The Power of IRA Choice
Freedom
Control
Opportunities
GET STARTED WITH SELF-DIRECTED IRAS
239-333-1031 Main Phone
About AdvantaIRA
SINCE 2002…
Freedom
Kevin Collins, Regional Sales Manager
Control
AdvantaIRA has been helping investors
reach their retirement goals since 2002.
Opportunities
Services
Self Directed IRA Administration
1031 Exchanges
Offices Throughout Florida
Miami/Fort Lauderdale
Fort Myers
Gainesville
The Choice is Yours
ADVANTA IRA DOES NOT GIVE INVESTMENT ADVICE
Freedom
AdvantaIRA, and its offices do not provide
investment advice or endorse any products.
Control
Opportunities
All information and materials are for
educational purposes only. Please consult
your attorney, accountant or financial
advisors before entering into any type of
investment.
AdvantaIRA reserves the right to accept or
reject the asset, based upon our review for
administrative liability.
Our Goal at AdvantaIRA
3 SIMPLE GOALS
Freedom
Control
O p p o r t u n i t iye s
• To educate you about the different
types of IRAs that can be self-directed
• Help you learn about the diverse
investments options available to you in
Self Directed IRAs
• Highlight the benefits of tax free
strategies
– Learn the Benefits of Roth IRAs
– Learn about Alternative Assets options
– Learn about Checkbook Control
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
What is an IRA?
INDIVIDUAL RETIREMENT ACCOUNT
Freedom
Control
Opportunities
• Set up in 1974 for your Retirement by
tax code section 408
• Vehicle provides tax free grow in the
account.
• Eligible for distributions at age 59 ½
• There are penalties for early
distribution
• Current Year contributions can be Tax
Deductible for most IRAs
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
Why Invest with an IRA Account?
BENEFITS OF TAX FREE INVESTING
Freedom
Control
Opportunity
• Certain IRA contributions can be tax
deductible
• Gains & income produced inside a
retirement account are tax free
• The Roth IRA might never be taxed
• BUILD YOUR RETIREMENT
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
Three Primary Advantages of IRAs
Time Value of Money (For Illustrative Purposes
Only – Please consult tax advisor for detailed results)
Freedom
Control
Rate of Return
Tax Rate
15%
19%
Opportunities
Year
1
2
3
4
5
26
27
28
29
30
YR Begin
$10,000
$11,500
$13,225
$15,209
$17,490
$329,190
$378,568
$435,353
$500,656
$575,755
Gain
$1,500
$1,725
$1,984
$2,281
$2,624
$49,378
$56,785
$65,303
$75,098
$86,363
YR End
$11,500
$13,225
$15,209
$17,490
$20,114
$378,568
$435,353
$500,656
$575,755
$662,118
Year
1
2
3
4
5
26
27
28
29
30
YR Begin
Gain
$10,000
$1,500
$11,215
$1,682
$12,578
$1,887
$14,106
$2,116
$15,820
$2,373
$175,785 $26,368
$197,143 $29,571
$221,096 $33,164
$247,959 $37,194
$278,086 $41,713
Total Taxes Paid
Tax
$285
$320
$358
$402
$451
$5,010
$5,619
$6,301
$7,067
$7,925
$70,810
YR End
$11,215
$12,578
$14,106
$15,820
$17,742
$197,143
$221,096
$247,959
$278,086
$311,873
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
Traditional versus Roth
PAY TAXES NOW OR PAY TAXES LATER
The Traditional
Established in 1975, this IRA provides for pre-tax
saving for most individuals. All investment earnings
grow tax-deferred until withdrawal. This option is
available to you whether or not you or your spouse is
covered by an employer's plan.
The Roth IRA
Passed into law in 1997, this unique saving plan provides for post
tax savings with the advantage that all the income growth is tax
deferred until withdrawal. If withdrawals take place at least five
years after funding, and after the age of 59.5, there is no
taxation.
Eligibility: Everyone under age 70½, with earned
income, is eligible to contribute to a Traditional IRA there's no income limit.
Eligibility: Everyone with earned income, not exceeding the
following Modified Adjusted Gross Income (MAGI) limits is eligible
to contribute to a Roth IRA.
• Married Filing Separate: $10,000
• Single: $120,000
• Married Filing Joint: $176,000
Contribution Limits: $5,500 + $1,000 catch-up
provision if age 50+ Nonworking spouse may be
eligible for equal contributions based on working
spouse's income
Deductibility: Based on the following factors. Consult
your tax advisor to
determine if your contributions are deductible.
