Longboat Retirement Solutions LLC

Educate Yourself About Self Directed Accounts March 22, 2016

Education is the answer

All too often I am approached by people who have never heard of a self directed IRA or a Solo 401k. These people are usually skeptical that they can use these plans or they may even question their existence.

While these retirement plan options have existed for many years, most people have never heard of them.

The reason is simple:

Large institutional investment banks will lose money when you manage your own retirement account.

When you set up a self directed retirement account, you take over the helm and make the investment choices that are in your best interest. You are no longer limited to a menu of investments offered by a particular investment bank.

With a Solo 401k, your choices are particularly powerful. Not only does it open up your options, but it also eliminates the middle man completely. There is no custodian needed with a Solo 401k; no permission to ask. You invest in anything allowed by the IRS, which includes pretty much anything other than insurance or collectibles.

Longboat Retirement Solutions can help you set up a Solo 401k quickly and painlessly.

Transferring your money out of a big bank IRA or 401k into a self directed account is not a taxable transaction, and there are no penalties.

Stop being robbed by the big banks; give us a call

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Part Three: Self Directed Retirement Questions May 19, 2015

This is the third installment in the Self Directed Retirement Questions, Answered.

These are questions I’ve been asked, my answers to those questions, and some commentary.

Question:  What is the difference between a Self Directed IRA and a Solo 401k?

Answer:  A Self Directed IRA requires a Custodian.  Custodians are generally banks and investment houses.  These Custodians charge fees to baby sit your money and tell you where you can and cannot invest your savings.  An SDIRA is far better than a standard IRA, but it can still have high management fees, hoops to jump through, and limitations in what you can invest in.

A Solo 401k, which is designed for the self employed, enables you to invest in anything that the IRS allows.  You become the Custodian; therefore you don’t have any filters on your investments (within the framework of the IRS’s allowed investments).  You basically don’t have to ask permission to use your own savings as you see fit.  Since it is a 401k, you can also borrow up to 50% of the value, up to $50,000.  And again, you don’t have to ask permission or fill out piles of paperwork to take out a loan.  You draw up the terms, put the terms in your safe, write a check from your 401k to you, and then just make the monthly payments to your 401k.  Because you are making payments to your 401k, the interest is essentially free – you are paying yourself!  A Solo 401k also enables you to contribute as the employee and the employer; in other words you can contribute over $50,000 a year to your retirement account – or over $100,000 if your spouse is a partner in the business.  This is a BIG deal.

My thoughts on the two different approaches boils down to this:

If you can, go with the Solo 401k.

 

More Solo 401k Questions May 17, 2015

Part two of the series where I answer questions that people have asked me about Self Directed Retirement Accounts.

Question:  “Can I buy a vacation house in another country with my self directed IRA or Solo 401k?”

Answer:  “Yes, you can, but legally, you cannot use the house for your own benefit.  In other words, the whole point of investment inside of a retirement account is for the benefit of the retirement account….therefore, you could not take a vacation at this house.  Of course the point of your retirement account is for the benefit of you – when you retire.  So, until you retire, you cannot use the vacation house.  I don’t know how anyone would know that you used the house, but regardless, it would not be legal, as far as the IRS is concerned.  I suppose if you went through a nasty divorce and your spouse wanted to stick it to you, they could tell the IRS that you took vacations in the house, and the IRS could look into it.  Another thing to consider is that you cannot do any handyman work on a house that is owned by your retirement account; you need to farm that work out to a contractor.  Again, I don’t know how anyone would know that you fixed a leaking toilet, or patched the roof on your beach house in Nicaragua, but technically, it is not allowed.”

Remember that when I say illegal, it is not a jail time thing, but you could lose more than the value of your account; that’s nothing to sneeze at.

You could buy a condo in Mexico, and rent it through a rental program with a management company, and the money would go into your Solo 401k – tax free.  This money would grow, tax free until you start taking distributions, then the distributions would be taxed at whatever income tax rate you are in at the time.

Alternatively, you could set aside a portion of your account as a Roth, and use those funds to make payments on your condo.  When you retire, you take the condo as a distribution, and since you already paid taxes, you pay none.

I think making an investment in foreign real estate is a great choice for inside a self directed account, but you need to stay within the guidelines.  Investing in emerging markets is exciting, fun, and creates true diversification.  Hell, you might even make some money!

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Sitting on The Fence May 9, 2015

Do you consider yourself a market timer?

Are you a market maker?

Do you know when the next market crash will happen?

Can you call the peak?

Do you have insider information regarding when Goldman Sachs will pull the carpet from under the U.S. stock market?

Is Janet Yellen your cousin?  Does she give you tips?

If your answer is no to all of these questions, then why aren’t you taking this opportunity to divorce yourself from this bubble while it’s still inflated?

It is amazing to me that more people are not taking this amazing opportunity to take profits, and instead are electing to roll the dice on market timing or give the keys to their future to some guy who has no stake in their success.

I know that I should not be surprised, as history seems to repeat itself every 7 to 10 years these days.  People have exceedingly short memories and attention spans that can only be measured in milliseconds.

I really don’t want to be that guy who said “I told you so”…or “I tried to tell you”.  I get no joy in hearing sob stories about how people waited too long and got wiped out by the debt tsunami.

The current market value has no basis in reality.  When it goes pop, it is going to destroy the retirement of millions of Americans who blindly followed the pundits on CNBC.

