All Forum Posts by: William Morrison

Rich, I would recommend:
Leverage Your IRA
by Matthew M. Allen
Best price is on the NASB site.
and
Live Tax Free Forever (through Your Solo 401k)
by Michael J. McDermott
It is like a lot of real estate and financial books that really have an important message but limited scope. So some fluff to justify a book, but worth it.
A third but much drier and a tough read is:
The Self Directed IRA Handbook
by Mat Sorensen Attorney at Law
Always better to be able to ask smart question of your CPA and your attorney.
I used Sense Financial with @Dmitriy Fomichenko to set mine up and provide follow up and I have been very happy with their service.

Did you do a walk though?  We deal with it then if we can.
Do you have an address to send the remaining deposit?  That's where you might send the mail @Chris Mason spoke of above.

Thanks @Bryan O. and @Justin Windham.  Bryan I had to go back to my notes on the Single Member LLCs.  I had too many years gap.  It's been changing state by state, for me 5 to 8 years or so is not a long time Grin.
I just checked a couple articles talking about how all states now accept them, some kicking and screaming, which was not true when I made my decision.  There are still some sites that track how each state treats asset protection, a whole different subject.
The second part was the earned income. As I understand it I can have earned income and a annual loss in an S-Corp and an LLC (not treated as a corporation) may require a profit to provide a distribution and thus the ability to add to your 401k. The first year I certainly didn't have a profit but do now.
Bottom I went with S-Corp because I got the same answer every time, not so much with the Single Member LLC for what was was attempting to do.  Left my previous job and rolled a portion of my 401k to a Solo 401k.  And as you said active income is the key.  I am a W2 employee if you will with active income.

Nice read on the 401k Bryan.
When looking to setup my Solo 401k I found several entities that were passive that surprised me.  The rental one is real important considering the audience we have here on BP.  You can set up an entity that manages properties or provides rental property services.  I wouldn't use a DIY source though.  It's not the entity itself I would worry about but penalties and taxes on an invalidated Solo 401k that you have rolled over several years later.  They are pretty harsh.
It seems CPAs and others are split on whether an Single Member LLC will work or not as well. Seems some file as employees but the language appears pretty clear it's a distribution not W-2 income. I went with an S-Corp to be sure. Some advantages and some disadvantages.

Do I have to take back my laugh now?

Thomas, did you check into commercial non-recourse products?
The rates are higher and the LTV is smaller. But if the numbers work it might be an option for you.
And if you do, and you're running your numbers, check the loan pay down.  Generally when I run rental numbers with a 30 year loan, the first few years the pay down is not significant.  When your amortizing over 20 years the numbers are worth adding to your return.  I know its not cash but your net worth is rising.  Worth a thought. 

 Chris, I did just like you when forming a partnership in California and found the high fees and minimum taxes a roadblock to success for a small cash out investment with long term capital gain goals.  We did a limited partnership instead.  The fees in other states are much smaller, they just don't offer the protection some think.
The Single Member LLC seems to be changing quickly. I bookmarked a couple sites that track the changes by state. Just a few years ago most every state invalidated the Single Member LLC and treated it as a Sole Proprietorship (I maybe using the wrong terms here but I'm close).
I have a couple Single Member LLCs for other reasons and found out after they were in operation.  I found out when the state notified me that they now recognize them.  Good for me.  I also have insurance <Grin>.
It seems the state trend is to recognize the Single Member LLC but some states are just now passing those laws.  To me the idea is that the states are finding they can more easily track the equivalent of a Sole Proprietorship and get fees to do it.  And the state defined process is pretty clear for LLCs, so no new regs.  

A Roth IRA can never be rolled into a Solo 401k in the future with the Trustee vs Custodian advantages and the UBIT vs no UBIT advantages on leveraged rentals. At least with the current law.
So be sure that's where you want it before you move it.
My wife and I both have two very small Roth IRAs that we cannot move.  And too small for Checkbook IRA setup fees.

You might like to read these two if you want to know about tax free for life.
Leverage Your IRA
by Matthew M. Allen
Best price is on the NASB site.
and
Live Tax Free Forever (through Your Solo 401k)
by Michael J. McDermott
It is like a lot of real estate and financial books that really have an important message but limited scope. So some fluff to justify a book, but worth it.

That's the issue I had. The numbers with equity would allow me to sell and buy up but I had trouble on the new loan end. You need to know not guess. You have so many days to identify properties and so many to close. Mortgage brokers could guarantee anything in advance.
Side note: I was selling in one state and buying in an other. You have to know your state's claw back rules. Maryland allows it without a claw back as long as you show you kept the future properties and didn't sell. Some states tax the sale or the future sale with their claw back provisions.