Longboat Retirement Solutions LLC

How Simple is it to Start a Solo 401k? Part One February 20, 2015

Filed under: Uncategorized — larsfforsberg @ 2:16 pm

The things that we do at Longboat are simple.

We assist people with the process of liberating their retirement money from the evil bankers.

How do we go about that?

Essentially, we set up a Solo 401k Trust for clients (all 401k’s are Trusts); then we instruct our clients on the procedure of opening a checking account for the Trust at a financial institution of their choosing.

After the account is open, we assist and consult our clients with the process of getting the client’s previous custodian (evil banker) to send the money to our client’s new Trust account.

After the previous custodian has sent the money to the new Trust account, our client is free to write checks, use an ATM card or wire funds to invest in whatever the IRS allows….or our clients can leave the money in their checking account as cash, ready to be used when they find the right investment for them.

Pretty simple, right?

 

 

A Very Short History / Finance / Economics Lesson: February 7, 2015

Filed under: Uncategorized — larsfforsberg @ 7:05 pm

A very short history / finance / economics lesson:

By the time March 6th 2009 rolled around, the Dow Jones Industrial Average dropped 54% to 6,469 from its high of 14,164 on October 9, 2007.  This oversized market correction took many by surprise, while others saw it coming and profited off the high point and the low point.

If you had bought stocks in September 2007, your return over the next 7+ years through today would be about 27%.

But when you adjust for capital gains tax (at 15%) and inflation (using the B.S. 2% number), the annualized return drops to just 2.5% per year….not really a great return.

In other words, if you buy at a high point and sell at a higher point, the gains are quite small.

You don’t need to be Nostradamus to see that the market is high right now and will go lower at some point in the future.

If your retirement savings is tied up in the US stock market and the market as a whole declines, what happens to the value of your savings?  It goes down.  It does not matter that your “portfolio is diversified” across asset classes.  When the market as a whole goes down, you lose.

You may ask “What can I do?”

Buy low, sell high.

You might then ask “How?” I can’t sell stocks in my IRA without liquidating and taking a huge tax and penalty hit, and besides, my IRA only allows investments in US stocks and bonds.

To that I say why does your IRA only invest in US stocks and bonds?  Why are you letting someone who gets paid to sell stocks, manage your retirement savings.  Relying on a salesman to manage your money is a little crazy, don’t you think?

Longboat Retirement Solutions can help you set up a Self Directed Retirement Account that will enable you to control your retirement saving directly, meaning that you can invest in what you want, when you want.

In other words, if you feel like the market is nearing a top, you can sell the stocks that you have and hold cash, ready for a low point to buy back in.

Or, as many people suggest, you could buy physical metals or real estate with your retirement savings.

There are mountains of research out there that aim to predict when the market will crash or correct.  None of this matters when you are talking about your retirement savings.  You need to be able to move in and out of the market when it is high or low.

It’s a simple technique.  When something is undervalued, you buy; when something is overvalued, sell.

How do you tell when an individual stock is overvalued?  Well, you can use a thousand formulas, or buy research, or use your gut feeling, or darts.  But, unless you are a day trader, this doesn’t matter either.

What does matter is the fact that the US stock market is at an all time high.  That means that your portfolio is probably in a good place right now.  This also means that it has a greater potential to lose money in the near future.

What I’m saying here is “SELL HIGH, BUY LOW”.

This is not anything revolutionary.  I am not Nostradamus.  I am not a stock picker or a trader.

longboat

406-551-4775

www.myselfdirectedretirement.com

 

December 31st is Approaching November 24, 2014

Filed under: Uncategorized — larsfforsberg @ 6:23 pm

It’s that time of year again – time to think tax strategies and planning for the next year.  Longboat is offering $500 rebates for the set up of Solo 401k’s by December 25th.  We’ve done it before until December 31st and it was a real nail biter trying to get things done between Christmas and New Years.

If you’ve been putting it off for a while and kicking yourself every time January 1st comes around, make your move now so you don’t have to kick yourself!  Last year you pulled a hamstring.

If you receive our newsletter, you will receive another reminder of this sale.

You won’t be able to say that we didn’t warn you or give you enough time.
 

