Solo 401k Compliance | Solo 401k Unlimited® Investing

The Most Elusive & Dangerous Self-Directed Solo 401k Practice – Part 2

November 18, 2010 By Jeff Nabers 8 Comments

[Originally Published at JeffNabers.com]

In the last post, you learned about how doing an active “entrepreneurship-ish” deal inside your Solo 401(k) is an open invitation for the IRS to tax the hell out of you.

In this post, you’ll learn the solution.

The solution is not to avoid doing active deals.
The solution is not to stop pursuing massive profits or to lock away your talents and skill to be unused.

The solution is to structure both your active entrepreneurship and your passive investment activity in a way that that puts you in the most control. Put another way, avoid giving the IRS an open invitation to tax attack you.

I bet you can guess where this is going (one commenter had a pretty good [Read more...]

Filed Under: Blog, Solo 401k Compliance, Solo 401k Contributions, Solo 401k Investment Options & Ideas, Solo 401k Maintenance, Solo 401k Participant Loans, Starting a Business, UBIT/UBTI/UDFI Taxes Tagged With: economy, investing, investments, real estate, recession, self directed ira, self directed solo 401k, solo 401k, solo k

The Most Elusive & Dangerous Self-Directed Solo 401k Practice

November 16, 2010 By Jeff Nabers 10 Comments

[Originally published at JeffNabers.com.]

There’s something that most “successful” Self-Directed Solo 401(k) investors do that can spin them out of control and get them into trouble.

I say “successful” in quotation marks because I’m talking about the particular kind of Self-Directed Solo 401(k) success that is sexy enough to be frequently written about.

What is this dirty deed that leads to massive profits and the potential implosion the very same Self-Directed Solo 401(k) that got those profits?

Entrepreneurship.

Bad Entrepreneur!

Yep. Entrepreneurship is so powerful that it seems to be the source of all aggressive wealth creation. So where’s the danger?

Let me explain. Some of the most [initially] profitable Self-Directed Solo 401(k) stories sounds something like this…

Joe, a Self-Directed Solo 401(k) investor, knows how to work real estate deals into profits. So he buys and sells real estate in his Self-Directed Solo 401(k). Sometimes he involves bank financing. Sometimes he involves private financing and partnering.

But one thing is for sure: Once Joe purchases a property, the work has just begun. He has a system. He only buys properties that meet a certain criteria. After the closing, he usually has repairs and/or remodeling work done.

And his system works. He’ll put $30k or $40k of his Self-Directed Solo 401(k) money into a deal and get $80k to $100k out, often less than a year or two later.

First, applaud Joe for [Read more...]

Filed Under: Blog, Solo 401k Compliance, Solo 401k Contributions, Solo 401k Investment Options & Ideas, Solo 401k Maintenance, Starting a Business, UBIT/UBTI/UDFI Taxes Tagged With: business, economy, individual 401k, investing, investment, real estate, recession, self directed, self directed ira, self directed solo 401k, solo 401k, solo k, startup, UDFI

A Major Improvement To Make Things Easier

November 11, 2010 By Jeff Nabers 4 Comments

Exciting news – we’ve just started implementing something that makes setting up a Solo 401(k) a much faster and easier process.

Now you can download a small piece of software that turns your computer into a portal for setting up your new Solo 401(k) in minutes.

Faster Creation

You can literally bring your Solo 401(k) plan into existence the same day that you get the software. You don’t have to be full-time self employed to qualify either; self-employment activity on the side of full-time employment elsewhere still qualifies you for the Solo 401(k).

Easier Transactions & Maintenance

It also makes certain tasks easier beyond setting up and funding the plan with rollovers. For instance, if you ever need to draw on the participant loan feature that lets you borrow up to $50,000 tax-free from your retirement funds, you can just fire up the software and get the loan funds (up to $50,000) in your hands on the same day.

Making contributions has never been easier. Use the software to instantly calculate your maximum legal contribution (up to $54,00) each year. Double that if your spouse is involved in your self-employment activity because she (or he) can contribute up to the same limits as well.

Clearer Benefit

There’s even a value calculator that shows you how much your 401k plan is measurably benefiting you. Most people find it’s in the tens or hundreds of thousands of dollars per year.

Total Control

And, of course, enjoying the power of controlling the checkbook for your own 401k investments comes with unlimited, legally-allowable possibilities… such as investing in:

Private businesses equity
Non-dollar, safe offshore investments
Private lending
Real estate
Tax liens
Virtually anything else (just no “self-dealing” or conflict-of-interest transactions)

After thousands of private trials gone smoothly and plenty of early adoption switch-over from our existing loyal clients, we’ll be doing a big promotion to celebrate making this available for new clients.

If you’re on my email list, you’ll be the first to get access.
[You can can join it if you haven't already]

Thanks for all your support, and everyone here at Nabers Group is ecstatic about unveiling our latest way to give back to the community!

Filed Under: Blog, Setting up a Solo 401k, Solo 401k Compliance, Solo 401k Contributions, Solo 401k Eligibility, Solo 401k Investment Options & Ideas, Solo 401k Maintenance, Solo 401k Participant Loans, Starting a Business Tagged With: asset, assets, choices, economy, entrepreneur, funding, funds, individual 401k, individual k, inflation, investing, investment, investments, ira, ira llc, loan, offshore, options, protection, recession, retirement account, retirement funds, safety, secure, self directed, self directed ira, self directed ira llc, small business, solo 401k, solo k

Solo 401k provides checkbook control without a custodian or LLC

June 18, 2010 By Jeff Nabers 17 Comments

With tens of thousands of self directed IRA investors utilizing LLC structures to enjoy “checkbook control” authority of their self directed IRA investments, this post may serve as great news for those who aim to follow suit.

