Taking Control of Your Retirement Plan

Transcription

1 Retirement Vehicles

2 Taking Control of Your Retirement Plan

3 This Information Applies to These Plans IRA 401k 403b 457 TSP SEP SIMPLE Keogh

4 An investment in knowledge always pays the best interest Ben Franklin

5 Knowledge is power. Information is liberating. Education is the premise of progress Kofi Annon

6 Wall Street Plans vs Self-Directed Plans

7 Level 1 Working With Wall Street

8 Do You Have A Balanced Portfolio?

9 Typical Wall St. Plan Stocks Bonds Mutual Funds ETF s, CD s Money Market Accts.

10 It s all based on the Stock Market and Fiat Money It s all paper. It contains no hard assets. It has Counterparty Risks

11 Counterparty Risk Enron Unicom Tyco Worldcom Bear Sterns Lehman Bros. GM MF Global Wachovia WaMu

12 This portfolio depends on inflation for its gains. What happens when the bubble bursts?

13 Your Investing Platform

14 Level 2 Move to a Truly Self-Directed Plan

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21 Truly Self- Directed Plan Stocks & Bonds Real Estate Precious Metals Private Offerings Private Loans Businesses Private Mortgages Hard Money Loans Real Estate Options Ag Land, Timber Wind, Solar Natural Gas

22 Your New Self-Directed Investing Platform. Bonds Stocks Self-Directed Real Estate Lending Gold Notes Tax Liens Natural Gas Water Rights Commodities Real Estate Options And More

23 If you have a plan and can t invest in all of these things It s because your Custodian doesn t allow it, Not the law.

24 About Custodians ERISA says your IRA Plan Trustee must be a bank or trust company. Guess who controls the banks?

25 Wall Street wants to control your assets so that they can be used as Wall Street sees fit. This is no accident.

26 High Stakes Game 100,000,000 qualified plan accounts 11 Trillion dollars in assets 99.9% controlled by Wall Street through banks and brokerage houses.

27 Like the Fox Guarding the Hens

28 Or maybe, for you conspiracy theorists it s more like

29 One Ring To Rule Them All

30 So, if you had to pick? Wall St. Plan Self-Directed Plan Bonds Lending Stocks Real Estate Gold

31 How NOT to use your selfdirected IRA. You got to know your limitations Dirty Harry

32 Avoiding Problems

33 If You Break The Rules The IRS can disqualify your plan entirely if you participate in a prohibited transaction. You could pay tax on a distribution of the entire balance of your account.

34 Penalties reach back to the date the transaction occurred. You will pay tax at 15% per year plus If not corrected within the current tax period you pay a 100% tax on the amount involved.

35 What you can t do & why. 1. Disallowed Investments 2. Disqualified Persons 3. Prohibited Transactions 2 Rules

36 So to keep your wealth secure from seizure by the IRS Remember the following

37 No disallowed investments.

38 Art and Collectibles any work of art, any rug or antique, any metal or gem, any stamp or coin, any alcoholic beverage, or you get the idea Don t Invest In

39 No Self-Dealing

40 Rule 1 Rule 1 Your plan cannot buy, sell, transfer or exchange assets with you or any disqualified person.

41 No personal benefit derived from plan investments.

42 Rule 2 Rule 2 Your plan cannot enter into a transaction which benefits you or any disqualified person.

43 Don t put your plan in deals with disqualified persons.

44 Who are disqualified persons? You and your linear ascendants and descendants & their spouses. 1. You and your spouse. 2. Your parents and grandparents. 3. Your sons and daughters and their spouses. 4. Your grandchildren and their spouses.

45 Also Disqualified 5. Plan fiduciaries & spouses. 6. Businesses, trusts, or other entities controlled by you or any disqualified person.

46 Some Examples 1. Your plan can t buy a vacation home and you use it personally Rule 2 2. You can t sell your home to your plan Rule 1 3. You can t do any work on a property owned by your plan Rule 1

47 4. You can t buy a business with your plan and work in it Rule 1 or Rule 2 5. You can t partner with your plan Rule 2 6. Your plan can t partner with your daughter Rule 2 But you can partner your plan with your daughter s plan.

48 Step Transactions This involves trying to accomplish in 2 or more steps what you could not accomplish in one. It doesn t work The IRS looks through the steps and sees the end result.