Please, Americans, spend more time thinking about your future and less time getting re-educated by mass media.

Lars Forsberg
Longboat Retirement Solutions LLC
406-551-4775
www.myselfdirectedretirement.com

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Why do People Continue to Give the Wall Street Criminals Their Money? February 11, 2015

Anytime I talk to people in random social situations and the conversation veers towards finances, I hear the same mantra: “All of the bankers are a bunch of crooks!”  To that I reply: “Why do you continue to give them your money?”

The initial response invariably is that they have no choice, their employer has their 401k managed by Fidelity or TD Ameritrade or Edward Jones, or any of the other big banks.  Of course this is incorrect.  They do not need to leave their money with the big crooks, whoops, I mean banks, in most cases.

The other common thing that I see all the time is people spending more time analyzing the pros and cons of a particular TV set or internet provider than their retirement plan.  This is crazy, but such is the nature of the human mind.  We spend too much time concerned with trivial things and too little with life’s most important decisions.

So, to answer my own question: “Why do people continue to give the Wall Street criminals their money?” – because they lack the knowledge that they have a choice, and they lack the fortitude to face the real issues that affect their future.

I may sound harsh in my analysis, but I can come to no other conclusion.

Certainly the big media propaganda and collusion plays a factor.  After all, big media gets paid big bucks by the big banks to put out investment “news” that paints a rosy picture of the stock market and the associated banks.

The herd mentality doesn’t help, nor does the mindset of “Oh yeah, most investment advisors are nothing more than used car salesmen, but my broker is great!”  That’s the same state of mind that gets us the same representatives in congress elected cycle after cycle, even thought these guys and gals have a 16% approval rate.

How can this be?  Congress has a 16% approval rate, and Wall Street banks continue to get wacked with hundreds of millions in fines for duping investors, yet the same clowns will get re-elected to congress and the same criminals will continue to live in mansions on the hill while stealing from old ladies’ retirement funds.

Please, pull your head out of the sand and explore the options you have, and for Pete’s sake don’t re-elect someone or give them your life’s savings just because their name sounds familiar!

 

Obama’s MyRA Savings Plan: Wolf In Sheep’s Clothing? February 19, 2014

Filed under: Corporate Malfeasance,Economics,Investing Globally — larsfforsberg @ 1:35 pm
Tags: , , , , , , ,

BY:  John E. Girouard

FORBES

If you were wondering how the federal government is going to unload those trillions of dollars in long-term Treasury bonds it’s been buying for the past five or so years—quantitative easing is the technical term—President Obama dropped an anvil hint in his State of the Union address last week. You’re going to buy them, with the retirement savings you’ll be putting in the President’s new MyRA program.

If ever there was a misnamed initiative this one ranks near the top. It’s a mash-up of My and IRA. It implies a greater level of possession than the familiar Individual Retirement Account, which came into being forty years ago during another retirement crisis—the 1970s, when a deep, stubborn recession drove corporate defined-benefit pension plans into the ditch.

This time, a deep, stubborn recession triggered by the Wall Street institutions that also sell IRAs drove a lot of individual retirement plans into the ditch. The fix was the Federal Reserve’s buying up a staggering amount of Treasury bonds to keep interest rates low and hopefully encourage investment and economic recovery.

Those bonds that our government now owns are yielding low rates at a time when most experts are predicting that rates will be rising again. When rates rise, the value of a bond falls. So U.S. Treasury bonds have become so unpopular not even China wants them. In November, a People’s Bank of China official gave a speech in which he said, “it’s no longer in China’s favor” to keep buying U.S. debt the way it has over the past decade or so. There are better deals elsewhere.

That means the federal government is stuck with a lot of unpopular bonds and one sure-fire way to get rid of them is to sell them to the American public as a retirement savings vehicle. It’s a wolf in sheep’s clothing.

The pitch for the new MyRAs is that it’s an automatic savings vehicle, a little like the old-fashioned Savings bonds that our parents and grandparents bought for the kids and grandkids. On the surface, it sounds like a good idea—encourage people who don’t have the money or discipline to buy an IRA or Roth to put a little away each week for the next two or three decades.

MyRA contributions will be invested solely in U.S. debt, guaranteed against loss, and will pay the going Treasury bond rate. But there’s a catch or two. There’s no tax deduction for buying MyRAs, so you’ll be buying them with dollars that have already been taxed. The interest you’ll earn, such as it is, will be tax free, but Uncle Sam gets his cut up front and the use of your money for decades to come. And he unloads some of that mountain of bonds.

You, on the other hand, give up control of your money to the government and that money can never participate in a robust stock market or any other asset class, like your home, a business entity, or an insurance policy.

As a financial advisor for more than three decades, I know that automatic saving is the single most important tool in building a retirement fund. But the MyRA idea is just another example of how government controls so much of what we can and can’t do with our retirement savings by dialing up or down the tax rules.

There isn’t enough money in our economy for MyRAs to bail the government out of its bond glut. So we should be alert to what may be coming down the pike. The tax laws already require IRA funds to be invested in stocks and bonds to qualify for the tax deduction. It wouldn’t surprise me at all if at some point in the near future there was a proposal in Washington to require a percentage of all IRA funds to be invested in debt of the U.S. government.

In a capitalistic system, that would mean even more of the nation’s wealth would be locked up and unavailable to start and grow companies, buy homes, and make other investments that ultimately are the engine of individual prosperity.