Give use a call at 406-551-4775 or email me at lars@myselfdirectedretirement.com

Little Red Viking copy
Lars Forsberg
President

 

 

Deadlines And Tax-Savings Update: How You Can Cut Your Tax Bill By $10,000 October 27, 2014

Filed under: Uncategorized — larsfforsberg @ 10:55 pm

The following is a repeat of a post from December of 2012.  The benefits have only increased.  Don’t wait until it’s too late.  Take advantage of the huge tax advantages that a Solo 401k can provide.

 

Forbes 12/19/2012

BY: Stuart Robertson

Many self-employed and sole proprietors are unaware they can take advantage of an Individual 401(k) plan (aka. a Solo 401(k)) and the substantial tax-deferred benefits these plans offer.  The Solo 401(k) is pretty easy and inexpensive to start and delivers saving advantages that help improve an individual’s bottom line too.  Solo 401(k) plans are an option for any owner-only business.  Multiple owners and spouses can also be included in a Solo 401(k), but if the business adds employees to the 401(k), it will need to convert to a more traditional plan.

The following provides updated tax and savings information from a popular entry I posted here last year.  It also includes important plan setup and contribution deadlines for the 2012 calendar year.

When One Equals Two: Tax-Defer up to $50,000 for Your Retirement

One of the great advantages of a Solo 401(k) is the ability to play the roles of both employer and employee, enabling the owner to contribute up to $50,000 of her annual income tax-deferred in 2012 (or $55,500 if at least 50 years of age).  That’s a generous amount that might even drop the owner into a more advantageous tax bracket that can fast track the owner’s time to retirement.

The high contribution limits, tax savings and easy access to cash via penalty-free loans make the nominal price for solo 401(k)s a savvy financial move for any owner-only business that wants to save more than $5,000 a year (the traditional IRA limit).

In the past, many owner-only businesses have turned to traditional IRAs as a retirement savings strategy – an approach that, compared to a Solo 401(k), provides much lower contribution limits (not to mention penalties if the owner needed to access the money before reaching retirement age).  Solo 401(k)s also offer more flexibility than about any retirement option.  In 2012 for example, just compare a 401(k) to a traditional IRA:

401(k)

Traditional IRA

Annual Limit per Individual

$50,000

$5,000

Age 50+ Catch-up Amount

$5,500

$1,000

Roth Income Limit

None

$120K*

Penalty-free Access

Yes, loan to self

No

* Amount you can contribute starts phasing out at $110K and not allowed if making $125K or more.

FYI, the annual limit increases to $51,000 in 2013, or $56,500 if at least 50 years of age.  IRA tax-deferral limit is also increasing $1,000, so it will have a $6,000 limit in 2013.  Given the current discussions on potential tax increases for 2013 going on in DC, a Solo 401(k) may continue to become even more advantageous.

How Many Self-employed Can Save $10,000 in Taxes in 2012

The amount you can tax-defer will vary by your earnings and your tax rate.  In general, for those earning $165,000 or more, protecting $10K or more in taxes is often doable.  For those earning less, the tax savings can still be quite substantial.  Here’s how an owner under 50 years of age can max out his or her retirement savings and lower taxes for 2012:

Sole Proprietor Under 50 Years of Age

401(k)

Earnings

$165,000

    Employee  contribution

$17,000

    20% of net self-employment contribution

$33,000

Total Tax-Deferred Savings

$50,000

Taxable Income

$115,000

While the owner earned $165,000 in 2012, only $115,000 is taxable by Uncle Sam.  Assuming an adjusted gross income (AGI) tax rate of 20 percent, that’s $10,000, she can now keep for herself (versus paying the taxman) in 2012.  In actuality, the tax savings is likely to be even greater as she may also drop a tax bracket.  For example, the married filed jointly 2012 tax rate increases from 25 percent to 28 percent for income over $142,700.

Must Start a Solo 401(k) by December 31, 2012 to Qualify – Have until April 15th to Contribute

While business owners will have until their tax deadline to contribute to their 401(k) accounts, IRS rules require that their plans must be setup by December 31st to qualify.  Many providers have deadlines well before this date, so setting up sooner rather than later is a smart way to go.