Solo 401(k) retirement plans can grant direct checkbook control without the use of an LLC or custodian.

The concept of custodian comes from Internal Revenue Code Section 408(a)(2) and is defined in Section 408(n). This entire IRC section 408 is devoted to Individual Retirement Accounts, or IRAs. The code basically explains that an IRA is normally a trust, and the trustee must be a bank. It then defines bank as a bank, trust company, or any company specifically approved by the IRS. This capacity of trustee to an IRA is known as “custodian”. This trustee role is simply that of investing the plan as directed by the accountholder.

A Solo 401(k) plan is a type of 401(k) that is designed for self employed individuals whose businesses have no full time employees. All 401(k) plans are qualified plans, and qualified plans do not have any special restrictions on who can serve as trustee.

So the significant difference is that with a Solo 401(k), the participant can actually be the trustee and handle [Read more...]

Filed Under: Blog, Setting up a Solo 401k, Solo 401k Compliance Tagged With: 401k, accountholder, administrator, assets, checkbook control, custodian, invest, investing, investment, ira, legal, participant, reporting, self directed, solo, solo 401k, title, titling, trustee

Where to find a nonrecourse loan for a Self Directed Solo 401(k)

March 23, 2009 By Jeff Nabers 7 Comments

For many real estate investors, leverage is a key factor to their plans for profits – leverage in the form of mortgage financing. When you introduce mortgage financing into Self Directed IRA ownership of real estate, a special tax called Unrelated Business Income Tax (UBIT) is triggered. The tax often isn’t detrimental as will be covered in another post, but nonetheless it reduces the profit.

For the self employed, a fantastic development has occurred over the past few years – the Solo 401(k). One distinct advantage of the Solo 401(k) over an IRA is that it is not subject to paying UBIT on profits from financed real estate. Eliminating UBIT by using a Solo 401(k) eliminates the need to file a return (Form 990-T) as well as the accompanying tax. Sound pretty good so far?

The difficulty in recent times has been obtaining nonrecourse financing. The leader of NR financing in the Self Directed IRA industry for the past few years has been North American Savings Bank. Last year, they took the familiarity of IRA lending and applied it to Solo 401(k). Unfortunately for many Solo(k) investors, this has only been available to plans who choose to name a custodian as trustee of the plan. Qualified plans (which is what all 401k plans are) are different than IRAs in that they are not required by law to [Read more...]

Filed Under: Blog, Solo 401k Compliance, Solo 401k Investment Options & Ideas, UBIT/UBTI/UDFI Taxes Tagged With: 401k, 990-T, financing, investment, ira, lending, loans, mortgage, nasb, nonrecourse, north american savings bank, profit, property, real estate, solo, tax, taxable, UBIT, unlimited retirement account, unrelated business income, URA radio

Why to self-trustee your Solo 401k plan: An argument for direct possession of your assets

December 17, 2008 By Jeff Nabers 3 Comments

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We have seen some unbelievable things over the past few years… especially the past few months. The only thing certain is that there is a lot of uncertainty ahead. If you haven’t already done so, right now I strongly suggest you watch the 30 minute condensed version of the film I.O.U.S.A. This film features David Walker, the former U.S. Comptroller General… aka the chief accountant of the government. He tried to fix the government’s financial problems, but Dick Cheney and others told him he needed to stop because they didn’t need solving. So he stepped down from his position and decided to prove to the world just how bad of shape our government really is in.

Today some people, including congressmen, are promoting some very extreme ideas. Some of these ideas involve the government “nationalizing” (or “confiscating” for those of us who speak directly) the assets of the people. Some plans even call for confiscation of retirement account assets specifically. In one scheme called the “Guaranteed Retirement Account” all retirement assets would be liquidated and handed over the Social Security Administration for investment management in a program that would provide a guaranteed return of 3% per year. This kind of silliness doesn’t need to be gratified by anything more than a brief response:

We’ve already seen how well the Social Security Administration manages money. It simply doesn’t. There is no money. There is no account. It just hands its income straight over to the general spending account of the government, and (not surprisingly) it gets spent!
Liquidating $16 trillion is impossible. It would crash the securities market entirely, and $16 trillion would not be withdrawn. If you started liquidating people’s retirement accounts alphabetically by name, those with names that start with letters n through z would receive little to nothing because of the price free fall created by the first half of the mass sell off.
The real world cost of living increases do not jive with published CPI figures, and there is often a discrepancy of much more than a few percent. A 3% return on investment would likely be a steady loss of principal when accurately indexing for inflation.

While we may not see that particular scheme enacted into law, it can’t be ignored that this type of solution is being considered. This government theft approach isn’t unheard of. In fact, Argentina just did it! Don’t forget that [Read more...]

Filed Under: Blog, Setting up a Solo 401k, Solo 401k Compliance Tagged With: checkbook control, confiscation, custodian, depression, economy, entrust, equity trust, gold, guaranteed retirement account, guidant, ira, ira llc, nationalization, pensco, recession, recessionproof, self directed, silver, solo 401k, trustee