49 Don t buy collectibles. Use Rules 1 & 2 as a Litmus Test for all your creative investments.

50 Taking It To The Next Level

51 Level 3 Direct Control of Plan Assets

52 Start At Level 2 Self-Directed IRA

53 Level 1 Investor Wall St. IRA $ Rollover Level 2 Investor SDIRA Common & Familiar Hands off & Easy (hidden fees) Alternative Custodian More Involvement Fees Exposed More Choices Paperwork Delays

54 Working With Custodians Custodians: Charge fees Hold all plan assets Sign all the checks

55 Custodians: Slow or kill deals Are good at being bureaucrats They work for you but you jump through the hoops?

56 Problems : Custodian Fees Custodian Involvement Solution: Checkbook IRA

57 Add Checkbook Control and Move to Level 3

58 Gain Personal Control Level 1 Investor Wall St. IRA Level 2 Investor $ $ SDIRA Level 3 Investor Checkbook IRA

59 Checkbook IRA Wall St. IRA $ SDIRA 100% Funded by IRA $ LLC You manage the LLC Investment 1 Investment 2 Investment 3 Investment 4 Investment 5

60 How It Works As LLC Manager You write the checks on the LLC bank account. You hold the assets titled in the name of the LLC LLC profits flow through to the IRA

61 How s that possible? It s not only possible but it s been possible for over 20 years. In 1990 DOL approves (Jason Opinion Ltr.) 1996 IRS is reprimanded in court (Swanson Case)

62 Level 1 Investor Wall St. IRA Side-by-Side Level 2 Investor $ $ SDIRA Level 3 Investor Checkbook IRA Hidden Fees Few Choices Lower Fees More Choices Paperwork Delays No Custodian Fees Unlimited Choices Direct Ownership Direct Control No Delays

63 2 Ways to Get Control If you want Unlimited investment choice Checkbook control Direct control of plan assets 1. Checkbook IRA 2. Solo 401k

64 Level 4 The Elegant Solution A Solo 401k

65 Wall St. IRA $ Solo 401k Solo 401k Self Trustee (You) Trust Bank Account Trustee Controls Assets No Custodian No Delays No Fees Investment 1 Investment 2 Investment 3 Investment 4

66 To Open A Solo-401k You must be self-employed. Any business will do, even part-time. Have no full-time W-2 employees

67 About the Business Anything you do with the intent to make a profit is a business. Anything

68 Anything you do with the intent to make a profit is a business. Hobby Business Part Time Consulting Investing Contract Jobs Freelance Writing Photography Flea Markets Antique Dealer Catering Trainer Seminar Speaker

69 Make It Real Do at least the minimum to make your business a real business: assumed name (dba) tax number (EIN) business bank account keep separate books

70 Also, if you want: business cards, brochures, flyers website business get listed in online directories other things normal businesses due

71 About Employees You can have workers who: have ownership in the business (owneremployee) work less than 1000 hours per year are independent contractors follow IRS guidelines

72 are non-resident aliens with no U.S. income are union employees are under age 21

73 Who s Included? You Your Spouse Partners may also be included.

74 If your business must have full-time w-2 wage earners The Solo 401k is not available to you. You have 3 options:

75 1. Open a Checkbook IRA 2. Reorganize your employee relations 3. Adopt a 401k plan that covers you and all your eligible workers (but still has all the choices you want)

76 A Self-Directed Smackdown

77 1 st How are they alike?

78 How are they alike? Both are based in ERISA but governed by different parts of ERISA, both allow: alternative investments rollover s from other plans checkbook control ROTH component

79 How do they differ?

80 About Rollovers IRA Simple IRA SEP IRA Roth IRA 401(k) 403(b) Keogh TSP Pension Protection Act (PPA) Established Plan portability Funds in any of these plans can be moved to any other of these plans (with rare exception).

81 IRA SEP 403b TSP Roth Simple 401k 457 IRA IRA LLC Solo 401k

82 If you have a ROTH IRA You will have to use a self-directed IRA.

83 Plans are Trusts About Custodians A trust has a Trustee and Beneficiary Custodians are Trustees, you are the Beneficiary IRA Trust Trustee is a bank or trust company. 401k Trust Anyone can be Trustee No Custodian means No Fees with a Solo 401k

84 About Debt Financing You can use debt financing to buy real estate but your plan might have to pay UDFI tax. UDFI = Unrelated Debt-Financed Income

85 Tax rates vary between 15% and 39.6% Tax is levied on income and profits based on the percentage of financing used. If 80% financing is used 80% of the profits will be taxed. IRA s pay UDFI tax 401k s do not

86 About Participant Loans Solo-401k Loans allowed Borrow up to $50k or 50% For any purpose Reasonable Interest Paid back within 5yr. IRA, No loans 401k, Up to $50

87 Solo-401k About Contributions Employee = $17,500 (plus $5,500 over 50 yr.) = $22,000 Employer = 25% of w-2 income max $50k combined IRA Max (over 50) = $ k Max (over 50) = $50k IRA, Minimal 401k, Huge

88 About Simplifying The Solo-401k is simpler

89 Checkbook IRA Structure Wall St. IRA SDIRA 1 Gov t Mandates Rule Changes Forced Distribution Regulatory Changes Increased Taxes Increased Filings Fines 2 LLC Investments There are 2 weaknesses in this system. 1. Custodian Intervention 2. Government regulation of the LLC

