All Forum Posts by: Jaime Raskulinecz

@Dmitriy Fomichenko The article you posted was from 2012 and didn't have anything to do with either company absconding with client funds. Some clients, who don't do their due diligence on an investment, will try to get compensated for their investment losses by suing their SD IRA provider. As we all know, in the self directed world we don't give advice or vet any investments.

I don't know any company that doesn't provide FDIC insurance on client cash not invested, even if it is only up to the $250,000 maximum. Due to the way we place client cash in multiple banks, we offer more than that for our clients.

Some people handle checkbook control and Solo k responsibilities as they are intimately familiar with the rules. That strategy is certainly NOT for everyone. We see a lot of prohibited transactions that take place in those scenarios because people are not fully informed.

Be careful out there folks. The main thing you should be worried about, after due diligence on any investment you want to make, is maintaining the tax advantaged status of your account. 

Everyone makes very valid points in the answers here. I have had clients create separate IRAs to hold single real estate assets in the event of an issue where there may not be enough insurance coverage, or just to be very cautious.

I have also seen clients do this, multiple IRAs, and then form an LLC for each of those IRAs in order to hold individual properties or assets in each. Of course everyone has their own tolerance for risk and your mileage may vary - LOL.

Always check with tax and legal advisors before taking steps like this. There is also risk in the single member LLC structure as, unless you are intimitely familiar with the rules on SDIRAs, there is a real possibility of doing a prohibited transaction and putting the tax advantaged status of your account at risk and potentially incurring penalties, taxes and fines.

Disclaimer: I own a self directed IRA company, Next Generation Trust Services in northern NJ.

I am also not a big fan of IRAs owning LLCs either as a single member or partnering with the IRA owner, which is allowed as long as certain rules are followed. However, both can be done.

You can have a SDIRA before you set up an LLC for it to invest in.

An IRA is an entity and does provide some asset protection. Many of our clients choose to have multiple IRAs for holding single real estate assets to protect cash and other assets if there is a legal problem with a piece of real estate.

Yo don't need another IRA to open a SDIRA. It can be opened with a contribution.

Good luck!

Jaime Raskulinecz, CEO

Next Generation Trust Services

Disclaimer: I own a self directed IRA firm.
We haven't raised our annual asset admin fees in over 2 years. As with most things, I think the adage is true that you get what you pay for. In our case, you get a lot more than you pay for. Our customer service is second to none.
Regarding single member LLCs, they are a viable option. However, we find that most investors aren't familiar enough with the IRS regulations to keep themselves out of trouble.
One of the benefits of owning property directly in the IRA is we can help keep you within the guidelines in order to protect the tax advantaged status of your account.
Once someone invests their IRA into an LLC we no longer know what happens within the LLC.
Did you know that if the LLC applies for a credit card and the IRA owner signs for it that it is a prohibited transaction?
There are many things that seem harmless and really aren't.

Jaime Raskulinecz

Some clarifications if I may:
You can title a property in the name of an LLC that is owned by your SDIRA or Solo k; however, it must be an LLC that is newly formed for the purpose of your SD account funding it. It can't be an LLC you already own and are using for any other purpose. This is very important.

In addition, you don't incur any penalties when you rollover from a 401k into a SD account as long as it is done correctly.

Jaime Raskulinecz

Thanks Bill! I think I do have the company, etc. on my profile. I just added a couple of things.
I am happy to be a resource if you need.

Dislcaimer: I am the CEO of Next Generation Trust Services, a SDIRA administrator. We allow single member LLCs and real estate directly deeded to the IRA.

I have no vested interest in either strategy our clients choose to use.

Even with a single member LLC you need a custodian to hold the LLC as the asset your IRA owns.

Just because you choose to use a single member LLC to hold your real estate assets instead of having the IRA hold it directly, it doesn't mean that you don't have to follow all of the IRS regulations as they relate to prohibited transactions and such.

You would best be served by speaking with an accountant familiar with SDIRAs about any taxes and returns that might be due.

To set up an LLC for this purpose, I have seen that clients typically spend less funds to set it up and are much better prepared and advised by using an attorney familair with ERISA and who has a practice specializing in this. Most will also give ongoing advice, sometimes at no charge and sometimes a reduced charge since you used them to set the structure up.

Regardless of the structure, the custodian will require an annual fair market valuation. In the case of real estate or an LLC that only holds real estate, a broker's opinion of value or comparative market analysis would be sufficient to value the real estate. If held within an LLC you would have to add bcak any cash, other assets owned, etc. to complete the valuation.

There are also many things an IRA owner could do inadvertently if real estate is held within an LLC that would be considered a prohibited transaction. We always recommend trusted, knowledgable advisors no matter which path is taken.

Jaime Raskulinecz