Getting Around Prohibited Transactions August 31, 2009
Posted by Jeff Nabers in : Self Directed IRA Solo 401k, real estate , 15comments
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…)
Prohibited Transactions Guide Book – 50 Free Copies September 22, 2008
Posted by Jeff Nabers in : Self Directed IRA Solo 401k , add a comment
I’ve written a comprehensive guide book on prohibited transactions. These will be available for sale soon for $39 + $5 shipping. I’m making 50 copies available completely free of charge on a first come first serve basis.
If you’d like one of these 50 free copies, please email your name & shipping address to:
specialoffer3 [at symbol] nabersgroup [dotcom]
This blog has been viewed over 20,000 times since April, so act fast 
### Update – October 3, 2008
We have (more…)
Coinvesting with your plan / Partnering with disqualified persons July 24, 2008
Posted by Jeff Nabers in : Self Directed IRA Solo 401k , add a commentWhat if you could combine your retirement funds with your personal funds and additional monies from other family members? Well, you can… sort of. This question was asked and answered in a Department of Labor Advisory Opinion in July of 2000.
Click that link above to read the opinion in its entirety, but here’s my summary in its most basic form:
Your plan can partner with disqualified persons in certain situations, BUT there are many possibilities for a prohibited transaction in operating the partnership.
A prohibited transaction is when a retirement plan transacts with a disqualified person. The DOL Opinion says (more…)
What's so special about the IRA LLC? June 9, 2008
Posted by Jeff Nabers in : Self Directed IRA Solo 401k , add a comment
Ahhh… the single most mis-answered question in the self directed IRA world:
Customer: I’ve noticed it costs more to setup an IRA LLC than it does a general purpose LLC. What’s so special about the IRA LLC?
LLC Facilitator: The Operating Agreement has special language. Putting together an IRA LLC without this magical language will result in a prohibited transaction and hefty taxes.
This is untrue. While it’s advisable to include special language in a special purpose LLC (one that is intended to be owned by an IRA and managed by the IRA accountholder), the absence of such language will not create a prohibited transaction in itself. Believe it or not…
Any newly created LLC can be used with an IRA!
…without necessarily creating a prohibited transaction. The sales pitch that you need the special purpose operating agreement is bogus.
That said, it is still advisable to have an IRA LLC established for you by a company experienced and competent in such facilitation. Not because you have to, but because you should want to. Why?
You want things to look good in the event of an IRS audit
This is probably the main reason why you should have an IRA LLC formed for you by a specialist instead of doing it yourself. If you get audited, the IRS is going to have a first impression about your IRA LLC structure. If it looks like you did everything compliantly and your documents pro-actively address most compliance issues, the IRS’s first impression may be friendly. If it looks like you just threw the LLC together with little regard for compliance, this may negatively affect the IRS decision of how long and excruciating the whole ordeal will turn out to be. This is an important issue. Notice I said “looks like”. Regardless of how compliant you are, (more…)
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