Better Yields

Self-Directed IRAs

We specialize in all IRA'S, traditional, Roth and 401k plans. These can be invested in real estate and mortgage notes. Unlike the traditional IRA, contributions to a Roth IRA are not tax-deductible. However, that is but a small disadvantage when compared to the enormous benefits that can be gained through the creative use of a Roth IRA. Here are some of the more important benefits:
There is no limit on the amount of profits a Roth IRA can earn. Enormous tax-free profits are being earned by Roth IRAs that invest in carefully chosen assets, such as real estate options. In a recent transaction, our investors earned a tax-free profit of $260,000 on a real estate option that cost $8,000 sixteen months earlier.
With a self-directed IRA, the owner decides where the IRA funds will be invested. Funds in a self-directed Roth IRA can be invested in almost any assets the owner chooses.
Roth IRA funds can be invested, reinvested, and allowed to compound completely tax-free for as long as you choose to do so. Given the fact that it is possible for an IRA to earn enormous profits, this is an important advantage. Even more important, the profits are completely tax-free when the money is taken out—provided the owner is at least 59½ years old and the account has been established for five years or more. Contributions to a Roth IRA can be taken out at any time without tax or penalty.
It is interesting to note that, over any given period of time and at any given rate of return, the final value and the after-tax yield for most investors will be 40% to 50% greater when the money is allowed to compound tax-free.
As with other entities, a Roth IRA can increase its yield through the use of leverage. For example, it could borrow some of the money needed to purchase a larger mortgage at a discount. When a Roth IRA uses leverage (financing), some of the profits will be taxed. If, for example, the IRA uses financing for 75% of the cost, 75% of the gain will be taxed—unless the borrowed funds have been repaid. However, any tax should be a one-time occurrence. Both the contributions and the earnings can remain in the IRA and allowed to compound, tax-free, thereafter. Caution: Any IRA financing will need to “stand on its own.” That is, only the asset being acquired and/or other IRA assets should secure the debt. If the owner of the IRA, or members of his or her family, were to personally guarantee financing obtained by the IRA, it could be a prohibited transaction involving self-dealing.
A Roth IRA can serve as a “safe haven.” In most states, retirement assets are protected from those who would use the law to take from others. For minimum liability exposure, it is recommended that you hold only intangible assets in a Roth IRA. These include cash, notes and mortgages, beneficial interests in real estate trusts, and real estate options.
The Roth IRA can be a valuable tool for transferring wealth to children and other members of the family, thereby reducing estate taxes and probate costs.
A surviving spouse who inherits a Roth IRA is allowed to treat the IRA as his or her own IRA. The surviving spouse can withdraw the funds or keep them invested and can designate other beneficiaries. Your beneficiaries can be your estate, dependents, and anyone you choose to receive the benefits from the IRA after you die.


Roth IRA Rules

It is important that we become familiar with the rules that apply to the Roth IRA. In order to maximize our benefits, it is equally important that we consider what the rules don’t say and explore creative ways to profit without violating the rules.

Who Can Qualify For A Roth IRAs
A Roth IRA can be established for almost any individual—even a small child. The owner of a Roth IRA must have “earned” income, all of which could be contributed to the IRA as long as the contribution doesn’t exceed $3,000 a year. (Starting in 2005, this increases to $4,000 and starting in 2008, it increases to $5,000.)
Even a small child can earn $2,000 to $3,000 a year. One enterprising businessman paid each of his small children (ages one and two) $2,000 to model for photographs. The professionally made photographs were later used to advertise his business. The father then set up a Roth IRA for each child, using the $2,000 of “earned” income to fund it.
If either husband or wife is working, each can establish a Roth IRA and contribute up to $3,000 per year for a total of $6,000, as long as they have at least $6,000 in earned income. The adjusted gross income (AGI) for married couples that file jointly must be under $160,000. If their AGI is between $150,000 and $160,000, they will only be allowed to make partial contributions.
Single individuals having an adjusted gross income is $95,000 or less can contribute up to 100% of their first $3,000 of earned income each year (increasing to $4,000 in the year 2005). For incomes between $95,000 and $110,000 the amount of contribution that can be made is reduced.
The AGI-based contribution limits for Roth IRAs apply whether or not the taxpayer is a participant in a qualified retirement plan.
We have until April 15th each year to make the contribution for the previous year. For example, contributions for the year 2001 can be made at any time prior to April 15th in the year 2,002.
There is no requirement that a contribution be made each year and you don’t have to make a contribution at the time you open the account. You can fund a Roth IRA with as little as $200 and then contribute from $0 to $3,000 each year. It is, of course, to your advantage to contribute the maximum amount. The sooner you make your contributions, the longer the money can work for you.

Self-Directed IRA's

We suggest that you visit these wonderful sites to help you with your self-directed IRA.

Investment Programs

Remember these
important points: