Longboat Retirement Solutions LLC

Solo 401k and Self Directed IRA LLC Pricing June 10, 2012

June 9, 2012

BY: Lars Forsberg,

Why are the prices all over the map for the creation of Solo 401k’s and Self Directed IRA LLC’s?

Like any product or service, the perceived quality of the product and/or the level of service determines the price.

Often promoters of self directed retirement products have ulterior motives.  These promoters will sell their plan establishment services cheap, with the intention of pushing other investment products on clients down the road.  These guys are kind of like drug dealers who give people cheap introduction pricing on drugs, knowing that once addicted, the people will return to purchase more.  Beware the self directed plan pusher who tries to convince you to pursue risky investments or behavior that may invite the scrutiny of the IRS.

If it appears that a promoter of self directed retirement products pushes only real estate investing on their website, or encourages ROBS (Roll Overs as Business  Startups) strategies, consider their motives.  This is not to say that any particular alternative investments are always superior to others.  To the contrary, beware the “expert” who knows how you can skirt the rules and “make a fortune” doing this or that.

Other promoters provide little or no after-sale service.  These companies will sell you their retirement products, then set you loose.  While self directed investing is fairly straightforward once you understand what is acceptable and what is not, initially you will have questions, and you will need answers to avoid pitfalls.

You should not limit your choices to the companies that have the most spectacular web site or marketing.  You should not limit your choices to the companies with the most familiar names.  Whatever you do, don’t look for bargain basement pricing.

Choose a self directed retirement package that fits your personal needs.  Be sure that the plan you choose gives you the most power and flexibility.  Choose a company that you are comfortable with.  Choose a company that will support you after the sale, rather than try to sell you on other products.  When you are dealing with a decision as important as this one, take your time, do your research.


Beware of Promoters of ROBS May 26, 2012

Filed under: Corporate Malfeasance,Uncategorized — larsfforsberg @ 4:45 pm
Tags: , , , , , , , ,

The IRS and Rollovers as Business Startups (ROBS)

Why should you use Longboat Retirement Solutions to setup a Self-Directed IRA LLC, or Solo 401k instead of some of the other companies out there?

Many of the other companies promote a strategy of ROBS.  If you are a client of a company promoting ROBS, you may be a target for IRS audits.

Best case audit scenario: After months or years of being audited, you are finally cleared. Your assets might be frozen during that time, and you may incur tens of thousands of dollars in attorney fees to defend yourself.

Worst case scenario: If you used the ROBS strategy yourself with, say a couple hundred thousand dollars, you could incur MILLIONS of dollars in taxes.  The tax penalties are severe.

What is ROBS?

ROBS is a strategy involving a C-Corp, a 401k, and you using your retirement funds to start, purchase or grow a business. The government says ROBS is not legal.  They aren’t going after ROBS promoters or ROBS users…..yet.

So basically, if you become a client of a company that pushes ROBS strategies, you are associated with the promoters of a strategy that the government deems illegal and could eventually pursue.

The IRS notes that it has identified 9 promoters of these programs. Here are the main legal deficiencies being identified in the programs, according to the Memorandum:

We have examined a number of these plans – having opened a specific examination project on them based off referrals from our determination letter program – and found significant disqualifying operational defects in most. For example, employees in some arrangements have not been notified of the existence of the plan, do not enter the plan or receive contributions or allocable shares of employer stock. Additionally, we have identified that plan assets are either not valued or are valued with threadbare appraisals. Required annual reports for some plans have not been filed. In several situations, we have also found that the business entity created from the ROBS exchange has either not survived, or used the resultant assets on personal, nonbusiness purchases.

The IRS states that there are “two primary issues raised by ROBS arrangements”: (1) violations of nondiscrimination requirements, in that benefits may not satisfy the benefits, rights and features test of Treas. Reg. § 1.401 (a)(4 )-4. and (2) prohibited transactions, due to deficient valuations of stock.

Many promoters will claim that they have IRS approval for their program, when in fact the IRS has only approved the form of the Plan document. The Memorandum notes that the violations that occur are typically operational and not document failures.

On November 5, 2008, the IRS issued the following warning to all business owners contemplating the implementation of a ROBS arrangement:For these reasons, we intend to scrutinize ROBS arrangements. Our guidelines will serve as instructions to our technical specialists to resolve issues they encounter when evaluating these plans. We believe that ROBS arrangements may endanger the qualified status of otherwise tax-qualified employee plans and may be prohibited transactions, requiring complete undoing of the transaction, and imposition of excise taxes.

Again in 2010 the IRS Looked at ROBS:


Tread carefully with your retirement savings.

Longboat Retirement Solutions does not promote ROBS.