Funding Your Self-Directed IRA with a Transfer
At Next Generation Trust Services, we make it easy to initiate a transfer in order to fund your Next Generation IRA; we simply require the transfer form (found on our site under Client Forms and provided with the application) and a current account statement (from which funds will be transferred). We ask for the statement in order to confirm the details of the transfer: that the account type is the same type as the account that it is being transferred into, and that the requested transfer amount is available to transfer.
Regarding your transfer options:
- It can be a complete or partial transfer of stocks, bonds or mutual funds and/or an asset in kind.
- For stocks, bonds or mutual funds, they must be liquidated prior to the transfer.
- Since we are not a broker dealer, we can only accept non-publicly traded assets.
- Transfers of assets in kind will require additional registration documentation depending on the asset type. Our staff will walk you through that process if necessary.
Upon receipt of the transfer form and statement, our office signs the form as the administrator for the accepting custodian and initiates the transfer accordingly. Our office then contacts the current custodian (where the funds are coming from) and provides funding instructions. On occasion, many proactive clients mail our form directly to the current custodian. Unfortunately, this often causes delays since our office must initiate the transfer; otherwise it could be considered a rollover, which is a reportable event and may be taxable.
Helpful tips about fund transfers for your self-directed retirement plan
Since self-directed investors are responsible for researching their investments as well as all necessary instructions for the administrator (like Next Generation), here are some helpful tips regarding fund transfers. They’re good to know in general and will help you avoid delays in funding your self-directed retirement account at Next Generation Trust Services.
- Our form reserves a space for a Medallion Guarantee Stamp, which is sometimes required by your current custodian. Please determine whether this is required. If it is required, the client must sign the form in the presence of an authorized signatory at a financial institution and mail the original form to our office. Our office does not do Medallion Guarantees.
- Many custodians do not require original documents and even accept requests by fax. Please determine whether originals are required and confirm a fax number where we can send the form.
- Often, the contact information we receive is for a specific branch or office of the custodian and not the transfer processor. If mailing the transfer request is selected, please confirm we have the correct mailing instruction.
- Recently, a few custodians have discontinued the practice of wiring funds. If time is a factor, please discuss expedited options (for example, express delivery of a bank check) with your current custodian.
We do our best to coordinate fund or asset transfers with current custodians in the most expeditious manner. Never hesitate to call our office with your questions or to discuss your transaction; we can be reached at (888) 857-8058 or Info@NextGenerationTrust.com.
Jaime Raskulinecz Interviewed by Ted Thomas on the Tax Lien Investing Podcast
Jaime Raskulinecz was recently interviewed by Ted Thomas on the Tax Lien Investing Podcast. To listen to the interview use the player below, or download the podcast from iTunes.
Ted Thomas is a best-selling author and publisher and is best known as America’s Tax Lien Certificate and Tax Deed Authority. Thomas has sat for more than 200 radio and TV interviews, most recently on ABC, CBS, NBC and Fox and he has been recognized in Newsweek, USA Today and the Wall Street Journal.
During a Volatile Stock Market, Alternative Assets Can Shine a Brighter Light on Retirement Savings
Afraid of the dark? Try self-direction as a retirement strategy
For people who are afraid to open their brokerage statements for fear of seeing what happened to the their IRA’s value (hoping they don’t see a plunge on those graphs), learning more about self-direction can be a great way to shine a light on their retirement savings.
Savvy investors, take note: you can invest in what you already know and understand, and build potentially greater retirement wealth, by including nontraditional investments in a self-directed IRA.
self directed IRA plans
Do you already invest in real estate? How about precious metals? Do you prefer to invest in hedge funds or private placements? How about becoming a Broadway producer (as in, investor in a show) or make a loan to someone you know to open a restaurant or pay for college?
If so, and if you understand how to make these investments, you could do so through a self-directed retirement plan, and enjoy the same tax advantages of a typical retirement account. As a self-directed investor, you can take control of your future by including non-publicly traded assets in your account. You make all your own investment decisions, it’s up to you to thoroughly research and understand the asset and work out all the arrangements concerning the investment. The administrator/custodian, like Next Generation Trust Services, makes the transaction on behalf of your account according to your instructions, manages all the paperwork, and handles all the necessary reporting.
At Next Generation, we also provide education to self-directed investors to help them understand the IRS guidelines, and can answer questions about how self-direction works.
Our white paper about self-directed retirement plans will explain all the basics to you.
Our helpful informational videos can provide additional tips (check back periodically for new videos).
Ready to leave dark stock market days behind you?
Want to lighten up your future with self-directed investments? Contact our professionals with any questions you have about this strategy at 888.857.8058 or Info@NextGenerationTrust.com; or go to our Starter Kits to open up your self-directed retirement plan today.
