Does the tax credit for start-ups apply?
No, because a plan must cover at least one non-highly compensated employee (NHCE) to be eligible for the credit.

What if the client currently has a SIMPLE IRA?
SoloK.com can create an amendment to terminate the plan (additional charge). Since a SIMPLE must be the exclusive plan for a calendar year the 401(k) cannot be established until the following calendar year. For example, if the SIMPLE is terminated as of 12/31/05 the 401(k) could not be effective until 1/1/06. The SIMPLE plan would still be funded for the 2005 plan year.

What if the client currently has a Profit Sharing or Money Purchase Plan?
SoloK.com can create an amendment to terminate the existing plan(s) (additional charge) if that’s determined to be the best option. The 401(k) can be adopted and funded right away as long as the prior plan wasn’t a 401(k). If both plans are in existence at the same time the annual additions limit applies to the combined contributions of both plans.

Can a Defined Benefit plan be combined with the SBO 401(k)?
Yes, it can. SoloK.com would want to look at the specific plan to see if this would be beneficial to the client.

What happens if a client hires employees who will be eligible to participate?
The employer would no longer be eligible for the SBO 401(k). SoloK.com can do a plan design for the client and create a new service agreement. The cost associated with the plan would increase due to additional testing and filing requirements.

Can a spouse of an owner participate in the plan?
Yes, as long as the spouse is receiving earned income from the company (W-2, Schedule C, K-1, etc.)

What if the client has ownership in another business?
Please contact us at with the ownership information to determine if this client will be eligible for the SBO 401(k).

Why Self-Directed IRAs Are Becoming More Popular

Self-directed IRAs are becoming more popular. That’s a fact. What you may not understand is why. Mutual funds, stocks and bonds; what do they have in common? They are all investments you can make with your self-directed IRA money. How about real estate, notes, tax liens and mortgages? These are investments you can make with your IRA account funds as well, but that are rarely, if ever, offered by traditional IRA account managers.

How Entrenched Institutionalism Could Be Deflating Your Retirement Fund
Most IRAs are overseen by account managers, benefits directors and/or fund managers. Many of these professionals are employed by companies who promote a portfolio of products. They are paid commissions on selling these products, hence, have no incentive to go outside of that realm.

The marketing machine behind large Wall Street companies work hard to keep their products front and center. Account managers, fund managers and benefits administrators are all influenced by this advertising. And when it comes to choosing investment funds in which to put your money, they are more apt to go with traditional investments like stocks, bonds and mutual funds.

Even if these funds return less, it’s easier to go with what Wall Street “experts” are touting than to seek out nontraditional vehicles that offer greater returns.

Nontraditional investments like real estate are not offered by the vast majority of retirement funds. This in essence means that you are cut off from investing in the number one investment vehicle that leads to wealth in America – real estate.

The Power of One
And, this is why you need to be in charge of your retirement account. A fund administrator has hundreds or thousands of investors to invest for. You only have you. The power of one is a force to be reckoned with.

This means you can put in the time, energy and research necessary to find the best investments so that you can retire securely. No one cares as much about, or is as invested in your future as you are. Shouldn’t you then be the one to make the investing decisions affecting your life?

A self-directed IRA puts the power of investing in your hands. It’s the ultimate power of one. Contact a self directed IRA specialist today to start maximizing your account returns.

3 Options to Consider When Trying to Decide How to Invest in Real Estate with Your Self-Directed IRA

As real estate prices fall and foreclosures hit all time highs, using your self-directed IRA to invest in real estate could potentially put you light years ahead of others market.  Did you know that by some accounts, only 3% of workers invest in real estate as a retirement option? The other 97% focus totally on traditional investments like stocks, bonds and mutual funds.  

Real estate has proven to be a sound investment. It is made even more attractive when you consider that you are investing for the long term. And, it is a “diversified” investment, as well.

