Since 1975, the Employee Retirement Income Security Act (ERISA) has permitted self directed Individual Retirement Plans to purchase real estate and notes. Today, less than 3% of the four trillion in retirement accounts is invested in real property.
The Entrust Group (www.theentrustgroup.com), with corporate offices in Reno, Nevada, is the leading third party administrator of self directed IRAs (SDI). With franchised offices across the country, The Entrust Group provides superior customer service, local educational events, and faster transaction time for Investors, Realtors, CPAs, Attorneys and Financial Planners. Entrust does not promote any product or assets, only offers Self Directed Plans and provides record keeping for all assets within the plan. This allows the taxpayer control to invest in all types of assets, just not securities but in what the taxpayer knows best.
Types of retirement plans that can be self directed include:
- Traditional IRA
- Roth IRA
- Individual (k) including the Roth Individual (k)
- SEP
- SIMPLE
- Rollover IRA
- 403(b)
- 457
- Coverdell Education Savings Accounts
- Health Savings Accounts
Self directed investment choices include:
- Land
- Rentals
- Real Estate Options
- Pre Construction Contracts
- Private Placements
- LLC and Partnerships
- Privately Held Stock
- Tenants in Common
- Timeshares
- Notes/Mortgage Receivables
Prohibited investments are collectibles such as art, antiques, metals or gems, stamp, coin and alcoholic beverages. The asset held by the SDI cannot be used personally or by family members and friends. Nor can the taxpayer receive any benefit such as compensation for providing property management or repair services.
It’s an easy process to open an Entrust account. To start an account is opened, funded with proceeds from either partially or fully liquidating a retirement account. Enter into a purchase contract for the asset, funds are wired to the closing and the property is deeded to “Entrust FBO Richard Eimers.” Upon the sale of the asset, the net equity is wired to Entrust and follows your instructions to purchase another asset or to open a securities account with your broker.
A self directed account can fund a limited liability company (LLC) with the sole member as the Individual Retirement Account. Real property could be purchased and held be the LLC. Expenses can be paid and rental income received by the LLC. Once the property is sold the equity is returned to the LLC. No capital gain or recaptured depreciation taxes are triggered given the LLC is owned by a self directed retirement account. This is better than a 1031 tax deferred exchange!
The fee to open an account is $395 which includes the first year maintenance fee of $250 per asset. If the value of the asset is less than $32,000, the percentage fee option can be selected for the annual maintenance fee. All expenses such as home association fees, taxes are paid from your Entrust account. Your Entrust Administrator will alert you to an upcoming expense and request a contribution. Or you may hold additional cash to pay for the expenses.
To learn more about how an Entrust Self Directed Retirement Account can benefit you, contact Andy Gustafson in Destin, Florida at 850-837-1031 or andgus@atlas1031.com. To learn more about Andy and Entrust go to www.atlas1031.com.
The Entrust Group does not offer investment, tax, financial or legal advice to clients. Individuals who believe they need advice should consult with the appropriate professional(s) licensed in that area.
