How To Invest In Real Estate With SDIRAs and Checkbook Control

Tax Free Real Estate Investing With Self-Directed Retirement Accounts: SDIRA, QRP & 401k

Did you know that you can use a Traditional IRA and Roth IRA to invest in real estate tax free? Do you know the difference between a Traditional IRA and Roth IRA? In this post you’ll get an overview of these accounts and how you can use a self-directed IRA with checkbook control for real estate investing.

What is a Traditional IRA?

An IRA, or Individual Retirement Arrangement, is described in Section 408 of the Tax Code and provides for tax deductions and tax-deferred returns on investments in the account. You get a tax deduction for each dollar you put into the account, up to $5,500 per year or $6,500 for those aged 50 and up – and no taxes are paid earnings in the account. When funds are distributed from the account at retirement income tax must be paid.

What is Roth IRA?

A Roth IRA, described in Section 408A of the Tax Code, provides for the reverse treatment. There’s no tax deduction for contributions to the account, but investment returns within a Roth IRA are completely tax-free, forever. If you may have very high returns on your retirement account investments a Roth IRA is preferable to a Traditional IRA.

What Assets Can An IRA Invest In?

According to the tax code and regulations, an IRA can invest in anything other than life insurance, collectibles, and S-Corp stock. That means real estate, private loans, tax liens, private stock, and any investment you can think of ARE allowable.

What is NOT a Self-Directed IRA?

Technically, all IRAs are self-directed. When you open an IRA at Schwab, Fidelity, or another brokerage, they don’t choose the investments for you (unless you pay them to do so). You’re free to choose from among any stock or mutual fund available on their platform.

If you’d like to invest in real estate, as allowed by the tax code, the brokerage representative informs you that doing so is not allowed. Says who? Not the IRS. The IRS follows the tax code which allows real estate investing. The reason brokers don’t allow investing in real estate on their platforms is that they’re not able to handle those investments and make money off you.

What is a “Traditional” Self-Directed IRA (SDIRA)?

A traditional Self-Directed IRA is an IRA held by specialized trust companies that are capable of administering non-traditional IRA investments, such as real estate and private loans. In a traditional SDIRA the custodian holds the IRA cash and handles all investment paperwork as trustee of your SDIRA. Being that these companies don’t have investment platforms they generate revenue from administrative fees, which can be substantial. In addition, every disbursement and every deal doc must be processed, approved, and signed for by the trustee. This can cost you valuable time when you’re trying to close a deal.

What is a self-directed checkbook control IRA?

A checkbook control SDIRA has all the benefits of a traditional SDIRA without any of the downside. A checkbook control IRA gives you direct control of the cash in your IRA and allows you to sign all deal documents. With a Checkbook IRA, custodian fees are minimized and investment flexibility is maximized. Checkbook IRAs use a specialized IRA-LLC structure to that enables you to handle real estate IRA investments with the same ease as real estate deals outside of a retirement account.

Should I use a self-directed Solo 401k for real estate investments?

Self-directed Solo 401(k)s are a great vehicle for retirement plan real estate investing and extensive tax benefits for those that qualify. However, not everybody qualifies for these but it is definitely something you should explore.

ReSure is led by Bernard Reisz CPA and assists investors nationwide with total control SDIRA, QRP & 401k. Whether you’re looking to invest in real estate or the stock market, the ReSure team can help you do so with confidence.

CARES Act for Self-Directed Financial Investors: QRP, SDIRA, & Solo 401k

In this post, we focus on CARES Act implications & strategy for tax-favored self-directed retirement accounts: Individual Retirement Arrangements (IRA), Qualified Retirement Plans (QRP), Self-Directed IRAs (SDIRA), Solo 401k, Employer 401k plans & many other QRPs.

The CARES Act, short for Coronavirus Aid, Relief, and Economic Security Act, is a massive $2,000,000,000,000+ tax and spending package signed by President Trump on March 27, 2020. The CARES Act includes many forms of financial relief for businesses and individuals. Continue reading “CARES Act for Self-Directed Financial Investors: QRP, SDIRA, & Solo 401k”

What is a QRP? What is the QRP?

