World Markets to close? October 10, 2008
Posted by Jeff Nabers in Health, Money, Personal Enjoyment.Tags: invest, currency, government, Money, plan, retirement, power, stock, market, constitution, financial, crisi, world, leader, gloabalization
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In a Bloomberg article today, Italain Prime Minister Silvio Berlusconi said world leaders are considering the closing of world markets so they can rewrite the rules of how they work. He claims the solution can’t be for one country, but instead it must be global.
As terrorism and financial terrorism make us fearful enough to pass the Patriot Act and globalize world markets and power, a Benjamin Franklin quote comes to mind:
“Any society that would give up a little liberty to gain a little security will deserve neither and lose both.”
See the whole (more…)
My Meeting with the Social Security Administration August 19, 2008
Posted by Jeff Nabers in Money, Self Directed IRA/401k.Tags: 401k, benefits, budget, government, inflation, invest, investing, investments, ira, pension, retire, retirement, self directed, social security, social security administration, solo, Solo 401k, ssa, stock market, trust fund
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About 6 months ago, the Social Security Administration started calling my office asking to arrange a meeting with my IRAAA colleagues and I. For months I had shrugged it off because of the fact that many of my readers, customers, and colleagues plan their finances as if SSA will fail. Taking control of your IRA/401k funds is all about putting your retirement in your own hands. So when I received the message from SSA, I figured it must be some kind of mistake.
After numerous messages, I spoke with them, and a meeting was set here in Denver. Associate Commissioner of the Office of External Affairs was flown in from Washington, D.C. I didn’t exactly know what to expect.
Their Concerns
Here I provide a brief summary of their objective in this meeting:
- Their budget is being cut
- They now have (more…)
Video: Self Directed Solo 401k July 31, 2008
Posted by Jeff Nabers in Self Directed IRA/401k.Tags: account, contribution, custodian, invest, investing, ira, limits, loan, plan, reale state, retirement, self directed, Solo 401k
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I recently sat down with Eric Wikstrom - CPA, CFP, & Founder of Integrated Wealth Strategies.
In this segment we briefly discuss the Solo 401k and how it differs from a Self Directed IRA.
The following clip observes the benefits of unrestricted investment choices. (more…)
Follow Up: 30 Day Challenge - Can you do without TV? July 22, 2008
Posted by Jeff Nabers in Health, Personal Enjoyment, Personal Productivity.Tags: management, retirement, schedule, television, time, travel, trips, TV, vacation, work
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It’s been 30 days since I put out the challenge to not watch TV for a month. Speak up and share your experience.
Here’s what I found over 7 years ago when I stopped watching TV…
- More time - This is pretty simple. The average American adult watches 5 hours of TV per day. Convert some of that into work or starting a business to increase or replace your income. Convert some of it into personal enjoyment.
- Lower discretionary spending - I am susceptible to materialism. When I allow my brain to be bombarded with advertising, it creates a desire to buy things, and I act on it. Advertising continues to happen because it works. The fact that it works means that (more…)
Penalty Free Early Distributions May 23, 2008
Posted by Jeff Nabers in Money, Personal Enjoyment, Self Directed IRA/401k.Tags: investment, self directed, ira, 401k, custodian, tax, retirement, administrator, penalty, early, distribution, 10%, 1099, 1099-R
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Probably one of the must unknown facets of retirement planning is that you can distribute before age 59 ½ for any reason without paying the extra 10% early distribution tax. How?
Substantially Equal Periodic Payments
- Set a distribution schedule calculated using IRS tables
- The schedule must have regular payments of a certain consistent amount.
- You must make receive these distributions from your retirement account either until you reach age 59 ½ or for a 5 year period… whichever is longer.
Internal Revenue Code Section 72(t) is where the extra 10% tax for “early distributions” (before age 59 ½) is imposed. However, if you read on to IRC 72(t)(2)(A)(iv) it is explained that the 10% tax is not applicable to any distribution that is part of a series of Substantially Equal Periodic Payments - or SEPP for short.
To give you an idea of how this works using calculations from IRS life expectancy tables, let’s examine a fictional case study with round numbers for simplicity:
Jared is considering early retirement at age 45, and over the years he has grown his IRA to an asset value of $2,000,000. He isn’t sure whether he wants to completely retire, work part time, pursue a career change, or start a new business. Let’s take a look at his options… (more…)
Consumer confidence falling & the $600 checks to save the day May 5, 2008
Posted by Jeff Nabers in Money, Personal Enjoyment, Self Directed IRA/401k, real estate.Tags: 401k, consumer, cycle, economic, economy, education, finance, invest, investing, ira, poor, retirement, rich, self directed, spending, stimulus, wealth, wealthy
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Did you get your $600 check yet? What will you do with it? Surveys are saying that most Americans will use their “Economic Stimulus” check to deal with gas, food, and catching up on bills. This doesn’t stimulate the economy.
Consumer spending stimulates the economy. In other words, the Department of Treasury sent out checks to us all totaling $150 billion in hopes that we would buy clothes, jewelry, and electronics. Let’s take a step back for a moment and assess how our system works:
Two thirds of our nation’s economic activity is coming from people spending money. When our economy is “going good” it is because people are spending money - often more than they make or have. When our economy is “doing badly” it is because people are saving money or living within their means.
Finances 101
This is America and everyone wants to be rich. How does one become rich?
Make more money than you spend.
Or spend less than you make… in case that hits closer to home for you.
A person following those rules is becoming wealthy, while a person who practices opposite rules is becoming poorer. Here’s where things start to look funny. Our economic system is booming when people are becoming (more…)
Prohibited Transaction Basics April 24, 2008
Posted by Jeff Nabers in Self Directed IRA/401k.Tags: 401k, 4975, account, department of labor, disqualified person, dol, investing, investor, ira, irs, plan, plan asset, prohibited transaction, retirement, self directed
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The most notable difference between endeavors down the path of using a self directed IRA versus traditional investing is the unique rules that apply to the former. The extremely simple rule is that an IRA (specifically) cannot buy life insurance or collectibles (such as rugs, works of art, alcohol, bullion).
The more involved rule is known as “no self dealing” and is described in Internal Revenue Code section 4975. This rule basically says that for each retirement plan/account, there is a list of “disqualified persons” with whom that plan cannot do business. These DQPs include:
- The accountholder/participant and any other fiduciary (person who makes investment decisions for the plan)
- Companies who provide services
- A member of the family of #1 or #2 above (family defined as spouse [husband/wife], ancestor [parents, grandparents, etc], lineal descendants [children, grandchildren, etc], and spouses of lineal descents)
- A corporation (or other entity) that is 50% or more owned (directly or indirectly) by #1, #2, or #3 above
- An officer, director, 10% or more owner, or highly compensated employee of #4 above.
- A 10% or more (in capital of profits) partner or joint venturer of #4 above
Every self directed IRA/401(k) investor should make this DQP list before making any investments.
Too many people seem to think of the list as only “the accountholder and his family”. As you can see it is a bit more involved than that. This doesn’t require calculus, but you should actually write out the list step by step to ensure that it is complete. This list can actually get quite extensive if you, your family member, or anyone who provides services to your plan has ownership in several companies.
So, what is a prohibited transaction?
In a nutshell, when a DQP transacts with a plan it is a prohibited transaction (abbr “PT”). The trick here is what is considered to be a “transaction”. This is generally defined in IRC 4975 as when one of the following happens between a plan and DQP directly or indirectly:
- sale, exchange or lease of property
- lending of money or extension of credit
- furnishing of goods, services, or facilities
So I consider that to be the general rule. There are a couple of special rules and they (more…)
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