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How Will You Spend Your Retirement?

September 12, 2012

Thanks to a seating assignment onboard the Monarch of the Seas on a cruise to the Bahamas, I was recently able to meet a delightful couple with whom we shared breakfast.  When I inquired about what they do when they weren’t cruising, they said they were retired (partially).   Come to find out, they live in the Villages, a large retirement community in Central Florida, and have purchased rental real estate both inside and outside their IRA.

Mary finds tenants, collects rent checks, and oversees the maintenance of the five houses they own.  She requests expenses to be paid from her IRA for those homes held in a self-directed IRA account.  John is nearing Required Minimum Distribution (RMD) age from his IRA, which will occur when he turns 70.5.  They are not concerned, as the rental properties they have purchased in their IRA are providing cash flows of 8-10%.

Because they have good tenants and friends who assist them in looking after the properties, they spend over 100 days per year on cruises.  Evidently Mary scours the internet looking for last minute deals on cruise lines and usually pays less than half-price for their travels.  They use the rental income from their non-IRA owned rentals to help fund their time on the water while amassing their IRA rental funds for future retirement needs.

After a good breakfast with Mary and John, it dawned on me that most of our self-directed clients are much like them – wanting to stay in control.  Whether on the seas or simply walking on the beach, NuView IRA is ready to help you achieve your retirement dreams on your own terms. Give our Florida self-directed IRA administration company a call today at 877-259-3256 to discover your retirement options.

The Power of IRAs

August 29, 2012

According to the Investment Company Institute, there are 46 Million US households with IRAs. What is remarkable is the difference in those households that have an IRA, and those that do not.

Assets of an IRA household were 8 times larger than those households that did not have an IRA. Eight times! While the IRA may not be the holder of all the wealth, there is little doubt that the discipline involved in saving and contributing to an IRA is likely illustrated by other choices made by the members of the IRA household.

Your ability to achieve your retirement dream is dependent on two variables: saving and contributing consistently, and investing wisely. For many, investing wisely is the most difficult challenge. The super investor Warren Buffet is often quoted as saying, “Never invest in a business you cannot understand.” Most of us that are invested in mutual funds and selected stocks seldom have any idea on what our investment dollars are doing.

If you are a bit frustrated with not being in charge, the answer may be to self-direct your IRA. We have thousands of clients who feel much more confident in their own choices that those brokered by others. Private placements, real estate, tax liens, and joint ventures are just some of the ways you can seize control of your retirement plan through NuView IRA, while earning tax deferred or tax free profits.

If you would like to learn more about your investment options with a self-directed IRA, contact our Florida self-directed IRA administration company by calling 407-367-3472.

What will happen to the tax rate once the Bush tax cuts expire?

August 24, 2012

Regardless of your political opinions, Congress agreeing to keep taxes low while we are experiencing the highest deficit in our nation’s history may be unsustainable. As the House and Senate pass versions of bills that neither will sustain, the taxpayer is left more confused than ever.

If you have already put funds into a traditional IRA account, the government may have given you a tax write-off on your contributions and let you defer the tax on any earnings. Now, the government may be changing the tax rate you have to pay when you withdraw the money in the future. In addition to this, when you turn 70 1/2, the government does require you to take at least the required minimum distribution (RMD) from your IRA each year to force you to pay that tax.

You can think of your IRA as if it has a mortgage on it and next year the government may be raising the rate you have to pay. However, converting to a Roth IRA is like paying off the mortgage on your IRA early, and at these lower rates.

Nearly everyone is a candidate for a Roth conversion this year. However, executing a Roth conversion requires professional assistance. Contact our Florida IRA administrators at NuView IRA today to learn how to convert your IRA. Call 407-367-3472 today!

Mitt Romney and the Mystery Behind His IRA

August 17, 2012

During Romney’s time at Bain Capital LLC, the company used a SEP-IRA that had a maximum contribution limit of about $30,000 per year. Assuming Romney maxed out these tax-deferred contributions, he would have invested approximately $450,000 in his individual retirement account during his tenure at Bain. BUT, he may have up to 227 times that amount in his IRA! The baffling mystery about Mitt Romney’s significant wealth is how he was able to build up between $21 million and $102 million in his IRA during the 15 years he was at Bain Capital.

So how did he do it? Of course, we don’t know, but there are several theories out there that attempt to make sense of it all.

One theory is that Romney contributed to his IRA using the low-basis, low-value stock he received as a partner at Bain Capital in the different buyouts the company did while he was there. Another theory is that Romney contributed limited-partnership interests to his IRA in Bain’s buyouts, and quite possibly only at a fraction of their market value.

