SDIRA with IRA Financial Group
Realtor · Jacksonville, FL · Member since 2013 · 15 posts · 0 votes
I am thinking about setting up a SDIRA with a company called the IRA Financial Group (http://www.irafinancialgroup.com) . Has anyone ever dealt with them before? I have a modest some of money sitting in various IRA's and I would like to use that money to invest in real estate and/or notes. Any insight appreciated!
Many IRA LLC providers will allow you to choose the bank where the LLC account is opened. For example, you can choose a local bank or credit union where you may have a relationship and go into a branch.
Here are some additional issues to consider in choosing an Self-directed IRA provider:
1. In order to have checkbook control, the IRA account will need to be at a trust company that will allow the IRA to invest in an LLC (where you will be the manager and your IRA will be member - an as manager you will have checkbook access to the LLC bank account). Therefore, you will want to confirm that the trust company allows for investing in an LLC and the associated fees and minimum balance that applies to the IRA account.
2. Confirm that the IRA LLC provider will prepare all of the documents needed to not only form the LLC (articles of organization, SS-4 to obtain an EIN) but also the documents needed by the trust company to process the investment of IRA funds in the LLC.
3. Confirm that the provider has experience with the particular investments in which you intend to invest your retirement funds as you very likely will have questions in terms of the mechanics (e.g. how do you invest in real estate, etc.).
4. Confirm that the provider has a pristine reputation (e.g. Better Business Bureau reviews, etc.).
5. In addition, if you are self-employed with no full-time employees you may wish to consider opening a Solo 401k instead of a self-directed IRA as it has several advantages over an IRA LLC such as much higher contribution limits, direct checkbook control (i.e. no need to have the account at a specialty trust company), ability to take a 401k loan, exclusion from unrelated debt finance income tax with respect to investment in real estate acquired with non-recourse financing, etc.
In addition, please note if you purchase debt-financed real estate with your IRA, unrelated debt finance income tax should apply to the income attributable to debt-financed real estate held by your IRA. Of course, you will want to review your specific situation with your tax advisor.
Never heard of them. But if you google: "IRA companies" site:www.biggerpockets.com you'd get a bunch of posts on other SDIRA options.
Thanks Chris!
So it's the end of July 2020 (Covid-19) and I can reply to this topic of creating my self-directed 401K with IRA Financial Group. First of all, for anyone who was able to get their self-directed 401K setup within 2-3 weeks is amazing. For me it took 2 months or 8 weeks from beginning to until I was able to get my Capital One business checking account setup for checkbook control. Overall, I would rate IRA Financial a 4 star. They did help me through out the process and answered my questions, but they did missed some detailed instructions for a noob I was often lost or wasn't sure what I needed to do. My ordeal may not be typical, overall here were the timelines, 2 days to setup initial account via web or app, 2 weeks to transfer my money out of John Hancock (aka my old IRA), took about 2 weeks to setup my Trust Account then my LLC. I spent about 3 days researching the whole LLC process and trying to understand it for various states that I may do real estate investments. Already that took a month, but I knew by this time i was near the end. During that first month, I had to notarized some documents, Covid-19 made that process harder than it was before. That was 2 days to arrange for notary service. All this time, I was working with IRA Financial via email and phone calls during the day while doing my day to day job. The last 3 weeks was transferring my money from the trust account to my business checking account for checkbook control. So establishing the checking account took a few days, but IRA Financial took care of most of the paperwork and process but processing the final transfer to the checking account and waiting for wire confirmation took 4 days. Honestly, the last 3 days was confusing because IRA Financial didn't provide all the instructions such as setting up the checking account which was a collaborative effort between them and myself with emails, account numbers, personal information, etc. So I guess, with holidays and weekends and me not knowing what to do and worrying about if I'm transferring all this money to God who knows where it probably took twice as long but kudos to those that can setup all this up in 3-4 weeks. There were so many confusing website access, docusign, document submittals, personal information verifications, etc. Short story long, IRA Finance was a great help and after 8 years of wanting to setup SDIRA, it's done. Hopefully this helps someone as to what to expect. Now it's time to go investment.
Many IRA LLC providers will allow you to choose the bank where the LLC account is opened. For example, you can choose a local bank or credit union where you may have a relationship and go into a branch.
Here are some additional issues to consider in choosing an Self-directed IRA provider:
1. In order to have checkbook control, the IRA account will need to be at a trust company that will allow the IRA to invest in an LLC (where you will be the manager and your IRA will be member - an as manager you will have checkbook access to the LLC bank account). Therefore, you will want to confirm that the trust company allows for investing in an LLC and the associated fees and minimum balance that applies to the IRA account.
2. Confirm that the IRA LLC provider will prepare all of the documents needed to not only form the LLC (articles of organization, SS-4 to obtain an EIN) but also the documents needed by the trust company to process the investment of IRA funds in the LLC.
3. Confirm that the provider has experience with the particular investments in which you intend to invest your retirement funds as you very likely will have questions in terms of the mechanics (e.g. how do you invest in real estate, etc.).
4. Confirm that the provider has a pristine reputation (e.g. Better Business Bureau reviews, etc.).
5. In addition, if you are self-employed with no full-time employees you may wish to consider opening a Solo 401k instead of a self-directed IRA as it has several advantages over an IRA LLC such as much higher contribution limits, direct checkbook control (i.e. no need to have the account at a specialty trust company), ability to take a 401k loan, exclusion from unrelated debt finance income tax with respect to investment in real estate acquired with non-recourse financing, etc.
In addition, please note if you purchase debt-financed real estate with your IRA, unrelated debt finance income tax should apply to the income attributable to debt-financed real estate held by your IRA. Of course, you will want to review your specific situation with your tax advisor.