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so just a quick disclaimer before we get really into it advanta ira and our employees we do not provide investment advice or endorse any product all information provided here today is for informational purposes only and all parties are encouraged to consult with their attorney's accountants and financial advisors before entering into any type of investment or making any taxable decisions for themselves personally my name is alex bernie i've been with advanta since 2012 a certified ira services professional i really enjoy what i do here at advanta i started doing uh this back in 2012 and i started doing investments for clients i have plenty of experience doing all manner of different types of different fundings different closings i was involved in over 1200 different investments before i kind of transitioned into my new role here in doing education and marketing for our company so if you have a question even if it may not necessarily be directly specific to checkbook controller maybe it has something else to do with self-directed iras in general please feel free to ask i am happy to answer those questions and if you would like a consultation afterwards please feel free to reach out to me directly all my direct contact information is on the slide here in front of you so what is a self-directed ira we'll kind of start with a little bit of the basics and work our way into the specifics of checkbook control and what that actually means for a self-directed ira but self-directed iras give owners complete control over their retirement funds more specifically control gives them complete control over exactly how those funds are directed and administered self-directed iras can use alternative assets to create diversity and build retirement and wealth and the different types of assets you know although there are a few listed right up here are are are as varied as the day is long so just understand that maybe just because you don't necessarily see the deal up here that you're maybe looking to do or the specific type of ass that you're looking to pursue the guiding principle with self-direction is that so long as the asset is not held on a traded securities market we can probably hold it and it can probably be done within a self-directed ira and the main reason people haven't heard about this is that larger banks and financial institutions they just don't have the specialty the specialized service and the time if you will to administer high maintenance assets such as things like real estate things like promissory notes things that take a very specialized touch and a lot of specific knowledge in order to make sure that they are administered record-kept and ultimately acquired properly within the scope of the ira there's roughly about four percent of the total ira market is self-directed and the retirement market as far as a figure of exactly how much capital is invested is somewhere in the neighborhood of about 27 to 31 trillion dollars of invested capital within retirement plans now in the context of doing self-direction and more specifically checkbook control it's not going to be necessarily defined to one type of ira you can do checkbook control and you can self-direct any number of different types of plans most people for whatever reason think you have to have a specific type of ira in order to do this namely people think that you have to have a roth ira which is just apparently not true you can self-direct any of the plans that are up on your screen right now and for those of you that are just listening i'll kind of go through them here real quick you can self-direct and checkpoint control traditional ira a roth ira if you're employed individually you can do a set by array any type of former employer plan can be rolled into a self-directed ira whether that be pre or post tax so things like thrift savings plans for armed services for all 401ks 403 b's governmental 457 plans cafeteria plans larger administered excuse me um pension plans if you were a unionized workforce or part of a collective bargaining workforce simple iras you can even you can even self-direct a health savings or education savings account so just because maybe you're thinking that hey you know i have to do this investment through a certain type of ira don't let that be a guiding principle understand that you can do these types of self-directed investments and do chocolate control through any number of these plants you can even combine these plants into one self-directed uh checkbook control type llc as well so there's a lot of different leeway there's a lot of different ways to do this you don't just have to have one type of plan in order to accomplish that now we mentioned that it's alternative assets that you do within self-directed iras and for those of you that may be watching this later or just trying to reference back to the slides again which slides are uploaded as a handout to this presentation i just like to put it up there we're not going to kind of go through each one of them each one of these different types of assets has a whole presentation that could be put against it but for the most part the main thing that most of our clients utilize is things like real estate and and real estate you can kind of do any any real project that you're looking to do can be accomplished through an ira and specifically control it doesn't have to just be single-family homes ready to rent you can do a ground-up rehab you can buy land you can speculate you can do really whatever you'd like to whatever makes the most financial sense for you and your situation whatever