While there are limitations concerning the amount of money that can be contributed tax-deferred to an IRA, there are no restrictions on the amount that the contributed funds can earn, and can continue to earn, on a tax-deferred basis, even after the contributions have stopped. Therefore, in the future when Romney withdraws funds from his IRA, the IRS will get a hefty sum of money in taxes. Too bad his money isn’t invested in a Roth IRA!

Diversify!

August 13, 2012

Diversification is a strategy that should be deployed by anyone who cannot accurately predict the future – which is just about everyone. While the stock market provides an ability to spread investment risks over geography, company size, market sectors, and other categories, the fact remains that public exchanges cannot provide full diversification.

You cannot own titled real estate purchased from your broker in your IRA – instead, he will likely offer a choice of publically traded Real Estate Investment Trusts (REITS). You cannot own gold bullion in your IRA if you rely on the stock market – rather, the market will proffer equity interests in mining companies instead. Most business startups have no access to public markets at all, with investors unaware of the potential attractive returns to the early equity participants.

Without a self-directed IRA from our Florida self-directed IRA administration company, it is unlikely that full diversification can be achieved in a retirement account. Whether you are looking for cash flow from property rentals, private lending and investing in tax liens, or instead investing for future appreciation in precious metals, limited partnerships or new business ventures, the choice is yours with a self-directed IRA. Call us at 407-367-3472 to learn more!

True diversification lies with understanding you choices, taking time to know the market, and executing your purchases with confidence, then staying involved in your investments.

Finding Opportunity in Private Placements

August 7, 2012

A hush sweeps over the ballroom of a four star Orlando Resort as a well-dressed CEO and CFO stride to the stage. They now have exactly 20 minutes to convince a sea of well-heeled investors and venture capitalists that their new business venture has a compelling market advantage, will enjoy meteoric growth, and one day, be acquired or “go-public”. They are seeking a five million dollar infusion for further product development and market expansion.

Meanwhile, across town, several leading bankers from competitive firms meet in secret at a private business club to discuss the chartering of a new community bank to serve an underrepresented business segment of the marketplace. It will take a minimum of $6 million to launch the bank, and over the course of raising capital, involve from 400-600 individual investors.

In 2006, there were 179 new banks chartered in the United States, led by 21 new financial institutions in both California and Florida. Over $1 billion was raised for these banks – all from the bank principals, board members and private individuals. In the same year, venture capital funds based in the US raised over $24 Billion – representing a mixture of pension plan dollars, combined with investments from high net worth individuals. Florida Venture, the sponsor of the annual ballroom event, has assisted in raising over $1.4 Billion for new companies headquartered in the Sunshine State.

What does each of these groups have in common? They each represent an opportunity for private investors to risk capital in order to potentially reap the rewards of significant growth – outside the traditional stock market choices. Just as importantly, these investments may be accessible to IRAs and Individual 401(k) plans through a self-directed administrator such as NuView IRA in Orlando.

While your stock broker may consider private investments a risk not worth taking, it may provide an important avenue to diversify your holdings and spread your risks across another class of investments. Here are just a few of the pros and cons of private placement investments:

Advantages:

  • Ability to meet/know the principals involved
  • Utilize your personal knowledge of an industry
  • Get in on the ground floor
  • Access large up-side potential
  • Help the company grow – through referrals, etc…
  • Participate in the excitement of funding a new venture

Disadvantages:

  • May be difficult to exit the investment quickly
  • May require investor qualification
  • True Market Value may be a challenge to determine
  • Company may have limited operating history to judge performance
  • Could be higher investment risk
  • May not be subject to certain government reporting requirements

The challenge of investing in private placements often can be locating the opportunity. If your interest is banking, most states will post a listing of denovo (newly chartered) banks on their state regulatory website, together with contact information. For other private ventures, you may turn to the myriad of venture capital clubs that meet routinely in cities across the country – one such listing is found on www.venturea.com. Simply by talking with financial professionals such as bankers, lawyers, CPAs, opportunities may also be uncovered right in your own community.

Regardless of the source, the responsibility is on the investor to properly vet the company, do the research and make a calculated decision on risk vs. reward. Self-directing your IRA or tax deferred funds may also prove to be the best source of capital for you, especially if the investment may be illiquid for several years – and the funds are not needed short term.

