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The Next Generation of Small Business Funding September 1, 2009

Posted by Jeff Nabers in : Money, Personal Enjoyment, Personal Productivity , 12comments

vc

Each year entrepreneurs pitch Venture Capital firms in hopes that their startup company or business expansion will get funded by them. The vast majority do not get funded. Furthermore, “getting funding” almost always means the entrepreneur must sell a sizable piece of his company to the VC.

Getting funded by a VC is a dream, but it can easily turn into a nightmare for both the entrepreneur and the VC. Because the VC owns a piece of the company, if further rounds of funding are needed in the future it could mean diluting only the founder’s ownership, depending on how the contracts were setup. It’s not too uncommon for founders to eventually wind up with a minority stake in their own company and to lose control of it. For the VC, there’s a big chance of failure. They usually need an exit strategy, such as taking the company public to sell its shares to the marketplace or to sell the company to a private party. But before they sell it, they need to try to juice up the revenue of the company to max out the sales price. When maxing out revenue becomes the primary unconditional focus, it’s easy for the business to go in a very different direction than the founder had intended.

The above horrors can happen when an entrepreneur does get funding. Let’s not forget that most entrepreneurs seeking capital just don’t get funded.

These are problems. And yet the world has a way about finding solutions to problems and getting them to those who can benefit. Sometimes the solution can be so incredibly simple that it’s hard to believe. In the case of funding a small business, the solution I see is a matter of (more…)

Getting Around Prohibited Transactions August 31, 2009

Posted by Jeff Nabers in : Self Directed IRA Solo 401k, real estate , add a comment

sneaky

Prohibited transactions is a chief topic when exploring self-directed IRA & Solo 401(k) investing. When a person first discovers that his retirement accounts have been chained to Wall Street brokerages without necessity, his mind starts to imagine the possibilities.

Real Estate? Yes.
Private Businesses? Sure.
Precious Metals? Absolutely.
Getting my hands on my retirement money now? Slow down there.

There are two types of limitations on the average retirement account. One is an unnecessary restriction of investment options to securities products. That can be eliminated through restructuring your accounts and funds. The second limitation is legal and cannot be removed.

Setting up a self-directed IRA or 401(k) is about removing limitations. Once you have it setup outside the nearly monopolistic network of securities dealers, you can invest in almost anything… but you must fully understand the legal limitations.

The general premise behind prohibited transaction rules is that the government wants you to grow your retirement account as big as possible because they plan to tax it later on when you distribute the funds to yourself for spending. Without prohibited transactions rules, anyone in their right mind would (more…)

Bail Yourself Out May 7, 2009

Posted by Jeff Nabers in : Money, Self Directed IRA Solo 401k , add a comment

My new article on Forbes.com…

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For entrepreneurs, getting through these financially turbulent times may require some imaginative [read whole article on Forbes.com]

Tax Return for UBIT – Does your retirement plan own leveraged real estate or an active business? April 15, 2009

Posted by Jeff Nabers in : Self Directed IRA Solo 401k , add a comment

Just a quick, last-minute reminder…

UBIT, or Unrelated Business Income Tax, applies to tax exempt organizations including retirement plans. To pay UBIT, Form 990-T must be filed with the IRS. If this is all news to you, once you are done scolding yourself, you may want to file for an extension using Form 8868.

Video: Self Directed Solo 401k July 31, 2008

Posted by Jeff Nabers in : Self Directed IRA Solo 401k , add a comment

I recently sat down with Eric Wikstrom – CPA, CFP, & Founder of Integrated Wealth Strategies.

In this segment we briefly discuss the Solo 401k and how it differs from a Self Directed IRA.

The following clip observes the benefits of unrestricted investment choices. (more…)

Borrowing money from your Solo 401(k) May 22, 2008

Posted by Jeff Nabers in : Self Directed IRA Solo 401k, real estate , add a comment

Solo 401(k)’s most touted feature is its uniquely large annual contribution limits ($46k – $102k). A lesser known feature may be just as useful for some: participant loans.

What is a participant loan?

A Solo 401(k) participant can borrow up to either $50,000 or 50% of their account value with the following terms:

Such a loan may only be made in accordance with the Solo 401(k) plan documents. While most plan documents disallow this type of loan, the Unlimited® 401k offered by my company does allow it.

Under what conditions is this allowed?

Any. As long as the plan documents allow for it & the proper loan documents are prepared and executed, a participant loan can be made for any reason.

When is this useful?

This can be useful when (more…)

Loaning money to your IRA/401(k) May 20, 2008

Posted by Jeff Nabers in : Self Directed IRA Solo 401k, real estate , add a comment

Do you have an IRA/401k-owned investment property that has a mortgage and negative cash flow?

Something I’ve been running into lately is Self Directed plan investors who speculatively bought a house or condo in previously hot markets (think Vegas, Florida, Phoenix, etc). Some of these areas have experienced declining values and declining rental income for short term rental properties.

If your plan (IRA or 401k) bought a house & obtained a non-recourse mortgage loan qualified based on short term rental income that has declined, you probably have negative cash flow. How can you avoid foreclosure? Loan money to your IRA/401k.

Loaning money to your IRA or 401k

A little known (more…)