you feel the most comfortable and what you think you can make the most money at is ultimately really what should guide your decision on what type of asset class to purchase and also obviously um advice of whomever is advising you on your on your financial uh purchases so here's just some of them enumerated up there for you um now let's get into you know kind of what you hear from checkbook control with an ira now checkbook iras there's there's a little bit of definition that needs to go into the front end of this uh some people and i get this call a lot and it's it's by no fault of the person um it's just kind of information that's out there isn't always the best information is that people think that uh there's so that a checkbook ira is a type of ira specifically it's not what i really want people to understand is that using checkbook controller when people talk about checkbook iras it is a way that you structure the investments within an ira the ira and its fundamentals if you go through the irs's code and you look through the irs's website you will find nothing that says checkbook ira audit it is not a thing it is the way that you structure the investments underneath of that account that ultimately gives you checkbook control or allows you to write checks and hold the checkbook for the ira so the way that an ira works in general if you don't have checkbook control is that you have it held as a custodial account meaning that the custodian in this case advanta will administer the assets in cash for the ira um and if you're not using an llc or checkbook control that means that we retain all the uninvested cash we pay all the bills at the direction of the client if you have a piece of real estate that needs a new water heater you get someone out there to replace the water heater you simply go on your advanta ira.com portal have us rip the check and they're paid the following business day which obviously does add a little bit of lag time into things but it is it is fully record kept by us you get the benefit of us having copies of checks invoices uh you know we can really show that uh everything is being done and kind of help with all that bookkeeping now with the chatbot control account instead of the administrator and custodian directly holding the cash and assets a entity and we'll get into the different types of entities here in a minute but an entity in most cases an llc will be formed it will be a single member for the most part manager managed entity that the ira will be the shareholder of meaning that the ira directly owns a private entity that then in turn that entity if your name is the manager of that entity will be the one writing checks and having checkbook control so again remember it is a structure not necessarily a type of an account that you're looking at with this which is an important distinction to remember because i like to make sure people understand exactly what they're getting into when it comes to any type of financial uh arrangement um it's important to understand exactly what's going on so that way if you ever have to explain it to someone like a cpa or even if you have an issue and you need help with your custodian it's important to understand exactly what you've structured and exactly how things work in order to make sure that you're you're doing the most to make sure that you're getting the most out of the structure so with the checkbook control account the client personally attains control over the cash by using that third-party bank account and then you're able to issue payments directly out of that account and receive deposits directly back into that entity as well without having to come through the custodian first so that's how you get that checkbook control aspect of the ira by using the the auspice of some type of entity between the custodian and the ultimate investment now there's a different there's a few different ways that you can achieve control you don't necessarily have to use an llc some people like to use a trust now i will say that the lion's share of people that come to advanta use an llc um it's a bit more flexible there's there's a little bit more leeway with the the way that you can direct your investments with an llc it may be a little bit more expensive than a trust in some aspects but you need to understand really that um these are two different types of entities there are two different ways to accomplish relative of the same thing but they do have their own set of rules with each and it's really important to understand it before you go forward with it so with either of these you have a few different aspects you need to look at you need to look at the management who writes the checks how the assets are taken and how the ira interacts with that entity because it is a very important distinction to make so with a limited liability company or llc you have a manager so you have a manager managed operating agreement which which will show how everything with that entity works now to have checkbook control obviously advance up so the custodian's not going to be writing checks and doing everything so who is going to be doing that that is going to be the manager named in that operating agreement in the llc's case it can be the client so the client directly can write checks uh sign contracts for closing sign sale documents and everything you know that is whom the authority to do everything with that entity is vested in its manager the title of the assets are going to be at the name of that llc and the ira will be a member of the llc so what is a member think of it as another way it's another way to say shareholder it's another