Presents
In Roth We Trust
Investing Tax‐Free with a Self‐Directed
Roth IRA
May 30, 2012
Adam Bergman, Esq.
• Adam Bergman is a senior tax attorney at the IRA Financial Group, LLC.
Roth IRA vs. Traditional IRA?
Traditional IRA Roth IRA Tax Deductible Contributions Yes No Tax Upon distributions upon reaching the age of 59 & ½ Yes No Required Distributions by Age of 70 & ½ (RMD) Yes No All income and gains from IRA investments tax‐free Yes YesHelpful Tips When Making an Investment
with a Self‐Directed Roth IRA LLC
• Make sure that title to the property is held in the name of the self‐directed IRA LLC. Title should NOT be held in the name of the IRA holder or the name of the IRA custodian. • The deposit and entire purchase price should be paid using IRA funds. In certain circumstances, IRA funds may be used alongside other non‐disqualified person funds. – No personal funds from a disqualified person should be used. • All expenses, repairs, taxes, improvements, etc. should be made using IRA funds. No personal funds should be used. • If additional funds are required for improvements with respect to the real estate investment, the additional funds should come from added IRA funds from the custodian or from a non‐ disqualified third‐party. – Can one make additional IRA contributions to the IRA LLC?• If financing is needed for an IRA investment, the financing must be nonrecourse (the IRA holder cannot personally guarantee the loan – that would trigger a prohibited transaction) • All income/gains or losses should flow from the real estate investment directly to the Self‐
Directed IRA LLC.
What are the Limits?
A Self
A Self
‐
‐
Directed Roth IRA can invest in anything
Directed Roth IRA can invest in anything
EXCEPT
EXCEPT
Internal Revenue Code Sections 4975 & 408 prohibit fiduciary and “Disqualified Persons” from engaging in certain types of transactions. 1. 1. Life Insurance PoliciesLife Insurance Policies 2. 2. CollectiblesCollectibles 3. 3. S Corporation StockS Corporation Stock 4.
