The Best type of Retirement Plan for a New Investor

[Conor Lehane]

I rolled over a traditional 401k from my previous employer to a Roth IRA at American Pension Services recently. I wont go into recent events since im sure most of ye are aware but I have now cancelled my account and am back to square one.I took the 1st option given to me and it backfired.
My thinking now is what do I need for my specific needs?
Recently moved to Dallas area and working with a mentor and a team of new investors so working aggressivly to generate deals.
I have read the posts here but my immediate feeling is that responses are from very seasoned investors with obviously different needs.
My 401k provider is waiting for me to give them a new custodian to send a check.
Any advice is appreciated for a new investor to get on the Self Direct ladder. Also im not rolling over a huge ammount of money if that makes a difference.

Thanks in advance
Conor

[Dmitriy Fomichenko]

@Conor Lehane

With SD IRA there is always custodian involved. Alternative to that would be using truly self-directed Solo 401k, where there is no custodian, you serve as a trustee of your own plan, have checkbook control and bunch of other benefits:

• Solo 401k offers Participant Loan Feature which allows you to access your retirement funds any time for any reason (example would be investing in a transactions that would be otherwise prohibited). It's like creating your own bank that will never turn you down. Some may never use this feature, but it is sure great to have this option. With an IRA you canâ??t touch your money until you are over 59 1/2 and if you do - you are taxed and penalized heavily!
• Roth Solo 401(k) - you can maintain additional, separate 'bucket' under your Solo 401(k) plan where you could make after tax contributions, thus, investing tax free for the rest of your life. The limit on Roth contribution in Solo 401k is up to $23,000 (compared to $6,500 in Roth IRA) and there is no income restriction on contributions unlike with Roth IRA. Also, pre-tax portion could be converted into after-tax (Roth). (Tax professional should be consulted prior doing so).
• With Solo 401(k) custodian is not required. The plan can be self-administered which could mean significant savings $$ on custodian, transactions and asset based fees that would be there in a case of SD IRA. You also have a checkbook control and dont have to obtain custodian consent when making investments. This could be huge on time-sensitive investments and give great level of convenience.
• Large contribution limit of up to $57,000 (significantly higher than an IRA, which is only $6,500). In additional to all other benefits mentioned above, Solo 401k is a great tax-sheltering vehicle, allowing you to shelter huge amount of money from taxes.
• When you use financing to acquire real estate in a SD IRA, the portion of the income from the property will be subject to UDFI tax (type of the UBIT of about 35%)! When you finance real estate inside of Solo 401k -?? it would be exempt from UDFI, which makes it even more attractive to use for real estate investment with leverage.

Solo 401k subject has been discussed here on BP in details many times and you can find a lot more info and learn about the experience of those who used it.

Keep learning, there is lot's of great resources here on BP!