Glen Mather is President of NuView IRA, Inc., a leading self-directed IRA administrator in Orlando. He can be contacted at 407-367-3472 or gmather@nuviewira.com

Self-Directed IRAs

August 3, 2012

Last week, the Romney team visited the Villages, a sprawling community of over 100,000 residents over the age of 55, only about an hour from the NuView headquarters in Orlando. What does this group have in common? And why do politicians consider this a critical stop to deliver their stump speech? These residents have an obsession with protecting their social security, Medicare, and retirement plans. Politicians use this group as a surrogate to prove their policies are “senior-friendly”. I’m told that until you are retired, you cannot understand the helplessness of relying on personal savings, which have been ravaged by low interest rates and stock market uncertainty.

If only those of us who are still working had the same obsession about saving and investing wisely! Most workers continue to rely solely on the advice of money managers, or mutual fund managers to ensure their retirement is adequately invested. When the market takes a dip, participants in employer sponsored plans often scale back their contributions, due to a lack of confidence in their investments or their advisors. Most professional financial advisors see lower stock market prices as a golden opportunity to buy, while human nature moves investors to become more cautious and withdraw.

It’s time that we all woke up to the fact that no institution, money manager, or even financial advisor has more at stake than you do – in the health of your retirement funds. Despite the droning platitudes of the politicians, their ability to ensure a stress-free retirement for you is limited by huge budget deficits, tax stalemates, and the burgeoning growth in the number of taxpayers moving into their retirement years.

If you feel inadequate in making good investment decisions, find several friends, associates and professionals who can serve as your advisors – and avoid being influenced only by one source. Just as you wouldn’t subject yourself to a critical medical procedure without a second opinion, don’t move forward with important investment choices without consulting with several advisors.

As stated in the Wall Street Journal, over the next ten years, private investment choices are likely to outpace the public markets. Ensure that you understand all your options, including a self-directed individual retirement account that can access those private investment choices. You may find that understanding your options for investing in rental real estate, private lending, or buying precious metals through your IRA may be easier than reading a 100 page disclosure on the latest IPO. The best result is one that results in making your retirement political proof, providing a greater insulation against the potential damages of future policy decisions, and less reliant on the governments “dividends”.

 

Financial Advisors: Ignore the Opportunity of Self-Direction at your Own Peril!

July 10, 2012

As President of NuView IRA, a leading retirement plan administration company in Orlando, I have the opportunity to speak to hundreds of investors and investor advisors each month. The single-most common question that is posed to our staff is… “Why haven’t I heard about self-directed retirement plans earlier?”

IRA or retirement plan beneficiaries generally look to their CPA, attorney or Financial Advisor to inform them of their investment choices… all their choices – including opportunities outside of the conventional stock market selections. Many times clients will change advisors that appear uninformed or unaware of investment vehicles that provide more attractive returnsthan general market choices.

The Wall Street Journal recent headlines trumpeted the Billions of dollars that are flowing out of the stock market to other investment choices. This certainly has drawn the attention of fund managers, brokers and the investment community as a whole. The key is that as a fee based Financial Advisor, both you and your clients can reap a powerful reward when you add self-directed retirement services to your investment portfolio.

While most financial planners continue to offer the usual mix of mutual funds, stock, bonds, annuities and other market based investments – we are seeing the higher net worth client moving toward LLCs, private placements, mortgages and real estate as part of their retirement portfolio. The investment strategy may be increased return, lower risk, greater cash flow (especially important for clients in the distribution phase of their life) or just diversification.

The next generation of Financial Advisors will include these “non-traditional” retirement investments as part of their investment strategy – and continue to earn their contractual fees and commissions over the total assets of the client.

At NuView IRA in Orlando, we are not permitted to offer our clients investment advice – as third party-administrators and recordkeepers – we instruct our clients to seek out the best possible advisors – then make an informed investment decision. Our role is to make sure that the client’s paperwork, administration and reporting meet the IRS requirements.

As a self-directed IRA administrator in Orlando, we are approved to provide Continuing Education credit for Financial Advisors – and as such, hundreds of Advisors are learning about self-direction and the possibilities it can hold for them and their clients. If you wish to learn more, please contact your local Entrust affiliate to discover the power and possibilities of unlocking your retirement plan.

Glen Mather is President of NuView IRA, Inc., a leading self-directed IRA administrator in Orlando. He can be contacted at 407-367-3472 or gmather@nuviewira.com

Bad News? What Bad News!

July 2, 2012

What a great time! Banks are no longer lending, no one wants to buy, and people are not paying their taxes. The Washington crowd is in disarray, the Federal Reserve is practically out of tricks, and the prospects of another recession, we are told, is a statistical possibility.