• Tax Filing Status
• Active Participant Status
• Modified Adjusted Gross Income
Distribution Rules: All withdrawals are taxed at the
ordinary income tax rate of the IRA holder.
Withdrawals before the age of 59.5 are normally
subject to an additional 10% penalty.
Contribution Limits: $5,500 + $1,000 catch-up provision if age
50+ Non-working spouse may be eligible for equal contributions
based on working spouse's income
Deductibility: Contributions are not deductible
Distribution Rules: Withdrawals for IRA holders who have had
their Roth IRA funded for at least 5 years and reached the age of
59.5 are not taxed. For early withdrawals, a ten percent penalty
and ordinary income tax will apply to the Roth IRA earnings. The
contributed portion of the Roth IRA is not taxed. Certain
additional rules apply to Roth IRAs which have been converted
from pre-tax retirement plans.
Required Minimum Distribution: The IRS requires
Required Minimum Distribution: None required
that you withdraw at least a minimum amount - known
as a Required Minimum Distribution - from your
retirement accounts annually, starting the year you turn
age 70-1/2.
Other Types of Tax Advantage Plans
Freedom
Control
Opportunities
• Simplified
Employee Pension
(SEP)
• Spousal IRA
• Coverdell
(educational)
• Savings Incentive
• Health Savings
Match for
Account (HSA)
Employees of small
employers
• 401(k) Plan
(SIMPLE)
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
What is a Self-Directed IRA?
UNLIMITED CHOICES
Freedom
Control
Opportunities
• A Self-Directed IRA allows the investor
to choose the assets they know and
they feel comfortable investing in
• Unlimited Choices
• Why is this not more popular?
– 99% of IRA Custodians will only hold
investments that they sell; therefore, They
only promote these investments (Stocks,
Bonds, Mutual Funds)
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
Your Investment Choices
WHAT DO OUR CLIENTS BUY
Freedom
Control
Opportunities
•
•
•
•
•
•
•
•
•
Real Estate (all types)
Unsecured/Secured Notes
Futures/FOREX
Gold & other precious metals
Private Stock
Limited Liability Companies
Limited Partnerships
Joint Ventures
Checkbook IRAs
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
IRS Rules and Regulations
Freedom
Control
Opportunities
• What assets are prohibited?
– Collectibles & Life Insurance
•
•
•
•
•
any work of art,
any rug or antique,
any metal or gem,
any stamp or coin,
any alcoholic beverage
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
IRS Rules and Regulations
Freedom
Control
Opportunities
• Examples of Disqualified Parties
•
•
•
•
•
•
You and your spouse
Lineal ascendants (and their spouses)
Lineal descendants (and their spouses)
Any fiduciary of IRA
Anyone providing services to your IRA
Corporations, partnerships, trusts, or estates in
which you own, directly or indirectly, at least
50%
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
IRS Rules and Regulations
Freedom
Control
• Prohibited Transactions (IRC Sec 4975)
– An IRA cannot engage in any transaction (direct or indirect)
with anybody or anything considered related to the IRA
Opportunities
– Some examples of prohibited transactions
– between a disqualified person and an IRA are:
•
•
•
Selling, exchanging or leasing property
Lending money or extending credit
Furnishing goods, services or facilities
Two key points with IRAs and real estate:
NO self dealing and NO personal use!
Tenants-in-common / Partnerships
Freedom
IRA doesn’t have to own the
whole asset entirely
Control
Opportunities
-
IRA pays its share of expenses
and receives its share of income
-
Example of vesting
-
AdvantaIRA Trust, LLC
FBO Client Name, IRA as
to an undivided 50% interest
and John Smith as to an
undivided 50% interest
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
Prohibited Transaction Pop Quiz
•
IRA purchases Apartment building in
Gainesville, Florida and IRA beneficiary
rents (at fair market value) to multiple
parties including a son attending college at
UF. Prohibited?
•
IRA Lends (via 1st mortgage note) to an
LLC in which IRA beneficiary own 67%.
Prohibited?
•
IRA purchases a condo from IRA
beneficiary’s Brother. Prohibited?
Freedom
Control
Opportunities
Prohibited Transaction Pop Quiz
•
Geri buys a house in need of rehab in Fort
Myers, Fl. 6 Months later, her fiancé, Dale,
wants to invest in the project by purchasing
half of the equity with the 100k he has in
his IRA. Prohibited?
