[Originally Published at JeffNabers.com]
You may be wondering why I haven’t blogged about real estate investing in a while. There’s a very good explanation video at Nabers.TV for you to check out.
How To Get Help
April 5, 2011 By 1 Comment
[Originally posted at JeffNabers.com]
Cliff notes version:
- I will be offering free one-on-one phone consulting to qualified people
- In order to make room for that, I will no longer be offering free consulting in the form of blog comment responses
Here’s the skinny >>>
I’m making some changes to how I focus my energy and how I am able to help you with your wealth preservation and wealth building, both inside a Self-Directed IRA LLC or Solo 401(k) and outside of retirement funds.
Here’s what these changes will do for you:
- If you are aimed down a path that is likely to succeed, we may get a chance to work together more intimately
- If you are aimed down a path that is likely to destroy your wealth and frustrate you, you won’t get my help
Let me explain…
The #1 biggest factor making an impact your wealth right now is inflation.
Some people are trying to “beat” inflation by taking bigger risks to hopefully get bigger returns that will be bigger than inflation.
For 95% of my readers, that won’t work. It won’t work because bigger risks increase the gains and the losses, and over the long term most people will have worse performance as a result of taking bigger risks.
Around 5% of my readers have maybe figured out how to get bigger returns by spending more energy on some sort of system or process that yields larger returns. Moving forward, I don’t think that will continue working either.
Why won’t aggressive investment strategies work in the future?
Well… they will work and they won’t work. They will work in terms of turning your dollars into more dollars. They won’t work in terms or actual value adjusted for inflation.
This is because there is no limit to [Read more...]
Solo 401k provides checkbook control without a custodian or LLC
June 18, 2010 By 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...]
Open a Solo 401k for 2009 before it’s too late!
November 13, 2009 By 2 Comments
If you’re looking for a tax break this year, there’s still time to open a Solo 401(K). But do your research and seek experts to help you understand the plan, how to manage your account without the need for a custodian which amounts to extra fees, and how to transfer your existing new plan. You’ll find the options for investing and maximizing your contributions are plentiful but the clock’s ticking—you only have until December 31st to open one for 2009.
Self Directed Solo 401k vs. 1031 and other conventional RE tax strategies
February 24, 2009 By 1 Comment
Conventional Tax Strategies for Real Estate
Many real estate investors boast of their tax strategy as involving one or more of the following:
Depreciation – This is a tax concept where the property owner pretends that his property is decreasing in value. For residential real estate, it assumes that the property’s improvements will become worthless over 27.5 years. In commercial real estate, the calculation is for 39 years. During each year of property ownership, the owner can take that year’s pro rata depreciation as if it is a loss against the income of the property… which reduces the taxable income of the property, thus reducing the amount of taxes due. Upon future sale of the property, depreciation normally must be “recaptured” which means that there is no more pretending, and the taxes on the truly realized gains must be paid anyways.
Cash out Refi – This is where the owner of the property will refinance the mortgage. The new loan will have a higher balance than the old one, resulting in “cash out”. Because this is just borrowing, it is not a taxable event. Upon future sale of the property, however, taxes will normally be due on the actual gains anyways.
1031 Exchange – Upon the sale of real property, the gains can be deferred if they are used to purchase property of “like kind” within a certain time period. It goes something like this:
- Sell Property A
- Have a “qualified intermediary” receive the proceeds of the sale
- Replacement property (“Property B“) must be identified in writing within 45 days of the sale of Property A
- Property B must be purchased (closed) within 180 days of the sale of Property A
- Property B must be of equal or greater value to Property A
- Both properties must be “like kind”. For instance if Property A was U.S. real estate, Property B must also be U.S. real estate.
So, savvy real estate investors often [Read more...]
Free Self-Directed Solo 401k!!!
February 16, 2009 By 16 Comments
You heard it right: a FREE Solo 401k from Nabers Group. This is a contest, and you have a good chance of winning. I estimate that 98% of my readers will not even try to win. It’s a phenomenon: people think “Oh too many others will enter the contest and my odds won’t be good” and that leaves you will excellent odds if you enter the contest. Here’s what you have to do:
- Be eligible for a Solo 401k in the first place. This means that you have to have self employment activity (such as Schedule C income on your 1040 or own a business), and you have to have no employees at any businesses in which you or your spouse have significant ownership. (An “employee” is somebody who works over 1000 hours per year for your business and receives a W-2).
- Add me on Facebook. Go to my Facebook profile to add me to your friends. If you don’t have a Facebook account, just create one. It’s very simple and easy, and it will help you stay connected for updates, news, events, etc.
- Write a brief explanation of the most powerful business or investment opportunities in our current recession. Explain the “how” and the “why” as much as you can, but be direct and to the point at the same time. Submit it in a comment on this blog post (the one you’re currently reading) OR post it to the “wall” at the bottom of the Facebook Solo 401k Contest page. I’ll review all entries, and the person with the best idea will get a Solo 401k setup for them by Nabers Group with the entire establishment fee waived.