90 Solo 401k Structure Wall St. IRA Solo 401k Investments Plan Trust is formed by a private document. No gov t. entity needed. No moving parts 1. No Custodian 2. No LLC Simpler is better

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92 Comparison IRA LLC or Solo 401k Investment Choice Portability Checkbook Control Debt Financing Tax Free Loan Large Contributions

93 Comparison IRA LLC or Solo 401k Legal Structure Trustee Custodian Required LLC Needed Trust Bank Yes Yes Trust Anyone No No No full time employees = Solo 401k Otherwise = Checkbook IRA

94 But It s Not Difficult In the end you open an Self-Directed account You decide how to invest it initially (hold cash if you wish or gold) You learn more You adjust your investments accordingly With freedom comes responsibility.

95 Inflation Financial Instability Nationalization

96 Inflation Awakening Monster

97 Monetary Inflation 2008

98 QE Infinity and Beyond!

99 Hyper-inflation on the Horizon

100 Inflation Forces Speculation In an inflationary economy: Savings are destroyed You are forced to speculate to try to preserve your wealth Stock market gains are just chasing inflation and losing

101 Store your wealth in real assets real estate, precious metals, productive farm land. Keep at least some of this offshore.

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103 Financial Instability

104 Inflation Brings Instability

105 Consider These Events 445 U.S. Bank Failures since 2007 Instability in Europe (Greece, Ireland, etc. PIIGS) Government budget deficits = half the budget! Looming bankruptcy crisis for cities and states

106 Boomers entering retirement Social Security and Medicare insolvency Capital flight nowhere to go Runaway spending on foreign wars Add you own

107 China as a World Financial Power Hint, this is big! Who do you think s in charge here? WTF?

108 Capital Controls Add To That Increased Litigation Risks Coming Tax Law Changes (maybe retroactive)

109 Increased IRS Audits Possible Civil Unrest Peak oil, peak food, peak water?

110 Nationalization of IRA/401k Plans Can the government really take my IRA?

111 Unprecedented Times Call for Unprecedented Measures!

112 Unprecedented Times Call for Unprecedented Measures!

113 Watch for: Should you be worried? Persistent activity on the legislative front indicates that you should. Guaranteed Retirement Account (GRA) A Lifetime Annuity scheme that amounts to a 2 nd tier Social Security plan. Lose the balance when you die.

114 Watch for: Treasury Retirement Bonds (U.S. Debt = IOU) Replace some or all of the assets in your plan with U.S Debt = IOU from Uncle Sam Any takers? It s backed by the full faith and credit of the United States of Government. Watch for Protect the Little Guy jargon.

115 The Good Professor G Prof. Teresa Ghilarducci s fights an unending battle for social justice. Big promoter of 401k reform Called the most dangerous woman in America by some.

116 Here s Some of what s been happening. Oct House Committee held hearings Treasury Retirement Bonds to replace IRA s, 401k s Feb proposed issuance of rules regarding annuitization of 401(k) plans Feb 2012 Calif. SB1234 introduced, it s known as: "Golden State Retirement Trust". This Bill is based on GRA s May 2012 Connecticut HB5337 (SCEPA) based on GRA s.

117 I assure you. We haven t seen the end of this issue yet.

118 A plan for saving your retirement.

119 It s probably not what you thought. It s not an act of Congress. It s an action. An action you take to reclaim your retirement savings, secure them.

120 Open a Self-Directed Plan Now! IRA or Solo 401k

121 Inflation Financial Instability Nationalization 3 Reasons You should consider getting your savings under your personal control sooner rather than later. 4 th Reason There is no benefit in leaving your savings under the control of a Custodian at some bank.

122 You are the only one responsible for your future. No one else cares as much as you do.

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124 Liberty 401k By Guardian Capkey Co. Full Freedom of Choice Complete Asset Control Minimum of Restrictions

125 Liberty 401k By Guardian Capkey Co. IRS accepted Prototype Plan Comes with IRS Approval Letter All the personal help you need

126 Liberty 401k By Guardian Capkey Co. Plan Documents.. $1550 Annual Registration $200 Total.. $1750

127 Liberty 401k By Guardian Capkey Co. $1750 Total Probably less than you pay each year in custodian fees.

128 Liberty 401k By Guardian Capkey Co. Next year and thereafter just $200 per year

129 Liberty 401k By Guardian Capkey Co. Special Panama Offer Start your Liberty 401k before Dec. 1, 2012 and you ll get a $300 discount.

130 Liberty 401k By Guardian Capkey Co. Special Panama Offer Total Price Until Dec. 1, 2012 $1450

131 I Urge You To take the steps necessary to regain control of your retirement savings. If you need to, educate yourself or seek trusted advisors. Do it soon. You ll sleep better once you do.

132 The real voyage of discovery consists not in seeking new landscapes, but in having new eyes. ~Marcel Proust