way to say owner but it is important that when you're looking at this that you understand some of the legal terminology that goes into showing what your ira is in relation to the institute that you choose to control with so real quick an llc has a manager that can be the client that your checks are written by the manager the title of the assets is in the name of the llc and the ira's relationship to that entity is that it is a member of the llc now with the llc one reason that some people do like to go with a trust is that llcs have to pay an annual registration to whatever state that they are registered in keep in mind that with regard to ira and llcs you do not have to register the llc and the state that you currently live in which is a really good thing especially for people that live in states that have a very high administrative interaction or very expensive administration for their states states a lot of the states on the west coast so california washington oregon um states southeast northeast like um you know maybe massachusetts new york some of the ones in the midwest illinois um you know cheaper ones that a lot of our clients look to and again this is something that you need to get advice from on whomever um might be advising you on how to do this or the person drafting your llc uh states like florida georgia texas um particularly a little bit cheaper for llcs and maybe have a little bit of a of a less involved requirement on an annual basis for keeping your llc registered on an annual basis but keep in mind that that is an additional cost to an llc that is not born by a trust now with a trust the ira cannot the ira owner cannot be the trustee um you are acting as a fiduciary at that point and irs rules state that you cannot act in a fiduciary capacity to your own ira so with a trust you have to have a clear independent third party act as the trustee so the person that's going to be writing the checks and managing that checkbook control entity has to be a third party for the client directly and it can't be a disqualified individual meaning um actually we'll get into that in a slide or two and then the assets just like with an llc it's being in that name it's in the name of the trust but it is bifurcated with regards to how the ira is involved in the actual setup of that trust the ira is going to be the grantor and the beneficiary so unlike with the llc where all of the benefit and cash come directly from the shareholder the trust has two different parts it has the grantor which is the individual which grants the assets or property to that entity so the ira is the one adding the cash into that trust and then who gets the benefit of the performance of the of the assets held within that trust which is beneficiaries the ira is going to be named in two places on the trust as opposed to just one place on the llc now that might be a lot of information but keep in mind that that's something that you know you really need to look at when you look at checkbook control that you do have options it's not just an llc and it's not just a trust there's a lot of different places i've seen out there online and in the industry they'll say hey you have to use this way or the other they both have their benefits they both have the drawbacks just understand there is choice but each one does have a cost benefit for that now with regards to a trust let's break this down a little bit further because again it's really important to understand when you go to choose one what really goes into either or and i saw someone raise their hand please if you have a question type it into the chat box um again we might get to a little bit later i'll look at it and i'll certainly answer this that come up so make sure that you do answer those if you do have any questions um just go ahead and type those chat box just double check and make sure okay no questions yet so now with the trust there's many different kinds of trouble looks like we do have a question okay so with a trust there are many different kinds of trust out there trusts have been in existence for hundreds of years as far as how they're codified in u.s law so there's a lot of different types of them out there you don't necessarily need to pick one over the other but it's important to know that you know it's not one size fits all with regards to choosing the type of energy if you go with a truss there's revocable trust meaning that you can at any point dissolve the trust and essentially file everything back into the grantor or the beneficiary there are irrevocable trusts not something we see a lot of with iras because as the name indicates being irrevocable it's really hard to revoke it so if you need to change something it's hard to do there's special needs trust that can benefit individuals with disabilities there's life insurance trust not all of these necessarily work with an ira so making sure that you get the right one for your ira is important most of the time people will just choose what is templated as a personal property trust it's nothing too crazy it basically is a personal property trust is what's called a grantor beneficiary trust meaning that the grantor and the beneficiary are the same entity which is important because the ira um would need to be the grantor and the beneficiary of a trust so again the most common type being for iras to use is a personal property trust uh you know don't think that that's something that you're going to add your own personal assets in it's just kind of the naming convention that's used for that specific type of entity now the parties in a trust the grantor is the one that contributes the assets