My Self-Directed Retirement Account is Funded. What’s Next?
Investing in Alternative Assets with Next Generation Trust’s Asset Kits.
Congratulations! You’ve opened your self-directed retirement plan with Next Generation Trust Services. You have funded the account and now it’s time to invest in those alternative assets to start growing your retirement nest egg
For more information on self-directed IRAs, call us at 973-533-1880 or 888-857-8058 or email Info@NextGenerationTrust.com.
FREE WEBINAR March 30th: How to Avoid the 7 Retirement Killers with David Alemian
Don’t Kill Your Retirement – Put it in Overdrive Instead!
Join us for this free live webinar, “Avoid the Seven Retirement Killers” on Wednesday, March 30 at 8:00 p.m. (Eastern).
Register at https://attendee.gotowebinar.com/register/1107679172834399748
Get the skinny on making the most of your retirement plan and savings strategy with co-presenters David Alemian, a nationally acclaimed retirement expert, and Karen Augis, business development representative of Next Generation Trust Services. You’ll get informative tips about using self-directed retirement plans to supercharge your retirement savings, and how to protect yourself and your family from common financial pitfalls that can crimp your retirement lifestyle. David and Karen will have time for questions.
Please register for this joint informative webinar today! https://attendee.gotowebinar.com/register/1107679172834399748
After registering, you will receive a confirmation email containing information about joining the webinar. Tune in for great information about self-directing your retirement plan, and avoiding the seven retirement killers.
A Red Alert about “Gray Divorce” and Retirement
The report cited a median household income of over $105,000 for married couples and $57,000 for households headed by an unmarried boomer. The report also noted that those who divorce later in life suffer more diminished wealth, and that people who divorce at younger ages have more time to rebuild their retirement wealth because they have more working years ahead of them.
The report shared some statistics about poverty among the baby boomer demographic as well, which showed gender disparities: 27% of gray divorced women are poor compared to 11% of gray divorced men, and gray divorced women receive smaller average Social Security benefits than all other single women and men. This is partly due to them receiving Social Security through spousal or widow benefits instead of being based on their own contributions. The extension of this issue means that fewer older divorcees may be eligible for spousal or widow benefits, “whether because they divorced less than 10 years into the marriage, they did not remarry or they never married in the first place,” as noted in the report.
You can read up on the guidelines regarding who’s entitled to what in the event of divorce at https://www.ssa.gov/planners/retire/yourdivspouse.html.
Here’s a green alert for a retirement
Coupled with the new rules being enacted, it could be difficult road to a comfortable retirement for many divorced spouses. But it need not be that way for savvy investors who want to build a potentially more robust, and more eclectic retirement account. For these individuals, a self-directed retirement plan can help them elude that bumpy road—even if they’ve gone through a divorce.
With self-directed retirement plans, investors can include many alternative assets that typical IRAs don’t allow. Using what they already know and understand, baby boomers, Gen Xers and yes, millennials can invest in real estate, commodities, precious metals, unsecured loans … a long list of nontraditional investments allowed in self-directed retirement plans.
Don’t let divorce disrupt your retirement security!
FREE WEBINAR March 14th: Learn How to Invest in Oil or Gas Using Your Self-Directed IRA
Thinking of Making Oil or Gas Investments Through Your Self-Directed IRA? This webinar’s for you!
Join us on Monday, March 14 at 3:00 p.m. (Eastern) for a joint webinar with SGR Energy. Tom San Miguel, president/CEO of SGR Energy will co-present this informative, free webinar with Next Generation Trust Services’ business development representative Karen Augis.
Register at: https://attendee.gotowebinar.com/register/629248678222169347
Tom’s presentation covers a breadth of information about investing in these commodities in an unpredictable market with “How to Take the Volatility Out of Oil and Gas Investments While Getting Solid Returns With Lower Risk Levels.” Karen will cover “Self-Directed Retirement Plans 101” and talk about the many alternative assets allowed within these plans (including oil and gas futures).
SGR Energy is a rapidly growing fuel blending and manufacturing company that has developed a proprietary blending technology platform to cost-effectively incorporate cleaner burning fuel oils and blendstocks for commercial and industrial burning.
Register at https://attendee.gotowebinar.com/register/629248678222169347
We’ll send you a confirmation email with all the information about joining the webinar.
Oxford Club Interview: CEO Jaime Raskulinecz of Next Generation Trust Services Shares Her Insights on Self-Direction with The Oxford Club
Want to hear what Jaime has to say about unique alternative assets for your retirement portfolio? You can listen to her interview (started at the 10 minute mark) with Marc Lichtenfield, chief income strategist for The Oxford Club. The Oxford Club is a private, global network of successful investors and entrepreneurs whose mission is to help its members grow and protect their wealth. Jaime shared her insights into how investors can build up their retirement portfolios by including non-publicly traded assets—citing investment real estate as a popular asset—in a self-directed retirement plan. Jaime also mentioned loans, unsecured and secured notes, mortgages, and private equity private notes, mortgages, and private equity as other popular assets to include in these plans.
