Longboat Retirement Solutions LLC

Diversified Portfolio February 28, 2017

Over and over I hear the mantra “Diversified Portfolio” – but what does that mean?

Diversification means different things to different people.

Most however, think that it means they own stocks in several industries that counteract each other. In other words, they own two stocks – if one goes down, the other goes up. No two stocks are going to perfectly counteract the other, but a person can come close with lots of research.

Other people (including myself) contend that investment diversification must also include investment class diversification and international diversification. In other words, you should own things other than stocks, things like metals, currencies, bonds, real estate, and even international investments.

The argument could be made that a world wide downturn would hurt all of these things. Well….sure, maybe, but maybe not. Generally “safe harbor” investments and “contrarian” investments like gold, and certain currencies (Norway, Switzerland) tend to go up during world wide downturns.

Now, being a guy that does not give investment advice, I’m not going to advocate any particular investment, or even investment class, or even investment style….but do your research, and diversify…..and I mean really diversify, not just own a bunch of U.S. stocks.

 

Why you should seriously consider establishing a Solo 401k: October 3, 2012

Some questions to ask yourself.

Do you trust your “financial advisor?”

Are you satisfied with your investment choices?

Do you feel safe with all of your eggs in one basket?

Do you feel comfortable leaving your future in the hands of the Wall Street gang?

Do you think that things “have to improve soon?”

Do you think that “it can’t get any worse?”

Does your “money guy” call himself a “money guy?”

Does this guy wear colorful suspenders and a gold watch?

If you answered yes to a few of these questions, you owe it to yourself to look into self directed retirement investing with a Solo 401k.  You may not be a financial or investment expert (the guy with the suspenders isn’t either), but at least you have your own best interests in mind when making investments.  It is not necessary to be brainwashed by the financial education community to make investment decisions; you can do this.

Take responsibility for your future.  Take action.

 

Fiduciary August 3, 2012

BY: Lars Forsberg
Longboat Retirement Solutions LLC
http://www.myselfdirectedretirement.com

Ever wonder why your financial advisor sold a fund or bought a particular stock?

Have you ever looked at your portfolio statement from your advisor and scratched your head, thinking what the…?

I met with someone the other day who received his monthly statement in the mail.  Glancing at the statement, he noticed something odd;  his “fiduciary” investment advisor sold some shares to cover his monthly maintenance fee.  Looking further, he noticed that his advisor charged him a fee to sell the shares…..wait for it….wait for it…..that was greater than the monthly maintenance fee.

Therefore, this guy, we’ll call him Joe, was charged a transaction fee, larger than his monthly fee, to sell shares to cover his monthly fee!  Awesome.  Wow.

So now Joe has lost some value in his portfolio of essentially worthless stock funds, paid a monthly maintenance fee, and paid a transaction fee.

This was a good day for his financial advisor.  He collected two fees from his customer.

This allowed his financial advisor to make next month’s payment on his BMW.

Unfortunately for the advisor, Joe decided to break free of the scam and self direct his retirement with Longboat.

Joe’s former advisor will now have to find another sucker to soak for fees to cover October’s car payment.

 

What is a Self Directed IRA LLC? May 26, 2012

Filed under: Real Estate Investing,Uncategorized — larsfforsberg @ 5:45 pm
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Many Wall Street brokerage firms and custodians use the term Self Directed IRA to describe  their programs that limit your investment choices to products that they sell. When Longboat Retirement Solutions uses the same term, it means you can invest into any asset allowed by the Internal Revenue Code. The only investments not allowed are collectibles and life insurance.

This structure allows an account holder to completely control investments with increased flexibility and reduced operational costs compared with operating out of a custodial account.

The LLC Formation

Longboat assists clients with creating Articles of Organization for an LLC with the state in which the LLC is to be operated. It is considered a business entity structure which is a hybrid combining aspects of both a partnership and a corporation.

After the IRA is moved into the LLC, it authorizes the Manager (generally the IRA account holder) to set up a checking account that will be utilized for making investments. The Manager of the LLC can enter into contracts and agreements on behalf of the LLC.