to the trust the trustee manages the assets of the trust and the beneficiary is the ultimate recipient of that trust so just good things to understand especially when it comes to trust that there's a lot of different flavors of these things and you don't necessarily need to get too far into the weeds with a specific type of trust for an ira again most common type being a personal property grant or beneficiary trust so again oh so again with the personal property trust you have a bank account you have a third party trustee which maintains your checkbook control now there are some other types of trusts out there that get confused a little bit when it comes into the specifics of a checkbook control trust now in the state of florida we have land trust that is not inherently a checkbook control trust they're treated just like real estate they don't necessarily have a bank account they do have a trustee but they don't always work in the same way so it's important to do the research with regard to who is actually going to be handling the uh the drafting of these things because you want to make sure you actually get the right type of trust for your ira a land trust not always being the best fit now llc's these by by and large are going to be the most popular type of entity to choose for individuals with iras and the biggest reason for that is simply because the ira owner can be the manager of that llc now remember back to the trust portions that we're recovering the trustee so whom signs the check who has that checkbook control cannot be the manager so if you as the client want to have checkbook control there's really not a huge benefit at least in my eyes to using a trust if that's really what you want to have the control for because it's not much different than just contacting us as the custodian to get a check written because you still have to contact a third party in order to get something written or signed so the parts the moving parts of an llc the members are the shareholders and the equity holders the manager i can be thought of as the officer of the president decision maker of that and the operating agreement is the really important part of having an llc for an ira in almost any state you can go and register on their on their online portal and set up and register an llc you don't necessarily have to do anything other than just pay some fees and get an llc set up while that's all well and good that is an essential step in the process of setting up an llc it is not it is not the only thing that needs to be done we need to have an operating agreement drafted and the state does not give you an operating agreement that's where you need to have a third party that is qualified to draft such a document make one for your ira because the operating agreement is going to show the ira as the member it is going to show that it is manager managed it is going to name the manager and it is going to create the llc as an investment in the ira's eyes so that's the really important part is that yes a lot of people have you know llcs and i and i hear it a lot and i heard a lot when i was doing investments for clients they would come to me and say hey i already have an llc that i'd like to use for this you know i set it up with the state years ago um i would encourage you if you're going to be doing anything for an ira start fresh use a new llc start from the very beginning even if you've had an llc sitting out there for a couple years and you haven't ever funded it just do yourself a favor and if you're going to be doing something like this start the very beginning do something new make sure that it has been set up and solely used just for uh your ira we got a question that popped up um so the question is is that can i personally pay to establish the llc or does the payment have to come out of the ira it's a really good question and it's very much a chicken and egg scenario because rules regarding iras is that iras are responsible for paying any and all expenses directly related to their assets in in the ira so for example if a piece of real estate if you need to pay property taxes has to be paid from by the ira any and all expenses related to closing has to be paid for by the ira an llc is going to have expenses um and if the llc does not necessarily have cash in it yet does how exactly is the llc going to pay that expense to have itself set up you know it has to be paid to be set up so how does that get paid now most states will just say hey you know put a you know put in a credit card and pay the fee for the filing for your llc while i would be uh it would be wrong for me to say that that i know that clients have never done that and plenty of them probably have uh you know it's my job to give you the most correct information and and give you the tools to do things as correct as possible now while it may not necessarily be be a route that everyone can take you would need to essentially in the most perfect scenario have a friend or some other third party pay that fee for the registration for the first year and then just have us write them a check or write them a check out of the llc would be what i would recommend um now have have people done it and have people had issues with it no um but again if it were to be looked at um you know it's i would much rather have if i were to ever be audited have everything in my ira that i've worked so hard to put in there be as protected as possible because and have done everything as correct as possible uh let's get another question here before we move on to the next slide i know you were talking about iras but can we self-direct a 401k plan for