Real estate can be a diversified investment. There is commercial property, residential property, raw land, mortgages and mortgage pools, trust deeds, etc.. Following are three investment options and why you may want to consider them as viable options in this economic climate.

Beach Condominiums: The foreclosure rate is at an all-time, high, especially in many beach communities. This makes it a great time to look into buying beachside condominiums with your self-directed IRA with an eye toward vacation rental income. Once the market improves, you’ll be well situated to capitalize.

Raw Land: You can use your self-directed IRA to purchase raw land. Many areas that have suffered from natural disasters like hurricanes and tornadoes may have particularly good deals on raw land, which can later be sold to developers for residential or commercial development.

Invest in Commercial Properties: While the US economy has not reached the formal recession status, the general feeling is that it is slumping. This has a negative, trickle down effect on business. Many close or look to restructure. All of these factors add up to great investment opportunities for future gain.

How to Rollover Retirement Funds into a Self-Directed IRA

Many investors confuse the term and/or use it interchangeably with transferring funds. To roll over investment funds and transfer them are two completely different things. The difference is in whether or not you touch them.

When you roll over retirement funds from one account to the next, you receive the funds and have 60 days from the time they are disbursed to deposit them into another IRA. If you don’t do it in this time period, you incur tax penalties. In a transfer, you never touch the funds. They are transferred directly from one IRA account custodian to another IRA account custodian.

Another primary difference is in how often you can move funds. You can roll over the same funds only once every 12 months. Direct IRA transfers can be made as often as you like.

Simply contact Self-Directed IRA Sevices, Inc. and open a self-directed IRA. We will walk you through the process step-by-step. 

How to Avoid Losing 20 Percent of Your Retirement Money in a Rollover
Many employees make the following mistake when rolling over IRAs from their current company into a self-directed IRA. It can cost you 20 percent of your retirement account, so be sure to understand the difference here.

When you roll over your IRA funds from your current employer, be sure to tell your current benefits director/plan administrator to make the check out to your new account trustee – not to you.

This is extremely important because with a direct rollover, your account funds go directly from your current IRA to your new IRA trustee. You never touch them. If the check is mistakenly made out to you, your plan administrator must – by law – withhold 20 percent for taxes.

If your intention was to have the funds rolled over into a new account, this would be a costly mistake with potential heavy tax consequences. 

How to Transfer Funds into a Self-Directed IRA

To transfer funds to your self-directed IRA, you need to work in conjunction with a custodian to ensure that all government regulations are followed. This is not optional. It’s mandated by law.

The only duty of the custodian is to set up your account and to oversee it. They do not advise you on investments or profit in any way from the investment decision you make, that is between you and your professional advisors.

Once the custodian has opened your self-directed IRA, you will fill out a form commonly referred to as a “direction of investment” document. This form in essence tells your current IRA administrator/account manager where to send your IRA proceeds.

To expedite the process when transferring retirement funds into a self-directed IRA, it is recommended that you go from like account to like account. In other words, if you now have a Roth IRA, it is recommended that you transfer funds into a self-directed Roth IRA. If you wish, you can transfer again into another type of self-directed account at a later date. The goal initially is to gain control over your account funds so you can start investing.

How Long Does It Take to Transfer Funds into a Self-Directed IRA?
Depending on which type of transfer you’re making, it can take anywhere from a few days to a couple of months. A cash transfer is the easiest and most rapid transfer. It only takes a few days.

Once your self-directed account has been set up and the proper paperwork forwarded to your current plan administrator/account manager, the wait time depends on them. Due to your 7 day legal right of rescission, funds cannot be invested until this initial
period has lapsed.

If you’re transferring from a brokerage account, for example, it can take a couple of weeks. If you’re transferring from an employee-based IRA, it can take up to a couple of months.

No matter how long it takes, the freedom of maximizing your retirement fund as you see fit is one that’s well worth waiting for.

Let Us Help You Take Control of Your Financial Future!