Most businesses will likely have until April 15, 2012 to make contributions for 2012.  But if the company is established as a corporation, the deadline will be March 15.  The good news is that, by setting up a plan by the end of the year, businesses will have plenty of time to determine the optimal amount they can save to best manage their tax and retirement savings.

One last thing to know:  If loan and Roth options are important to you, be sure to setup a full-featured, fully administered Solo 401(k) plan.  Some providers offer a record-keeping-only individual 401(k) that will likely offer more investment options, but will lack Roth and loan options.

A Longboat Retirement Solutions Solo 401k is self administered and allows not only many more investment options, but also Roth and loan options.  A Longboat Solo 401k offers the best of both worlds.

 

Bank fines top $142 billion — but tobacco fines are still bigger September 11, 2014

Filed under: Uncategorized — larsfforsberg @ 2:47 pm
Tags: , ,

BY: Sital S. Patel

August 20, 2014

The world’s biggest banks have now paid more than $142 billion in fines for wrongdoing tied to the financial crisis. That’s a huge number — but it pales compared to what tobacco companies have paid for their transgressions.

The top five U.S tobacco companies paid a combined $246 billion to settle with 46 states, five U.S. territories and the District of Columbia in 1998. The states had successfully argued that tobacco companies should cover the exorbitant cost of  treatment for health issues related to smoking.

For both industries, the settlements also led to heavy regulation and other significant changes to how companies do business.

For banks, the Dodd-Frank Act, which was passed by Congress in 2010, forced them to scale back risk and increase the amount of capital held in reserve. The Federal Reserve also required the biggest banks to undergo “stress tests” that showed whether they could survive another crisis without taxpayer-funded bailouts.

For their part, the tobacco industry agreed to accept federal regulations, which included advertising bans and a halt to marketing that targets the young.

The following are some of the biggest fines that banks have paid:

Bank of America Corp. BAC has paid a staggering $74.65 billion in fines and tops our table. The bank announced a record settlement of $16.65 billion with the Justice Department on Thursday for charges stemming from its purchase of mortgage lender Countrywide in 2007 and Merrill Lynch. This is the largest-ever government settlement with a single U.S. company.

J.P. Morgan Chase & Co. JPM has paid about $27 billion of fines. In November, the bank agreed what was at the time a record $13 billion settlement of charges also related to mortgages.

Citigroup Inc. C has paid about $12.14 billion in fines.  The latest came in July, when the bank said it would pay $7 billion to the Justice Department, several state attorneys general and the FDIC, over mortgage-related charges.

On Wednesday, Standard Chartered Plc  UK:STAN said it will pay a $300 million penalty for lapses in its money-laundering procedures, its second such penalty after a $340 million fine levied in 2012.

By comparison, the five largest tobacco makers, Philip Morris PM , R.J. Reynolds (now renamed Reynolds American Inc. ra RAI , Brown & Williamson, Lorillard LO and Liggett & Meyers made thebiggest litigation settlement to date in corporate America.

 
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New Year’s Resolution January 9, 2013

Filed under: Uncategorized — larsfforsberg @ 11:00 pm
Tags: , ,

Did you make a New Year’s Resolution to get your finances together?

Have you taken stock of your retirement savings plan?

Are you afraid to look at your “portfolio”?

Call me crazy, but I think you should consider taking control of your retirement savings.

A Solo 401k can help you save, keep, and control more of your money.  Take your money out of the Wall Street Ponzi scheme and find real peace of mind.  Contact your current custodian and ask to get a breakdown of all fees that they charge you.  Tell them that you know that a new law has passed that requires them to provide this information in a digestible format.  Take a hard look at the costs you incur.  Take an honest inventory of your savings and your future plans.

Don’t take my word for it.  Find out for yourself, the real cost of your current retirement vehicle.

The process of getting control of your retirement and future is painless and the cost of not acting is huge.