She also explained how self-directed transactions and distributions work, what Next Generation Trust Service does as the plan administrator, and what disqualified individuals and prohibited transactions are. Learn more about self-direction from the woman who started it all at Next Generation Services!
The Truth about Using Retirement Funds to Start Your Own Business
Current clients and prospective clients routinely ask us how they can start or buy their own business using retirement plans. More often than not, they have heard about this particular structure from a franchise seller or from companies that heavily promote this technique.
If you don’t have the personal savings or credit line necessary to fund a new business, can’t get or don’t want a bank loan, or you’re not tapping friends or relatives for the money, it is possible to fund a new business using funds from a self-directed IRA or 401(k); it’s called a Rollover Business Startup, or ROBS.
The ROBS structure was the subject of a recent article in Forbes that explained how and why this is all possible as well as some concerns the IRS has about businesses that are funded from a self-directed retirement plan.
ROBS at a glance
It takes more than a glance to really understand ROBS but basically, it takes advantage of an exception in the tax code under IRC Section 4975(d)(13) by which a C Corporation adopts a 401(k) plan and the 401(k) plan uses rollover retirement funds to purchase stock in the Corporation (qualifying employer securities). The Corporation would then use the funds to purchase the business assets. Sounds simple? Well, here are the steps required to set up this arrangement:
- An individual sets up a shell corporation that would sponsor a qualified retirement plan. This corporation typically has no employees, operations or assets at this point.
- The plan document put in place states that all participants in the plan may invest the entire account balance in company stock.
The individual who set up the plan becomes the only employee and participant. Usually at this point there is no ownership or equity interest in the company. - The individual rolls over or transfers current retirement plan funds, either from a previous employer plan or IRA, into the newly created plan. Any taxes that might ordinarily be owed by taking a distribution are avoided as the assets go directly into another tax-deferred vehicle.
- The only participant of the new plan then directs the purchase of his assets into company stock, which is then valued at the amount of the plan assets invested.
- These funds are then used by the individual to purchase a business/franchise or initiate a different type of business.
Next Generation’s Take on ROBS
As our clients know, we at Next Generation Trust Services do not give investment advice, but we do provide guidance and education regarding self-directed transactions, including our take on the IRS regulations regarding the purchase or structure of certain investments within retirement plans.
Regarding the ROBS “strategy,” we have always advised that it is a much more complicated arrangement than many of its promoters would lead clients to believe (as you can see from the steps outlined above). Our advice has been to contact an attorney well versed in ERISA (Employee Retirement Income Security Act) and setting up employer-based retirement plans such as 401(k)s.
The Potential Trouble with Using Retirement Funds to Buy a Business
The Forbes article states that the ROBS structure is the only legal way a business owner can use retirement funds to buy or finance a business that the owner or another “disqualified person” will be involved in personally. However, it has drawn the scrutiny of the Internal Revenue Service as its implementation has grown, and the IRS and the Department of Labor are looking into the operation of many of these arrangements for prohibited transactions and non-compliance issues.
In October 2008, the Tax Exempt and Government Entities Division of the IRS issued the only real administrative guidance on rollovers of retirement plan assets to fund business start-ups, the ROBS Memorandum. The memorandum covers several potential problem areas that we have discussed with our clients: issues of non-compliance regarding the 401(k) plan, lack of plan activity, inadequate valuation given to the purchase of the “qualifying employer security,” permanency of the plan, and whether the arrangement was established for the exclusive benefit of employees or for if personal assets were being purchased.
While we know that many people are seeking ways to capitalize a new business by alternative means, violating IRS regulations is an avoidable risk (and your precious retirement fund can be invested in many other ways). Having a qualified attorney, intimately familiar with the nuances of crafting these arrangements, conduct a thorough review of such an arrangement is a wise step.
Alternative Ways to Invest through Self-Direction
Researching the many alternative assets that you can include in you self-directed retirement plan is another wise move. Self-directed investors make all their own investment decisions, based on what they know and understand, and the allowable nontraditional assets span a very wide range (including private placements and unsecured loans). As the plan administrator, Next Generation Trust Services will conduct the transactions, hold the assets, and manage all the reporting and paperwork associated with the account.
If you are considering using your self-directed IRA to fund a new business, and would like a copy of the entire IRS memorandum, please e-mail us your name, postal address, e-mail address and request to info@nextgenerationtrust.com.
