All Forum Posts by: Brett Synicky
Brett Synicky has started 25 posts and replied 779 times.
Post: Has anyone moved their 401K to a self directed real estate one?
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 805
- Votes 436
Quote from @Rochelle Gerber:
Just to clarify, are you saying I can put 69k a year into the 401? That would obviously be the route to go.
is there a limit to how much of the account you can use to invest? Say, I bring 250,000 or 500,000, how much or what percentage is useable?
and if the 401 “makes” more than 69,000 based on investment returns is that fine ?
The $69k max only relates to contributions. If under 50 the max is $69k. If over 50 the max is $76,500. Roth or traditional or combination. The contributions must be made from business income from the sponsoring business aka your self employment. You wear two hats, you’re the employee so IRS allows elective deferral (just like your current w-2 401k) up to $23k or $30,500 if over 50 AND the employer so you can also make profit sharing contributions of 20% if profit or 25% if gross payroll. Total cannot exceed $69 or $76,500
You can invest as much as you want and no limits on returns. In fact as the fiduciary your responsibility is to grow the account as quickly and effectively as you can. If you're going to be self employed with no employees other than a spouse there isn’t a better retirement plan than the Solo 401k.
I encourage you to check out the link I posted above for more info.
Post: Has anyone moved their 401K to a self directed real estate one?
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 805
- Votes 436
Quote from @Rochelle Gerber:
I may leave a current employer and therefore I believe I will be eligible to turn my 401k into a real estate investment product. Pros and cons? ability to use the whole amount and how so ?
Post: Should I start a property management company?
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 805
- Votes 436
Quote from @Shaun Hunt:
I have purchased six properties. They have been assigned to my LLC, Hunt Family Properties LLC.
I do my own property management for those properties.
Would it make a difference if I started a property management company and hired myself to manage my own properties? Would it be a wasted effort if I did?
As of now, we pay our kids to collect the rent each month. They are paid through a DBA we started.
Also, unrelated, how do I keep my profile picture from rotating 90 degrees. It will be ok one day, then flipped the next.
Thanks!
@Shaun, many people looking to self direct their retirement who already own rentals actually establish a PM business (usually sole prop for simplicity) to become eligible for a Solo 401k. There is some nuance to the situation if you add your children as employees vs 1099. Learn more here: Solo 401k
Post: SD Roth IRA Investing In Syndication - Transfer Depreciation?
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 805
- Votes 436
Quote from @Kevin Sobilo:
I'm just looking forward to the future when I may wish to invest in a syndication through a Roth IRA.
Correct me if I'm wrong but since the Roth IRA has no tax liability, the depreciation deduction is basically lost.
I'm curious, is there a way in a syndication to shift that depreciation that is of no use to me to another partner who can take advantage of it? If so, is there a way to get some compensation for giving them this depreciation?
Here’s my late addition. Figure out how to qualify for a Solo 401k then you avoid altogether UDFI/UBIT on leveraged real estate. Annual contributions are 10x higher than an IRA and the plan has Roth and traditional built in. Both spouses can participate, doubling the benefits. Learn more here: Solo 401k
Post: I’m looking for a bank which offers non-recourse loans
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 805
- Votes 436
Quote from @Brad Tarry:
I'm am looking for a bank which offers non-recourse loans so that I may refinance a home I own under a self directed IRA. Any suggestions are greatly appreciated.
Here's a compiled list on BP: Non-recourse lenders
Post: 401k funds comingled with other investor cash
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 805
- Votes 436
@Dana Brash only you are restricted to the disqualified party rules. Most important will be your 401k sharing in the income and expenses pro rata according to the original investment breakdown. Recommend consulting a tax advisor before moving forward with this. There are several here on BP who understand self directed retirement accounts. @Ashish Acharya @Nicholas Aiola @Michael Plaks
Post: IRA UBIT with Comm Real Estate
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 805
- Votes 436
@Art Webb yes there is. Unless the loan paid off free and clear for at least 12 months.
Post: IRA UBIT with Comm Real Estate
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 805
- Votes 436
Quote from @Art Webb:
If I buy multi family comm real estate via a RE LLC company with my Roth IRA does the rent income become UBIT taxable ? If the property is paid in cash and later a mortgage is secured does it impact the UBIT question above ? Thank you for your feedback !
It's true that the IRA will incur UDFI/UBIT on the income derived from the same % leveraged. What's also true is that you can deduct expenses and even depreciation on this same % and subtract the first $1000 before calculating the UBIT. It's true it does scale up to 37% but not until around $12k of income after those deductions. Generally in the first year or more you'll have enough of those to not really incur any UBIT on especially when you factor in cost seg. Don't let UDFI on leveraged real estate scare you away from investing in your IRA, it can still make you a lot of retirement money.
Even better, get some self employment activity and sponsor a solo 401k then no UBIT on leveraged real estate!
Post: Mid Term Rental under Solo 401K Plan
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 805
- Votes 436
Quote from @Eden Meng:
Hi Wonderful BP Community,
I am in the process of acquiring an out of state property for mid term rental. The proceeds used to acquire the property will be from my solo 401K. I have my team on the ground when it comes to real estate agent, cleaner or other critical team members to make the property up and running. I have reviewed the IRC publication for prohibit transactions between the plan and a disqualified person which contain a few criteria including selling, exchanging and leasing the property. I dived deeper on the " leasing property part" and the only clarification is not to lease the property to disqualified persons. I would like to clarify if there is a possibility that I could be the leasing agent for the property?
Your input is greatly appreciated !
Eden
of course you could manage it. You can’t swing a hammer you have to hire somebody to swing the hammer. Again best to hire all this out for various reasons not the least of which is if somebody needs to be evicted.
Post: Benefits of self-directed IRAs
- Solo 401k and SDIRA Consultant
- Orange, CA
- Posts 805
- Votes 436
Quote from @Mohit Gupta:
Following. Just starting to research how to invest w/ SDIRAs.
I'm confused why would you say that rental income is taxed in an IRA? May be you meant that the IRA has deferred-tax funds and not Roth?
How about using SDIRAs not to hold assets but to operate businesses? For example, could I use my SDIRA to operate a management company that charges my holding LLCs a management fee? Now the paper losses are still able to be realized via the holding companies while the management fees are earned tax free? I'm guessing though that since the IRA owner isn't allowed to take out a salary, perhaps the SDIRA LLC will be required to hire employees?
This would be a prohibited transaction since you're a disqualified party and anything you already own (your LLCs) is part of that. Additionally if you're running an active business in the IRA the income will have to pay UBIT. There are some creative ways to get it from 37% to corporate tax rate of 21% but generally it's best to invest passively as the IRA is designed.