 
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Solo 401(k) 2012 Deadlines and Tax-Savings Update: How You Can Cut Your Tax Bill by $10,000 December 28, 2012

Filed under: Corporate Malfeasance,Economics,Investing Globally,Precious Metals,Real Estate Investing,Uncategorized — larsfforsberg @ 6:13 pm
Tags: , , , , , ,

Forbes 12/19/2012

BY: Stuart Robertson

Many self-employed and sole proprietors are unaware they can take advantage of an Individual 401(k) plan (aka. a Solo 401(k)) and the substantial tax-deferred benefits these plans offer.  The Solo 401(k) is pretty easy and inexpensive to start and delivers saving advantages that help improve an individual’s bottom line too.  Solo 401(k) plans are an option for any owner-only business.  Multiple owners and spouses can also be included in a Solo 401(k), but if the business adds employees to the 401(k), it will need to convert to a more traditional plan.

The following provides updated tax and savings information from a popular entry I posted here last year.  It also includes important plan setup and contribution deadlines for the 2012 calendar year.

When One Equals Two: Tax-Defer up to $50,000 for Your Retirement

One of the great advantages of a Solo 401(k) is the ability to play the roles of both employer and employee, enabling the owner to contribute up to $50,000 of her annual income tax-deferred in 2012 (or $55,500 if at least 50 years of age).  That’s a generous amount that might even drop the owner into a more advantageous tax bracket that can fast track the owner’s time to retirement.

The high contribution limits, tax savings and easy access to cash via penalty-free loans make the nominal price for solo 401(k)s a savvy financial move for any owner-only business that wants to save more than $5,000 a year (the traditional IRA limit).

In the past, many owner-only businesses have turned to traditional IRAs as a retirement savings strategy – an approach that, compared to a Solo 401(k), provides much lower contribution limits (not to mention penalties if the owner needed to access the money before reaching retirement age).  Solo 401(k)s also offer more flexibility than about any retirement option.  In 2012 for example, just compare a 401(k) to a traditional IRA:

401(k)

Traditional IRA

Annual Limit per Individual

$50,000

$5,000

Age 50+ Catch-up Amount

$5,500

$1,000

Roth Income Limit

None

$120K*

Penalty-free Access

Yes, loan to self

No

* Amount you can contribute starts phasing out at $110K and not allowed if making $125K or more.

FYI, the annual limit increases to $51,000 in 2013, or $56,500 if at least 50 years of age.  IRA tax-deferral limit is also increasing $1,000, so it will have a $6,000 limit in 2013.  Given the current discussions on potential tax increases for 2013 going on in DC, a Solo 401(k) may continue to become even more advantageous.

How Many Self-employed Can Save $10,000 in Taxes in 2012

The amount you can tax-defer will vary by your earnings and your tax rate.  In general, for those earning $165,000 or more, protecting $10K or more in taxes is often doable.  For those earning less, the tax savings can still be quite substantial.  Here’s how an owner under 50 years of age can max out his or her retirement savings and lower taxes for 2012:

Sole Proprietor Under 50 Years of Age

401(k)

Earnings

$165,000

    Employee  contribution

$17,000

    20% of net self-employment contribution

$33,000

Total Tax-Deferred Savings

$50,000

Taxable Income

$115,000

While the owner earned $165,000 in 2012, only $115,000 is taxable by Uncle Sam.  Assuming an adjusted gross income (AGI) tax rate of 20 percent, that’s $10,000, she can now keep for herself (versus paying the taxman) in 2012.  In actuality, the tax savings is likely to be even greater as she may also drop a tax bracket.  For example, the married filed jointly 2012 tax rate increases from 25 percent to 28 percent for income over $142,700.

Must Start a Solo 401(k) by December 31, 2012 to Qualify – Have until April 15th to Contribute

While business owners will have until their tax deadline to contribute to their 401(k) accounts, IRS rules require that their plans must be setup by December 31st to qualify.  Many providers have deadlines well before this date, so setting up sooner rather than later is a smart way to go.

Most businesses will likely have until April 15, 2012 to make contributions for 2012.  But if the company is established as a corporation, the deadline will be March 15.  The good news is that, by setting up a plan by the end of the year, businesses will have plenty of time to determine the optimal amount they can save to best manage their tax and retirement savings.

One last thing to know:  If loan and Roth options are important to you, be sure to setup a full-featured, fully administered Solo 401(k) plan.  Some providers offer a record-keeping-only individual 401(k) that will likely offer more investment options, but will lack Roth and loan options.

 
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