All Forum Posts by: Carl Fischer

@Tuan Hoang

Listen to other HIEs and their professional advisors. There are a lot of strategies to help your tax situation  and a lot of hacks trying to get your money. There is no rush so vet any ideas and perform your due diligence on each suggestion. 

One of the strategies I use is to reduce or eliminate taxes-  by using Roth IRAs and 401ks and other qualified plans to invest in real estate and other alternative assets.  In addition, none of my strategies is to  try to lose money or limit cash flow to save on taxes as some “financial advisors” recommend. Time constraints, income, tax bracket, exit strategy, age, timeframe,  etc all should be considered when developing a plan. There are more strategies but too much to describe in a post  without understanding your personal situation and goals. 
We can talk if you want. 

@Ivan Maldonado

Make the rules work for you. Most of the answers you received were to lower debt. I suggest “increase income” by taking a distribution from your ira (the more the better) and then put it back within 60 days-no taxes or penalties but a 1099 showing that amount as income. Do it each year and the banks count it as income.

I found it out by accident because I converted a traditional Ira to a Roth IRA and got the 1099 and the bank counted it as income.

Banks want income and not savings accounts or money in the bank- assets don’t mean as much as the income to the banks.

If you do it in December and put it back in January it is even better to split it between years.

If you need more specifics let me know. Play within the rules and make them work for you.

@Joey Cassera

Talk to your accountant. It is fairly easy to accomplish your goal. If your son has "Earned"income and files a tax return he can open up a Roth IRA. He can contribute as much money as he makes up to $6k.
Dependent on who pays and for what it could possibly be deductible. No federal tax will be due under $12k of income. See if your CPA has any ideas on how to reduce or eliminate any employment taxes (SS & medicare).

Good luck and great question. 

@Joey Cassera

I am not sure if the payment to your son will be eligible for contributing to a Roth IRA. The IRS has some specific rules regarding what type of income can be considered earned income. I would recommend that if you choose to go with the Roth IRA, you speak with a specialist who is able to aid you in setting everything up correctly.

Another option you can consider is a Coverdell or Education Savings Account. They are both the same type of IRA, but goes by either name. This is a special IRA set up where someone else, besides the child, such as a parent or family member may make contributions for the child. The contribution limits can change from year to year, the 2020 contribution limit is $2,000. The account can then be used to pay off higher education expenses later on in the child's life.

@Jack D.

I have also used owner financing as non recourse and borrowing from other SDIRA accounts held by non-disqualified persons. It should be easy as banks are paying such low interest rates. It doesn’t make sense having your money in the bank. 

@Kadeen E Lyons 

To do a Brrrr investment, you are able to do that with a self directed IRA or 401(k), there are a couple other things to consider when using a non recourse loan to buy a property this way. When I did my first couple of deals my dad helped mentor and guide me through the first couple of deal. Do you have an one who can help you with your first deal?

@Audrey Cranmer Moini

If you are looking to rollover the 401(k) to an SDIRA to buy a personal property or residence, that would be considered prohibited transaction. When the SDIRA is involved, you want to look at the purchase as an investment for you later in retirement. The IRS has specific rules and regulations in place to prohibit the SDIRA from providing you with any current benefit. 

@Kadeen E Lyons

I have been investing in real estate with my SDIRA for 40 years, and have been able to grow my retirement accounts with more control and stability than if I only invested in traditional wall street investments. Not all deals are buying property outright. There are so many great ways to structure an investment. Some are a little more passive, while others require you to analyze, decide and manage. You may see many on here telling you to take a distribution, especially with a covid19 distribution, keep in mind there are some requirements associated with that.

What kind of real estate investing are you looking to do? Have you done any other real estate deals before, or is this your first?

@Dmitry Sorkin

Welcome to bigger pockets! 

Can you move an inherited IRA over to a self-directed IRA - Yes. Be aware of how much time you have remaining on your 5 years. Some non traditional investing that you can do in a SDIRA has longer life span, so always be aware of how much time is left.

Can your inherited IRA invest in flipping real estate - yes, but as @Linda Weygant mentions, you need to consider UBIT. Many investors still use their SDIRA to invest in flipping, but they talk about the possible UBIT with their advisor, CPA or tax specialist as each deal is different.

Can you do carpenter work on the property your inherited SDIRA owns - no. As you mentioned this is considered sweat equity. You can not do the work for free, and the SDIRA is not able to pay you as you are a disqualified or prohibited person. 

@Dan H.

I’m a simple person.

You have very good thoughts and discussion points and you very well could be correct. 

I will look up Definition of investor and speculators 

Been investing for 40+ years. 
simple answer is to your question is 2008/9. 
if you can rent for less than you can buy -why buy?

I believe that you can buy cash flowing property that appreciates.