Lance W. Newton
For more than 15 years I’ve worked in insurance, banking and real estate. I enjoy sharing information with and learning from those who read my blogs. I welcome your feedback and comments.
Feel free to email me at lance@selfdirectioncentral.com .Linked in Profile
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Retirement Plan Loans
People are taking "Qualified Distributions" or "Hardship Distributions" from their company 401(k) plans at a rapidly accelerating rate to pay regular bills and house payments. When people lose their job, get sick or get divorced, money pressures can force them to turn to their pension plans as a source of cash, but the costs are very high and the long term effects can be devastating on retirement income. There is no way to replace the contribution amounts that are borrowed (if the loan is not repaid in a timely manner) and the remaining money in the plan would have to earn much higher rates of return of offset the distribution.
A "Qualified Distribution" is available for people over 59 1/2 or the age specified for distributions by your plan sponsor. A distribution means paying income taxes on the full amount of the distribution at your ...<< MORE >>
The Amazing Individual or Solo(k)
The Individual or Solo(k) Plan is the Cadillac of Retirement Plans for Small Business
If you search the IRS Website for the term Solo(k) you will get 0 hits. Solo(k), Individual (k), Roth 401(k) and a few other marketing terms are used to describe a 401(k) that is sponsored by a sole proprietor. A few examples are a business owned by a husband and wife (with no employees working more than 1000 hours per year), or any Solo practitioner in a profession. Many Doctors and Dentists are Solo Practitioners, most Mortgage and Real Estate Brokers were self employed and still are. Some CPA's and Financial Planners go Solo with good results. Any small business owner that is profitable can benefit from having a Solo(k) plan in place
A so called Solo(k) is the simplest form a 401(k) plan can take, since the sole proprietors are both employer and employee. One side benefit of ...<< MORE >>
What Kinds of Returns Can I Expect in a Self Directed Retirement Plan?
"Self Direction" means that you analyze and select your own investments yourself. Making your own decisions also means responsibility for the results of those decisions. This ultimate responsibility can make the decision to Self Direct a difficult one. Perhaps a better question might be; What kinds of returns can I expect if I passively allow others to direct my investments for me?
The rates of return you get by Self Direction are based on the type of investments you make, the level of risk you choose to accept, the amount of money you invest and usually, the time frame for the investment. The less time your assets have to perform, the higher the rates of return need to be to reach your goals. The higher the rate of return, the more implied risk in the investment.
When it comes to retirement, people are usually ...<< MORE >>
Retirement Plans that offer Self Direction
Self Directed Retirement Plans are plans generally offered by two types of entities, with several variations.
- Self Directed Custodians or Third Party Administrators (TPA)
- Facilitators
Custodians and Third Party Administrators generally do not offer Checkbook Control over Plan assets.
Facilitators assist in the structuring of retirement plans which include Checkbook Control for you.
What is "Self Direction"?
Self Direction means that you make the investment decisions for your own retirement plan assets. True self direction means that the assets are not limited to stocks or stock options, mutual funds or ETF's. It also means that you are responsible for the results of your investment decisions. Self Direction has been legal since the inception of the IRA in 1976.
You should consider Self Direction if:
- You have lost, or are losing money in retirement plan investments that you do not control
- You want the ...<< MORE >>
IRA's and Prohibited Transactions
A "Prohibited Transaction" occurs when an IRA investor makes an investment that involves a "Disqualified Person". Under IRS Section 4975 (c).
Disqualified Persons are generally defined as:
- Your parents or grandparents (ancestors)
- Your children
- Your spouse or the spouse of anyone above
- Any business entity where you hold a controlling (51%) or more interest
The IRS has been known to look closely at transactions with a business entity where the IRA investor held less than a 51% interest too.
The IRS Penalizes Prohibited TransactionsIn an IRA, a prohibited transaction (if detected and reported) results in the distribution and taxation of all of the IRA Assets held from the beginning of the year the prohibited transaction is discovered. Custodians and TPA’s have no liability for any Prohibited Transactions on your part, but may ...<< MORE >>
What is "Checkbook Control"?
A few Words about "Checkbook Control"
You should consider a Checkbook Control IRA LLC if you want:
- Immediate access to your own assets via a checkbook you control
- Understand that checks written may be treated as distributions if not properly accounted for
- To eliminate transaction and asset based fees from a custodian that does not offer Checkbook Control
- No time delay for a custodian to process a transaction
- To remove any Custodial prohibitions on certain legally allowable investments and not others
You should consider Checkbook Control only if you:
- Are ready and able to keep accurate and timely transaction records
- Know and understand required tax forms and filing deadlines required
- Have access to and are willing to pay a professional to do book keeping and/or administration for this type of account or know that you are capable of, have time to and are ...<< MORE >>
Taking Control and Responsibility for our own Futures
There is a phrase in Latin that translates into english as "Who will watch the Guardians?"
We are living in a time when it is hard to know who we can trust and what actions we can take on our own to create a secure future. Most of us have been increasingly disillusioned with the scandals and results for small investors on Wall Street. There does not seem to by any liability on the part of top executives whose decisions result in the loss of billions of dollars in shareholders equity. The most common "punishment" is dismissal with a big, fat, multi-million dollar severance package often including a packed pension, full medical coverage, life insurance and even free secretarial and limousine service for a period of years!
With all of the recent economic disasters in America and the related and interdependent economies of Europe and the World, it seems that we are headed for ...<< MORE >>