QRP & eQRP® have generated incredible excitement and interest within the self-directed investor community – from crypto-enthusiasts and gold & silver precious metals investors to real estate syndicators. But, there appears to be extensive misunderstanding of QRPs, so we’re here to set the record straight for you and all investors that want total financial control. For expert analysis, review, and FAQ about QRP, QRP-LLC, Solo QRP, Solo 401k & SDIRA, read on. Continue reading “What is a QRP? What is the QRP?”

Solo 401k Contributions: Understanding & Optimizing

Solo 401k contributions to a Checkbook-Control Qualified Retirement Plan – a Checkbook QRP – have multiple tax benefits: (1) They are tax-deductible, reducing your taxable income & tax liability to the IRS and (2) they grow tax-deferred, with no annual taxes on earnings and profits within the Solo 401k.

Tax-deductible Solo 401(k) contributions consist of 2 components: (1) Employee Elective Deferrals and (2) Employer Non-Elective Contributions (profit sharing). However, you may have heard various other terms used to describe 401(k) Plan contribution types. Following is a comprehensive guide to Solo 401k contributions, terms,  and calculations. Continue reading “Solo 401k Contributions: Understanding & Optimizing”

Solo 401k Loan FAQ & Answers

Checkbook Self-Directed Solo 401k Plans, also known as a Checkbook QRP, provide a great feature that can be leveraged in so many ways: A Checkbook Solo 401k Loan. The loan proceeds can be used to finance anything you’d like and the interest payments are made to yourself.

In fact, Checkbook 401k Loan Interest Payments can be viewed as a way to make backdoor contributions – beyond the Solo 401k contribution limits – to your Checkbook Solo 401k tax advantaged retirement accounts. Once those interest payments are paid to your Solo 401(k) plan or QRP, those funds become additional plan assets that can be invested tax-free.

Do you have debt to pay off? Do you want to purchase a new vehicle? Pay for education? Or, would you like to make an investment outside your Solo 401k using Solo 401k funds? The Checkbook Control 401k loan feature is your best option. In this post will cover all that you need to know to legally take advantage of this Checkbook QRP feature. Continue reading “Solo 401k Loan FAQ & Answers”

In-Service Distributions: Checkbook Control Solo 401k, SDIRA & QRP

Checkbook Control QRPs, 401(k) plans, and SDIRAs are powerful vehicles for investing in alternative assets classes, including: real estate, raw land, private loans, hard money loans, private businesses, tax certificates, cryptocurrency, crowdfunded investments, foreign & overseas assets, and so much more.

Getting access to and rolling over funds from your employer-sponsored 401k to a Checkbook QRP, Solo 401k or Checkbook IRA is doable in many instances, but you’ll have to overcome some obstacles to do so. With the knowledge provided in this post, you’ll be prepared to get the results you want.

Unlock Your Employer 401(k) to Get Checkbook Control Continue reading “In-Service Distributions: Checkbook Control Solo 401k, SDIRA & QRP”

Beyond Prohibited Transactions: The Plan Asset Rule

Checkbook QRP,  self-directed Solo 401k and checkbook-control IRA investors are aware (I hope that’s true) of the Prohibited Transaction Rules and Disqualified Persons discussed in IRC 4975. So, if you’re familiar with IRC 4975 are you covered? Or, do you need to know more than that to stay in compliance and protect your assets?

The Plan Asset Rule

There’s a lesser known extension of IRC 4975 in the Code of Federal Regulations that discusses something known as the Plan Asset Rule. In a nutshell, the Plan Asset Rule says that when retirement plans own a “significant” share of an entity, all of that entity’s assets are treated as assets of the retirement plans for purposes of the prohibited transaction rules. The implications of this can be staggering; if retirement plans collectively own a significant portion of an entity, all the disqualified persons of all the retirement plan investors are disqualified persons to that entity. Continue reading “Beyond Prohibited Transactions: The Plan Asset Rule”