the same activities absolutely um 401ks they have some other cool aspects where you can checkbook control without even needing um an entity like a trust or an llc i mean you can certainly self-direct them in many different ways with different types of of strategies with how those plans are administered and custodized so yes you can absolutely do that and last before we move on uh can an existing 403b converted to a roth self-directed ira yes it can questions okay check rules for checkbook ira llc's must be manager managed now what does that mean so most llc's if you were just to get a boilerplate operating agreement would be member managed because outside of an ira typically if you wish to set up a personal llc you would be the member and you would also want to be the manager so member managed makes sense but if the ira were to be the the managing member of a checkbook control llc you as the client wouldn't be able to sign anything advanta would still have to sign everything as the administrator of that account so it's very important to make that distinction it has to be manager managed it can include more than one ira but ownership percentages are based on the initial contributions so if you and a partner of any type are going to contribute funds to an llc if you both contribute 50 000 to that llc well then you both have 50 membership but if one individual contributes ninety thousand dollars the other contributes 10 you can't have 50 50 membership it has to be defined against the capital contributions going in to that llc and if the other individual is a disqualified individual that can also affect your ability to maybe make contributions later on in the future and also keep in mind that if you do do a multi-meter llc that you do get into an aspect where you are then going to have to file a federal tax return as a partnership because single member llcs are generally regarded as disregarded entities that most of the time are not required to file a federal tax return so even though you may not have any taxable liability for a multi-member llc if it is indeed owned by all iras you are going to have an additional burden of at least having to file a corporate return every year that could definitely potentially influence the way that you want to go with regards to how you structure these assets so keep that in mind that you can do multi-member llc's you can have as many partners as you'd like but um it's definitely going to maybe add some uh some complications and some additional layers that depending on you know how you want to go forward with it and with regard to adding more money into it especially down the road you can certainly add more money into multi-member llc's but you're going to have to make sure that the percentages and the ratios that you add money back into that are going to be maintained so if in the future in that scenario where you had someone contributing fifty thousand dollars and another contributing fifty thousand dollars if you wanna put more money into that llc you would need to put in in 50 50 ratios both people would have to contribute at the same rate otherwise one one ira's investment would be inflated and the other individuals would be diluted so that's a very important distinction to make as well and and that may also get into having issues with prohibited transactions so it's really important that if you do a multi-member llc it's uh it's something to really keep an eye on um let's see what else do we need to cover on the slide oh reliability protections so one thing that a lot of people like to point out and this does hold true for personally held assets for a certain degree of things is that you use a limited liability company or an llc for liability protections at least in the state of florida the florida supreme court typically does not extend liability protections to the shareholders a single member llc they treat it as a pass through so there wouldn't necessarily be as much of a liability protection or any in some cases you would really need to kind of make sure you're doing your research researched before you make your decision based on simply liability protections for that now if you want to look up the the florida case uh if you search the olmstead case in the florida records that's what's going to bring up the liability extensions for single member versus multi-member partnership liability extensions and if you want to look up a little bit more case law supporting the actual use of iras and llcs the big one that kind of created the basis for this was a case that was a case called swanson b commissioner another later case was a tax court memo of the tl ellis case now both of these cases have issues um they are not perfect and they are not necessarily a a green light for any and everything you'd like to do with these types of structures but it's a good place to start if you would like to get a little bit more information and maybe educate yourself on the legalities of what you're specifically trying to do with checkbook control you got a couple questions before we get into the next slide um do banks give real estate llc's home loan on llc so what this individual is asking is that can you get a loan for your ira owned property in an llc yes you can but most banks will not do that it has to be what's called non-recourse financing and that is kind of another whole topic in and of itself the short answer is that yes you can get financing but it is significantly more complicated than just a yes or no answer it has to be a specific type of financing and iras are going to then be exposed to a specific type of tax which we'll get into actually