Certainly those thrust out of work or those underemployed are bearing a very painful burden during these difficult times. We do need policies and leadership in all branches of government to make the tough choices to rebuild our economy to one of sustained and steady growth.

But, to investors, the timing may never be more fortunate. Let’s take a few examples, including a personal illustration, to clearly see the opportunities that are available for those that can risk capital.

In July of last year, together with a partner, my retirement plan purchased 50% interest in a two bedroom, one bath 1200 sq ft home in Lake County. In a better economy, we could not have purchased this home, with a dock on a canal leading to Lake Dora for $27,000. A renter has signed a lease for $500/month, providing a gross return after property taxes and insurance of over 11%, even after we spend another $8,000 for a new roof. As the investment is in my retirement plan, all gains will grow tax free.

Recently, I was invited by Fox 35 news to do a piece for their newscast on unique assets that can be purchased with an IRA. Needless to say, the market had just dropped by 600 points and people were in a panic. Keith Landry came by our office and produced a piece explaining how tax liens can be a great way for an individual investor to diversify. Sandra Edmonds of CFRI often provides workshops on how this can be done, and we have many IRA holders that self-direct their IRA funds into these investments. According to a local expert, Doug Gale, President of REO-America, returns of 6-8% are what one can expect, but can fluctuate, according to the market and those showing up to bid on the on-line auctions.

The best news of all, however, is that self-directed IRA holders can lend their money, backed by real estate. This opens the powerful option of real estate investors utilizing private individual’s retirement accounts to fund their purchases.

This type of lending, at rates determined between the borrower and the IRA owner/lender, can provide a great return to the borrower’s IRA while providing much needed capital to the real estate investor. At our self-directed IRA administration company in Orlando, we have clients lending money at rates from 8-16% – all directed by the IRA holder. There is no better time to ask your friends and neighbors about their IRA and their desire to invest in your project or purchase. All lending can be backed by a first or second mortgage on the property.

With a self-directed IRA from our Orlando retirement plan administration company, you will start to see your options in a much different light. Invest in anything the IRS doesn’t prohibit, unrestricted by the limited choices available from your current administrator. From start-ups to LLCs to foreign currency, all can be available to you tax deferred, or in the case of a Roth IRA, tax free.

Just think – if the economy was booming, real estate prices would be double to triple today’s prices, banks would be lending regardless of risk, and everyone would be paying their property taxes. If you have a self-directed IRA, thank goodness it isn’t!

Glen Mather is President of NuView IRA, Inc., a leading self-directed IRA administrator in Orlando. He can be contacted at 407-367-3472 or gmather@nuviewira.com

Self-Directing: Unlocking your IRA

June 19, 2012

Did you know that you can invest in real estate, mortgages, leases, and other asset backed investments inside your retirement plan?

Indeed, since 1975 self-directed plans have been available, although relatively few IRA holders have taken the time to understand their options and take advantage of such retirement plans.

There are three things you should know when you self-direct your retirement plan:

  • Which retirement plans are best – Traditional IRA, Roth IRA, SEP, Simple or Individual(k)
  • What types of investments you want to make within the plan
  • Understand the IRS rules of self-dealing and prohibited transactions

The IRS rules regarding prohibited transactions are not too complex, yet one should consult a tax advisor for specific advice. Disqualified people include your immediate family (except siblings) employers (in a qualified plan), certain partners, fiduciaries and other categories spelled out in IRS code. IRA owners may not borrow money from their IRA, sell property to it, receive unreasonable compensation for managing it, or use it as security for a loan. There are also several named categories, such a collectables which also may not be held by your IRA.

The opportunities outside these prohibited transactions are significant. You may buy, sell or exchange investment property inside your self-directed retirement account. You can partner with friends, relatives and business associates to purchase property, and then lease it to anyone that is not a disqualified person. You can roll property from one retirement plan to another – or even take property from your plan as a distribution.

We have seen clients form investment groups, combining IRA and non-IRA funds to purchase and hold property, rehab and turn properties or simply lend out the funds in the form of notes and mortgages.

In addition to these ideas, an IRA may also invest in partnerships, LLCs, private stock offerings, loans (both secured and unsecured), tax lien certificates, purchase options, joint ventures and other investments.

So if you are confident in your abilities to make your own investment decisions, have the desire to reduce or eliminate the tax consequences on your gains, and have the resources to invest – self-direction may prove to be a wise choice for your retirement plan.

Glen Mather is President of NuView IRA, Inc., a leading self-directed IRA administrator in Orlando. He can be contacted at 407-367-3472 or gmather@nuviewira.com

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