All Forum Posts by: Jaime Raskulinecz

@Alicia Campbell I wouldn't do this. I infer from your question that the only reason the company would hire your son was because he would benefit from doing the work in your IRA held property. This would be doing something indirectly in order to circumvent the rules.

I know everyone has an issue with fees on SDIRAs and Solo Ks; however, just as you need legal, tax and accounting guidance, the guidance you get from a custodian in order to avoid prohibited transactions is invaluable. The fees most custodians charge are extremely reasonable considering the time staff typically spends with their clients and prospects and other functions.

Even though I am responding as a custodian, I do believe these fees are something to be looked at the same way you look at the other professionals you engage.

Most of the prohibited transactions we find are in single member LLCs where no one is looking at the transactions and decisions the IRA owner makes. Something as simple as the IRA owner signing off on a credit card application for the LLC will result in a prohibited transaction and most would not think about that.

The same issues apply when using a Solo K without a custodian to review your transactions.

Prohibited transactions result in onerous fees to an ERISA specialist in order to try and correct it. If it can't be corrected, the prohibited transaction results in penalties, taxes and fines that could wipe out your entire retirement savings.

Believe me, you want a capable custodian handling your accounts and reviewing your transactions for peace of mind.

Just my opinion. Please note, however, that this was my opinion well before I got into this business.

Best regards and good luck,

Jaime Raskulinecz

Hello @Jeremiah T. We are also a SDIRA custodian. @Carl Fischer has some good basic tips to choose a provider. Even choosing a provider requires some homework on your part.

Another tip would be NOT to choose on fees alone. This is typically a pretty competitive industry, but the old adage that you get what you pay for is also appropriate here.

@Kelly A. We also have had clients in your situation that have been granted permission to invest outside their employer. Your employer is concerned mostly with what you will be investing in and will want to vet that. They may also want more information on the custodian you are choosing.

Please let me know if you need any additional information.

@Thomas Weidner All good advice you've gotten here. There are lots of different companies that can help you with your goal.

Check them all out and see who is right for you. Since you are just beginning you probably want someone who can walk you through all the basics and give you a good foundation of the rules, etc.

Jaime

@Marian Smith Please don't do any work, even minimal, on a property held by your IRA. Just as a large capital improvement can be considered a contribution to your IRA, so can this "minimal" work be considered a contribution. Be conservative in order to protect the tax advantaged status of your account. Stay away from the gray areas.

If you ever are looked at by the IRS for a possible prohibited transaction, something you printed from the Internet by a CPA who has not directly advised you isn't going to help you very much. 

I also imagine your current custodian isn't aware of this as I am sure they would already have warned you about a prohibited transaction scenario.

Jaime

@Charles 

@Charles Wilson before you do anything, make sure your current custodian is aware of the foreclosure and that the property is in the name of your IRA and they have it in your account. It would pay to have a discussion with them before you do anything to ensure you're not going to jeopardize the tax advantages status of your account. Also, if you have a tax advisor, bring them into the discussion early.

@Chuck Cirulli I hate to tell you, but it is that difficult. If this isn't addressed quickly and properly by a professional, your IRA will be distributed to you as a prohibited transaction.

This means that the value of the IRA will be added to your ordinary income and you will be taxed on it. In addition, you will be assessed penalties. They will not be insignificant.

Self-directed IRAs are a very powerful tool that can help you substantially increase wealth for retirement. However, they can also be "deadly" if you do not follow the regulations.

This is not something that should be attempted to be corrected on your own.

With self-directed IRA freedom comes great responsibility.

The only person who can help you at this point is an ERISA attorney or very well versed tax accountant.

It is possible there are ways to correct this serious prohibited transaction, but it is important to contact someone ASAP in order to begin the process.

We ask clients to speak with us early and often about the plans they have for investing with their accounts. It is almost impossible to think of every scenario that could happen that would cause a prohibited transaction.

Mathew Sorensen is a very well respected ERISA attorney who may be able to assist you.

Good luck.

Jaime

@Nicholas Sorrell This is absolutely allowable. You need a specialized administrator/custodian to open the account and process all the transactions.

You first open the account with the self-directed retirement plan administrator, fund the account by a transfer from an existing retirement account, a rollover or a contribution. You then should be speaking with them and researching in order to educate yourself on how the process works and what is allowable by the IRS. Identify a property and instruct the admin/custodian to make the investment on behalf of your account.

The funds stay in the account until they are moved by the admin/custodian to make the investment. The retirement account is the owner of the property and listed on the deed. All income and expenses flow through the account.

You may also finance the transaction as long as it is a non-recourse loan.

We are a third party administrator for these accounts. You can find more information on our web site. Any of our staff members would be happy to discuss this with you in more detail.

Good luck!

Jaime