on the slide as well if an ira even if a single member why not protected um so we have a couple questions about asset protection so ira assets yes they can be protected from creditor actions extending from actions of yourself personally so if you had some type of judgment against you typically that's not going to extend into your retirement accounts but the ira in and of itself is its own entity if it owns a piece of real estate it can be named in a lawsuit if there was a liability action now if you owned a property through a single member uh ira owned llc that llc may not necessarily protect the other assets held within that ira because it is treated as a pass-through so just keep in mind that when i say liability protection we're talking about actions created we're talking about judgments and actions and created by the assets or actions of the llc not necessarily personally uh let's see can you structure additional llc's or trust to be a partner with yourself as a dual member yes you can but again that's going to add a definite degree of complexity and also requirements for specific tax reporting here's a great question robert asks are there are there restrictions or prohibitions on adding additional funds to a single member ira owned llc the answer to that is no because you're never going to have a dilution or inflation event of the actual shareholder stake in that entity so if you were to have a single member ira owned llc that you would put a thousand dollars into whether you add in a hundred thousand dollars next fifty thousand dollars or a million dollars the ira's ownership in that llc is always going to remain so you don't have to worry about the the increase or the decrease in the basis of anyone's ownership in that so that's that's one nice thing about keeping it as a single member llc is you don't have to worry about uh membership percentages changing uh with regards to additional capital contributions keep the questions rolling in let's go through some more slides and then i'll take a break and answer some more so with iras there are prohibited transactions there are things that you cannot buy there are people that you cannot directly engage with in the course of investing these types of accounts you cannot directly buy or you cannot an ira cannot be named as the primary beneficiary of a life insurance policy it is paid out tax-free i recreate a cyclical you know kind of tax shelter that the irs identified they got that out of there you cannot buy anything excuse me that derives its value from collectibility so things like antiques rare bottles of wine artwork stamps you can buy coins that are traded strictly on their bullying content value but you cannot trade them um as a rarity for their rarity it has to just be simply based on the the price of the bullying content now any transaction between a plan and a disqualified person is another thing to watch out for so if you were to just say let's say your child had a rental property that you wanted to buy with your ira you couldn't buy that with your ira you also can't you utilize an llc to help um obfuscate the fact that you are initially you are trying to do that the intent is to purchase it uh and you go through either uh step transactions of having it conveyed to a third party that buying it from that third party it is seen as just just as bad in the irs rule so you cannot directly purchase or sell anything to or from a disqualified person or they can't also receive a direct benefit from your ira's assets so those disqualified individuals are your mother father son daughter spouse or anyone that's named as a beneficiary of your ira so if you look at your family tree you just draw a line up and down and those are the people that you cannot directly deal with and that cannot directly get a benefit from your ira owned assets now brothers and sisters aunt and uncles in-laws those are not just considered disqualified individuals so have fun uh but it's just something important to remember because a lot of people do like to invest with their family now to the question of financing an individual asked earlier about getting a bank loan if you were to do that you would be subjecting the ira to a tax now i really kind of hesitate to get into how that tax is calculated it is a maybe it's a little bit more of a complex uh conversation to have but just keep in mind that if you finance nything within an ira specifically you're gonna have to file a tax return for your ira and you're also going to have to pay taxes on the amount of profit that is generated from the leveraged portion of that asset now if you pay the loan off this tax and reporting requirement goes away but it does bring up a good point is that this tax of debt related finance tax is not applied to 401k accounts so if you want to buy property utilizing debt leverage being able to do that through a 401k is a huge benefit because it is exempted from udfi liabilities so something to keep in mind if maybe you're looking at utilizing an ira for checkbook control or maybe you're self-employed and you have the ability to use a 401k definitely something to consider now here for the individuals i know i explained it on the last slide but just so that way if you're downloading slides you can kind of see it laid out for you exactly what the disqualified individuals look like as far as something that is uh printed out so again remember looking directly up and down for you these are the people you cannot directly buy or sell something to you can partner with them on a new deal so let's say you and your spouse wanted to uh you know both put your iras into a checkbook