Self Directed IRA - CPA recommendation?

11 Replies

I recently invested with an experienced RE investor in Denver and am pleased with the relationship and results.  I would like to continue to invest with this person on future deals.  

My wife has an old 401k rollover from a prior job that we're both interested in rolling into a self directed IRA and investing in RE projects. Can anyone recommend a professional (I'm assuming a CPA vs attorney, but would like guidance) to help with this process?

We live in Aurora (Farm @ Arapahoe County, near Parker CO), so prefer someone within decent proximity (Denver is close, Aurora, Greenwood Village, Parker CO, etc).  

Much appreciate the help.  

Thanks.

Jeremy,

If you wish to invest passively using your wife's self-directed IRA - all of the incomes and gains resulting from this investing will be sheltered from taxes inside of an IRA and it will not have an impact on your personal taxes. So in this case you don't really need a CPA.

If you invest in an active trade or business the incomes/gains from such activities will result in your IRA owing UBIT (Unrelated Business Income Tax). That is when you will need help of a CPA experienced in this area. Keep in mind that the IRA will owe taxes, not you personally. Also this tax tops at 39.6% so you better make sure that the numbers make sense before engaging in such investment. Retirement accounts were designed to be invested passively, and that is what makes most sense since all income is sheltered from taxes. There are several tax experts who are active here on the forum who might be able to assist you.

But first you need to decide which type of retirement account is the right fit for you: you can have a custodial self-directed IRA, or you can enhance it with the checkbook control by setting up Checkbook IRA (aka IRA owned LLC). And finally if you are self-employed your choice would be truly self-directed Solo 401k plan

Got it.  Very helpful.  And makes sense after reading your response that active investment (as I was contemplating) would be treated differently from a tax perspective..  Good to know before we make any moves, so appreciate you educating me!  All the best - Jeremy

Jeremy,

@Dmitriy Fomichenko just setup a Solo 401K for me and I'm very pleased.  His team is great to work with and the process could not have gone smoother.  I have a good CPA in town, but I haven't talked to him about his experience in dealing with these types of accounts.  I plan to do that shortly and will let you know if he is someone who can help.

I live in the Farm as well.  I'll send you a message about meeting up sometime.

Rick