•
Your IRA and your Father purchase a
condo as 50/50 tenants-in-common
ownership. Prohibited?
Freedom
Control
Opportunities
Real Estate
REAL ESTATE IS THE MOST POPULAR ASSET WE HOLD
Freedom
• Single family and multi-unit homes
– Fix & Flip (REO & Bank owned OK!)
– Buy & Rent
Control
Opportunities
•
•
•
•
•
•
Apartments
Condominiums
Commercial property
Improved or unimproved land
Foreign property investment
Land Trusts
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
Real Estate
• IRA takes title to the property directly
– AdvantaIRA Trust LLC FBO John Q.
Client IRA # 123456
All income and expenses must flow through
the IRA account
No personal use or self dealing
Case Study - Buying Real Estate
GETTING STARTED
Freedom
Control
Opportunities
• Dr. Jones transfers $35,000 to a self-directed IRA
• Dr. Jones directs the IRA to execute a contract to
purchase a parcel of land in Northport
• The IRA purchases the land for $30,000 in May
2008
• Dr. Jones directs the IRA to sell the property for
$48,000 in November 2012
• The original $30,000 plus the gain of $18,000
goes back in Dr. Jones’s retirement plan tax-free
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
Private Lending - Notes
Freedom
Control
Opportunities
• Lend money on a Mortgage or
Promissory note
• Generally command higher interest
rates 8-15%
• You negotiate and ultimately decide the
terms
• IRA can foreclose in event of default
Case Study Lending Money in your IRA
YOU CAN BE THE BANK
Freedom
Control
Opportunities
• Bill Smith decides to invest in note with
his IRA and hold a note & mortgage for
an individual purchasing a rental
property. $100,000 5 Year balloon
• The note is secured by the property
and the interest rate is 12%
• Subsequent monthly interest only
payments of $1000 are made to the
IRA from the individual.
• Benefit - tax free income to the IRA
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
Private Companies
• Via Subscription Agreement
– Hedge Funds
– Real Estate Funds
– Private Stock/PPM
• As Partner/Member
– IRA is a member on Operating Agreement
Single Member LLC
“CHECKBOOK CONTROL IRA”
• Freedom & Responsibility
• IRA is sole 100% member
• IRA holder is manager
– File LLC with state
– Prepare IRA compliant Operating
Agreement
– Establish bank account for LLC
– Advanta then funds business bank account
All investments are made in the name of
LLC
Single Member LLC
“CHECKBOOK CONTROL IRA”
Advanta
IRA
Account
SingleMember
SM LLC
Bank
Account
LLC
Investment
Investment
Investment
A
B
C
How to Get Started with Self Directed IRA
TAKE CONTROL OF YOUR RETIREMENT NOW
Freedom
Control
Opportunities
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
How to Fund your IRA
THERE ARE THREE WAYS TO MOVE MONEY
Freedom
Control
Opportunities
• Annual Contribution (limits based on
the type of plan you have)
• Transfer from another IRA
• Rollover from a pension plan or 401k
AdvantaIRA does not endorse or promote any investments. This presentation is for educational purposes only
.
Quick Review
ADVANTAIRA BENEFITS
Freedom
Control
Opportunities
We Do
•
•
•
•
IRS Reporting
Receive investment income and pay investment expenses
Request all required forms for transactions
Accept contributions and process distributions
We Do NOT
•
•
•
We Do Not provide any investment advice
We Do Not sell or endorse any investment products
We Are Not regulators, nor do we approve transactions
AdvantaIRA is a Resource
DO YOU NEED MORE INFORMATION
Freedom
Learn more about self-directed retirement
plans:
Control
Opportunities
1. Weekly educational seminars
2. Special Continuing Education sessions for Brokers,
Realtors, Financial Planners, CPAs and Attorneys
3. Sign up for our free monthly newsletter
4. Visit our website: www.AdvantaTRUST.com for a
large collection of articles, applicable IRS code,
and answers to FAQ
5. Just call us – we are a local resource and look
forward to serving you and your clients
Thank you from AdvantaIRA
WE ARE HERE TO HELP…CALL ANYTIME
Contact Information
Freedom
Control
Opportunities
AdvantaIRA Trust, LLC
Offices in
• Fort Myers
• Miami
• Gainesville
Phone: (786) 275-5870
www.AdvantaTrust.com