BiggerPockets

Guidant financial services has the best IRA LLC. Look them up. They do cost much more to set up (around $3k) but you then have the immediate access to the funds required in tax lase investing.

I am not familiar with pension plans so my first question is can an IRA (or any other qualified plan) be rolled into a pension that you administer?

Have you looked into a self-administered 401k? May be a much better option for you with more control, less rules, and more advantages than a SDI.

The Guidant guys can help with setting up the self-administered 401k Will describes. I used Guidant. Pricy, but they go through the whole process in detail. Even with these other plans, you'll need some legal help.

The type of plan you use will depend on the type of investing you want to do. The IRA LLC is good for passive investments, such as making loans or owning rental property free and clear. If you have rentals with loans, or do something active like flipping or wholesaling, it will be subject to UBIT.

The self directed IRA is good if you're going to do something active, but has restrictions against passive investments.

The Guidant folks are really helpful. If you call, they'll pass you along to someone you can discuss this with and decide on the property type of account.

I don't understand this UBTI. Will have to talk to my CPA about it, and that costs $.
Until then, can anyone give me a bit of an understanding on it? If you buy a rental property or a business with your SDI IRA monies... the income would be going back into your IRA. An IRA is tax deferred. Why and how could there be a tax (UBTI) on that income? If this is the case then an IRA isn't a tax deferred retirement account. Could someone possibly clear this one up? Thanks in advance.

Your all making great comments about Self Directed IRA's. They have their place for some clients. However, The Ultimate Plan for RE. Investors is the Solo Roth 401K.(Self employed bus owners) Don't need the LLC, Don't have to worry about UBIT etc. It's not only a Self Directed plan but it's Self Managed-no outside custodian-You are the custodian. You also, can rollover all other IRA', s Keogh's, Sep's, etc, into one plan. You can also legally combine your IRA with your Spouse's IRA.
The other outstanding feature is that you and your spouse can take out private loans up to $50K ea. and use the money for anything you wish.

Mathews Realty Group
Agent/Investor
Retirement Planning Advisor
(removed)

Alfred, UBIT applies to a non-profit entity like a university bookstore. Even though the university is a non-profit, the book store is considered an "unrelated business", and is subject to UBIT. Traditional IRAs fall into this category, too.

An active business, like wholesaling or fix and flips, would be an active business and would be subject to UBIT. There are exceptions. One is rental income. If you own a property free and clear in your IRA, it is not subject to UBIT. But there's an exception to the exception. That is financing. A fraction of the net rental income, after all the normal deductions, is subject to UBIT. That fraction is the total debt divided by the basis.

Then, yes, you will pay taxes when you take the money out. So, income inside an IRA from an active business, or from debt financed rentals is subject to double taxation.

I'm not too hot on retirement or tax deferred vehicles. This IRA is an inheritance from my dad, known as a stretch or inheritance IRA. I transferred it into a SDI and invested in a construction project at 10%. The project is almost over and the capital will be coming back to the IRA shortly.

I really don't like not having full control of and access to my money and all of the rules and regulations connected to this.

The amount is 120k. I'm actually thinking that the most optimum thing to do is... 1) set up a good money making activity ahead of time... 2) just pull the money out of the IRA on Jan 1st 2010... 3) put it into action (example: buy a little business with decent income)... 4) I won't have to pay taxes on IRA until April 15 of 2011, so get an extension until Oct of 2011 and I've just deferred taxes on the IRA money for close to 20 months... 5) I will have made money from the business I bought and can use some of that to pay off the taxes owed on having pulled the IRA... 6) Now taxes have been paid on the IRA money I took out and that money is now mine to do with as I see fit.

I know this may seem wild or unconventional to some. I'd like any feedback you might have on this above strategy I just laid out.

Thanks for the info and advice. Much appreciated. I won't have a 10% penalty on IRA because it is an inheritance IRA. But I'll pay the marginal income tax rate for sure. If I pulled it out of IRA I'd have 120k on top of any other earned income for that year (this would actually be a good time to do it because I'm not earning much $... I'm working on a start up business and living off of passive income from my real estate investments). Let's say I bought a business with that 120k that nets 50k per annum. The business could probably pay off the taxes on the 120k and from that point I'd be free.

The only prob with a solo 401k is that I can't roll the inheritance IRA into it. So, because it is an inher IRA I have to stick with an SDI or Chkbook LLC IRA or just take the money out and run.

Other key data, I don't believe in retirement and will never retire. Plus with the IRA , taxes will be much higher when I withdraw that money in the future and the government is gonna get its due anyway. I'd rather have the money now to build businesses and buy assets with without any restrictions. I can maximize that 120k and make a lot more money with it outside than I can inside of the IRA (even if I'm paying taxes). When I reach old age I'll have businesses and income properties to take care of me or sell. Screw the government, social security and their stupid retirement accounts. I'd rather be free and take care of myself. That is my viewpoint and I think I'm right about it. Altho, my CPA rolled his eyes when I suggested it to him. I'm either outside the box and able to prosper on a higher level with this strategy... or, I'm out to lunch.

Yes, but if I have to pay taxes on the $ before it goes into a Roth... I might as well take it out in full as planned.
Don't think I can switch my inher IRA to a Roth IRA without having to pay the taxes.
I'm not that concerned about earning income on a tax deferred basis (IRA, 401k, etc.) would rather earn income and pay the taxes as I go. they'll be lower now then they will in 3,5, or 10 years. Plus I can use all the tax advantages, strats and legal tax avoidance actions to minimize my income tax. I'm still thinking bail out of IRA.

Will:
Ah ha. Good idea. Going the route of the Roth IRA might be the best and least costly way to get my money OUT from under governmt rules and FULLY into my control. Altho, having approximately 20 months to use the IRA money to generate a lot of money, deferring paying the tax for as long as possible via extensions, and then finally paying the taxes out of the profits I've made (and will continue to make), may put me further ahead.

Let's face it. There ain't no investment vehicle inside of an IRA that 120k can buy that is going to give you the return
that you'll get from a little business that is a good little money maker. And... you have full control and don't have to deal with IRA, 401k, 401a, etc. etc. rules.