Rollovers

You can rollover funds from Traditional IRAs, Roth IRAs, 401k Plans, 403b Plans, Money Purchase plans, Profit Sharing plans, Keogh plans, Government Eligible Deferred Compensation Plans, ESA Plans, HSA Plans, Qualified Annuities and more to initially fund your IRA LLC. You do this by setting up a account for the IRA LLC and directly transferring the funds from the Custodian to the newly created IRA LLC bank account.

Investing in Real Estate

The Longboat client can now make an offer, negotiate a deal, and acquire real estate. Once real estate is acquired, the client can handle administrative duties or appoint a property manager.

Income-producing properties can provide your plan with monthly income as well as long-term gains through appreciation. There are no limitations on the types of properties that can be held within your Real Estate IRA.

Real Estate has always been permitted inside IRA retirement accounts under the Employee Retirement Income Security Act of 1974 (ERISA). As your IRA LLC funds grow, you can continue to invest.

Contributions are made to the Self Directed IRA Custodian and invested into the IRA LLC. Distributions are initiated via sales of LLC shares to the Custodian.

Income to an IRA associated with the financed portion of a property purchased using a non-recourse loan is subject to the Unrelated Debt Financed Income (UDFI) tax. UDFI is a type of unrelated business taxable income.

 

What is a Solo 401k?

A Solo 401k is a retirement savings plan designed for self employed individuals.

Solo 401k Advantages

A Solo 401k plan possesses most of the characteristics of the Self Directed IRA LLC, including having the ability to invest in anything the law allows, but without the need to establish an LLC. It’s the most tax-advantaged, self employed plan available with very high annual contribution limits. You can set up this plan even if you’re employed at a full-time job. And, you can borrow funds from the account.

3 Simple Steps

Is setting up a Solo 401k a difficult?  No.  Longboat has made the process simple and quick.

  • STEP 1: Solo 401k documents are produced by Longboat and delivered to you.
  • STEP 2: You establish a local bank account to receive existing funds or contributions.
  • STEP 3: As Trustee, you determine best investment options and execute transactions.

Self Trustee

With a Solo 401k, you act as your own Trustee and are charged with investing trust assets prudently and productively. The Trustee cannot co-mingle personal funds with the trust and cannot enter into a transaction with the trust.

Rollovers

You can rollover funds from Traditional IRAs, SEP Plans, previous employer 401k plans, Money Purchase plans, Profit Sharing plans, Keogh plans, Defined Benefit plans, 403(b) plans and Rollover IRAs to initially fund your Solo 401k. You do this by setting up a Trust account for the Solo 401k and directly transferring the funds from the Custodian to the trust bank account.

Making Contributions

For the salary deferral portion in 2011, you can contribute the regular 401k maximum of $16,500 (with an an additional $5,500 if over the age of 50 at year end). And, you can add up to 25% of compensation for the profit-sharing portion. The combined maximum of these contributions can’t exceed $49,000, plus catch-up additions, if applicable. You could also set up a “designated Roth component”, if you desired.

Taking Out A Loan

Our Solo 401k plan document has a loan provision enabling you to take out a loan from your 401k. You can borrow up to 50% of the total 401k value up to a maximum of $50,000, tax free. Repayment of the loan is according to a loan amortization schedule created when the loan is initiated and must be paid back into the account (including interest). It is a simple process with no cost to you, through Longboat software, to create the loan documents.  Failure to make the loan payments may cause a loan default causing taxes and IRS penalties.

A Solo 401k is Not Subject to UDFI Tax

Income to an IRA associated with the financed portion of a property purchased using a non-recourse loan is subject to the Unrelated Debt Financed Income (UDFI) tax. UDFI is a type of unrelated business taxable income.  Solo 401k plans are exempt from this tax.

 

Beware of Promoters of ROBS

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

http://www.irs.gov/retirement/article/0,,id=231594,00.html

Tread carefully with your retirement savings.

Longboat Retirement Solutions does not promote ROBS.