Submission Deadline: March 15, 2009
Value: $210,585
The math: Over the past 10 years, most stock indexes have produced a return of approximately 0%. With a Self-Directed Solo 401(k) plan, the accountholder can buy real estate, gold, stock in private companies, and loan money to individuals or corporations. Surveys have shown us that over 80% of our Solo 401(k) clients have a target return of investment of 12% per year or more. An investor with $100,000 of existing funds who earns 12% per year for 10 years will generate a profit of $210,585.
We’ve never done this before, and I don’t know if we will ever do this again. Now’s your chance – start working on your entry today!
* The value is based on the potential profit you could earn and will vary based on your investment decisions. With a Self-Directed Solo 401(k), it’s up to you to find and choose investments, and only you will decide how profitable and valuable this investment vehicle will be.
We’ve never done this before, and I don’t know if we will ever do this again. Now’s your chance – start working on your entry today!
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Weak economy strengthens the incentive for a Solo 401k
February 10, 2009 By 1 Comment
This is quite a simple concept so this post will be very brief.
- Our weak economy has brought very high inflation: as high as 13% over the past year.
- Future dollars are worth much less than dollars today.
- With a Solo 401k you can make tax-deductible contributions to your retirement plan in today’s dollars and pay taxes later in less valuable dollars.
- Successful entrepreneurs and self employed individuals can contribute $49,000 per year or more to their Solo 401k in 2009.
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3 Reasons why today is the best time in human history for immense personal wealth and freedom
January 21, 2009 By Leave a Comment
While there are many people finding themselves more fearful than ever, there are others who are more excited than ever. Here’s why…
- The rules of safety and courage have changed. Since the industrial revolution, employee-ism has surged. During this time, getting a job to work for somebody else was the safe thing to do. On the other side of the coin the risky, courageous act of working for oneself is what brings riches. As a result, each person has been faced with a choice to pursue either safety or riches. Part of what made employee-ism the safe bet for an individual is the stability of companies as well as what has become the largest store of non-real estate wealth in our country: holdings in the stock market. This year we have seen the rules of the game permanently changed. Our financial system is crashing, and trustworthiness has evaporated from corporate America and the financial services industry. Now working for yourself is no longer the courageous thing to do; it’s the safe thing to do.
- Technology has brought immense power to everybody. Personal computers and the internet are now available to just about everyone. This has made some very expensive things become cheap or free. This has made it possible to do things that were previously impossible. There is no longer a need for every transaction to take place in a physical location. Needs and desires are able to be fulfilled online. In many circumstances, the large corporation cannot compete with the one-man shop. Today a person can start and run several businesses for little or no money. Taking something and creating or increasing its value has never been more accessible.
- Arbitrage has never been [Read more...]
Nabers Group Solo 401k vs. Custodian Solo 401k
December 12, 2008 By 3 Comments
After being asked “What’s the difference between your Solo 401(k) and one offered by a custodian?” for the umpteenth time in the past few months, I figured it’s about time to write a post about it.
Why custodians exist
IRAs are governed by section 408 of the Internal Revenue Code. There they are defined as a retirement savings account trust where the trustee is a bank or a trust company (a trust company is basically a bank that holds assets but doesn’t make loans). This role is often referred to as custodian. Self directed IRAs have been in use for decades, and so self directed IRA custodians have been around for decades as well. For IRAs, there is no choice… you must hire a custodian to serve as trustee to your IRA.
The trustee role of a self directed IRA
The term “custodian” comes about in IRC Section 408 because when a bank or trust company serves the trustee role, they are not being trustee in the traditional sense. Usually the trustee of a trust makes decisions and has discretion over handling the income and assets of that trust. With an IRA, this normally isn’t the case. The bank or trust company is not making decisions or providing any other services other than custody (holding assets as an intermediary), and that’s why they are usually referred to as “custodian” – because they don’t provide any services other than custody.
Solo 401(k) is not required to have a custodian
Internal Revenue Code Section 401, which governs all 401(k) plans, does not issue any restrictions on who can serve as trustee. Not too many people have figured this out yet because the self directed Solo 401k wasn’t available until 2006. The benefits of a Solo 401k (such as higher contribution limits and reduced administrative requirements) come from the fact that you can play multiple roles. You can make higher contributions by serving the roles of employee/participant and employer. But it doesn’t stop there. The participant can also serve as administrator and trustee.
The role of administrator for a Solo 401k
An administrator simply keeps records. For a self directed Solo 401(k), a diligent investor is already keeping the records that an administrator would. These include bank statements, brokerage statements, copies of real estate purchase contracts and leases, and generally whatever paperwork accompanies a transaction of the plan. Since the self directed investor should already keep these records, it isn’t necessary or beneficial to hire another company to also keep the same records. Hiring an administrator for a self directed Solo 401k simply introduces unnecessary, undesirable fees.
The role of trustee for a Solo 401k
The trustee is simply the person or company who handles the transactions of the Solo 401k trust. As an investor, if you were to hire a custodian, [Read more...]
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