control llc now let's say you wanted to do it in a multi-member llc you can do that you can start one like that but you can't maybe necessarily add more money in later you can't buy your spouse out you can do it with a with a parent or a uh or a child so just keep in mind that you can do these things with disqualified individuals as partnerships but you cannot directly buy or sell anything to them all right got a couple questions let's see when you talk about prohibited people i hear the term extending service how do you interpret extending service and being the manager of the entity um it's not i haven't mentioned it already um that's more of maybe a specific thing that you possibly saw somewhere but essentially an ira owner is disqualified for providing service to the ira now that is frustratingly vague by the irs and also disqualified individuals are prohibited from extending service to an ira owned asset now what that would mean essentially is that let's say my uh let's say my daughter owned a landscaping business and i own property through my ira llc i could not hire my daughter's landscaping company to come and do landscaping work for my ira owned property that would be a clear violation of a service being extended now i tell people when it comes to services yes it's vague as a manager acting as a service provider so long as they're not physically doing any improvements or maintenance on the property i think you're fine you know you can coordinate you can inspect uh but when it comes to actually you know rolling a paint brush or a swing hammer that's where you really got to draw the line and the same thing goes with disqualified individuals acting in a service capacity to your ira as well let's see kyle asks if i invest in a private placement with a group of people and they use debt to purchase a large multi-family am i still on the hook for unrelated debt financing attacks yes possibly you are um if it's going to depend a lot on how they structured that entity if they are electing to be taxed as a secret no if they are taxed as a partnership then potentially yes let's see eric great question especially with the current state of affairs yes uh i'm actually gonna be teaching a class next week i would really highly recommend that you circle back next tuesday about uh buying crypto and an ira um we do uh encourage clients to use llcs and in very uh broad terms yes the llc would be what actually interfaces with your particular brokerage choice such as kraken or coinbase um and then you would be the one holding the wallet for that but check back next tuesday we're going to have a full hour and a half directly on buying crypto and higher ed uh definition of spouse being legally married yes uh did i understand uh gonna say but fisher is disqualified person yes if you're named as a beneficiary of your ira they become disqualified and last question before we move on if you formed an llc partnership between husband and spouse and the llc throws off income is that income subject to self-employment taxes no so with these remember that it is these are tax shelter accounts so if the only members of that llc are tax qualified entities such as iras that is not employment taxable income they're treated as pass-throughs so the taxable liability um if there was one would pass on to the member and since that member is a tax-exempt entity as an ira would have wouldn't have any uh taxes associated with that all right let's continue let's do a case study let's uh let's see how this works in in real practice so this is joe's real estate deal joe has 150 000 in a traditional ira he's interested in investing in real estate so he decides to buy a single family rental property and he finds one for sale for 100 grand he needs an additional 20 000 of work to get it ready so their projected monthly rents after that are going to be about a thousand bucks a month so how can we get this done remember we have really three choices at this point we can use the ira directly we can use a trust we can use an llc so directly through the ira how does that work joe opens the account and in any of these scenarios the first step is that the account has to be open the biggest pain point that i see when people go to buy anything and this has to do with funding a mortgage buying a piece of real estate cryptocurrency whatever it is if you are trying to do something from an ira first and foremost get that account open so that way we can start working for you to make sure things are done correctly so in this case he's buying it directly through the ira completes the ira application transfers the rules for funds and then we get the account number issued for him within 24 hours he's identified the property so we need to make sure that one that contract is written in the name of the ira which would be advanta ira for benefit of joe smith's ira client approves the con client approves the contract we execute it we issue the escrow deposit from the ira now we go through a standard closing we review all the documents the client needs to approve all of those but we as the administrator of that account are going to sign the contract we're going to review the deed sign of stopples probations anything that needs to be done for that property closing advanta signs the client approves now at closing we wire all the funds and then joe at that point goes out and finds a tenant and starts renting the property the ira starts collecting those rents and that's the return on his investment that he's seeing is that thousand dollars a month of rent so every year you know minus expenses he's you know bringing in 12 000 bucks a year