All Forum Posts by: Brian Eastman

@Reid Sealby

If you have separated from service, then you can rollover your TSP to an IRA of your choosing. Some self-directed IRA plans are configured to allow for investments other than the stock market, such as real estate.

With a self-directed IRA you are not borrowing from the plan so you can invest in real estate. Rather, the plan is investing in real estate rather than being limited to investing in the stock market. It is still tax-sheltered retirement money, and everything the IRA does is purely for savings purposes within the IRA. You may not personally use or access the funds until you reach retirement age.

@Christina Tabacco

The simple answer is that unless you are over normal retirement age of 59 1/2, you do not want to pull any funds from your retirement plan.  You will pay tax on the amount distributed as well as a 10% penalty for early distribution if you do.  This is equally true for a plan limited to investing in stocks and a plan invested in alternative assets such as real estate.

@Maya Gavasheli

What you propose is a prohibited transaction. You are ultimately creating a transaction between yourself and your IRA. The other party would be viewed by the IRS as a "straw man".

@Ellen Quinn

I am sorry the custodian you are working with is not performing for you.

A transfer between custodians can be done with an asset in-kind. The request will be initiated from the receiving custodian and will require an assignment of the deed from ABC custodian FBO your IRA to XYZ custodian FBO your IRA. Make sure you work closely with the receiving custodian and understand the process. Don't just go out and start getting a new deed on your own.

The real problem is likely that no custodian is very good at handling the level of interaction and time sensitivity that comes with a direct investment in real estate.  They all market the services, but they are much better at dealing with more static assets like funds.  Even a custodian with better customer service will still likely leave you frustrated.

You should evaluate a plan that offers checkbook control so the custodian's role is limited and you will have much more direct control over your investment transactions.  Not all providers will be able to (or willing to) deal with the fact that you have an asset in-kind to move - that can be a good bit of extra headache.  That said, the work will likely be worth it in terms of a much better program that will also probably cost you less year over year than the processing services of a 3rd party custodian. 

@Robin Cornacchio what is "better" will be something to determine based on consultation with your licensed tax and investment advisors. Simply pulling the property out of the IRA, however, is not likely the right move based on what you describe as the situation.

@Robin Cornacchio

You cannot sell or transfer an asset from your IRA to yourself.

The LLC will need to be distributed at its full value from the IRA as an asset in-kind. The value will be treated as taxable income to you if this is a tax-deferred IRA.

Why you would want to do so is something to question. Speak with your tax advisor to understand the tax implications. There is generally not a benefit to liquidating an entire IRA all at once and paying a high rate of taxes.

If you choose to move forward, work with your plan provider to understand their process for executing in in-kind distribution of the LLC. They will want a certified value for the LLC since this is a taxable event. They will also want to see amended LLC documents reflecting the assignment of interest from the IRA to you personally.

@Tyler Smith

There are no "workarounds" for IRA rules related to disqualified parties. Since you and your company are disqualified to your father's IRA, he simply cannot invest with you.

@Damian Healey

So long as the partner is not using their IRA, and is not someone classified as a disqualified party to your IRA, there is no issue with them acting as property manager and providing other services to the partnership.

@DongHui Patel

With most Solo 401(k) providers, you are hiring a consultant, not a financial institution.   Your plan provider will do the legal work of establishing a custom 401(k) trust and guide you to setup an account with a bank and/or brokerage of your choosing.  A quality provider will also continue to be available to you for support purposes.

Such firms never hold your funds.  If they were to go out of business, you would lose access to guidance surrounding the use of the plan within IRS guidelines, but your funds would not be impacted.

Using a custodian to act as a 3rd party processor for a Solo 401(k) is typically a poor solution.  The plan is designed to provide you with checkbook control over plan investments.

@Basit Siddiqi

You have done exactly what we commonly recommend.  Build up some savings using the simple approach of a brokerage SEP, then upgrade to a Self-Directed Solo 401(k) once you have some savings accumulated.  The reasons you outline are exactly why we recommend this approach for many investors.  There are of course exceptions who have a specific investment niche in mind where a lower dollar threshold will make sense to go self-directed.