minus any expenses um now he directs all the expenses to be paid by the ira so us at advanta we're going to be paying taxes we're gonna be paying insurance everything's gonna be paid directly out of that ira account directly and then you can track us track everything directly through the uh the online portal that we provide and keep in mind that that's one of the benefits of using the custodian like advanta as opposed checkbook control is that if you're not the best at record keeping or you'd like a little bit more um comprehensive service we take care of all that if we're directly if we're not using an llc or checkbook control if you're using checkbook control you give up a little bit that's kind of one of the trade-offs that yes you do get to be able to write checks you do you are able to sign contracts and everything but you're responsible for keeping records of all checks and all all payments all expenses contracts rental contracts everything like that ultimately becomes your responsibility at that point now let's look at using a checkbook control llc again can't stress enough first thing to do open the account now after that happens uh joe chooses the state to set up the llc in remember this can be any state that you want you don't necessarily have to choose the state with in in which you live now other states proclaim different benefits for the most part since this is not a personally owned llc um the privacy concerns of uh that are that are promoted by some states are a bit moot namely places like uh wyoming and uh nevada promote those a lot i will say that the the majority of our clients choose states in the southeast or delaware to incorporate their llc in so joe will choose the the state to set up the llcm chooses the name he will provide his uh either his own tax or legal service to to file the articles and do the operating agreement or we can recommend someone we have a book of business that our clients have worked with they've been happy with we don't have any type of a financial agreement with any of these people they've just been service providers to our clients in the past they've treated our clients well and we feel comfortable giving their names out to provide the service to our client so after that we make sure that the ira is listed as 100 owner the operating agreement shows the ira as the member and just like with that contract if you're not using an llc it's advanta ira for benefit benefito joe smith excuse me ira number xyz now at that point we sign the operating agreement on behalf of the ira and then we send either a checker wire to that llc's bank account and you're off to the races so once the funds are in that llc joe then has full reign to sign any closing documents make any deals doesn't need to contact advanta every time he needs a check or every time he considers something simply just goes out and performs that action for the llc doesn't need to get us involved every time the only time we need to be involved in something is at the end of the year we'll need to get an annual update of the value of the llc which basically just be an unaudited balance sheet of the holdings of that entity so cash plus assets minus any liabilities would be what we need to be shown at the end of every year kyle if you have questions about fees it varies it can vary i'm happy to go over that specifically with you if you just want to give me a call or shoot me an email afterwards um it's not necessarily kind of a flat rate for everyone it can depend on you know maybe if you're if you're not investing a whole lot it might be a little bit different than if you're invested more money it might be a flat rate so it just really kind of depends we try to be very flexible and get you the best uh best best situation possible for for our billing for that so i'd encourage you to give me a call and i can give you an exact quote okay now using a trust again first thing we do we open the account now this is where we have a divergence from the llc so now we need to have a trust document drafted trusts are not registered with any particular state so you don't necessarily have to choose a state but you have to choose what type of trust that you would like to have trust you're not public records so if you're if you're extremely concerned about anonymity or public record uh of public record presence of your name and information trust might be a little bit better but keep in mind that there is the trade-off of being able to sign your own checks and personally checkbook control first the llc versus having to have a trustee do it again the grant or beneficiary is going to be the ira and then just like with the llc and the closing documents joe has to approve everything before we sign the trust agreement we fund the trust account and then from there joe coordinates with his trustee to have everything coordinated paid done signed sealed and delivered or the actions of that trust just as he would have done personally with the with the llc in my opinion the trust is is most similar to just doing it directly through advanta you know if you're if you're very passionate if you will about having checkbook control and you don't want to be your own manager a trust might be a good fit again we do not see a whole lot of trust being utilized for this capacity excuse me for that reason of not being able to act as the uh the trustee so keep that in mind they they are available there are options but it is certainly not the uh more popular of the three to go uh let's see patricia asks can you buy crypto or foreign currency without using a trust or an llc foreign currency yes crypto not at advanta we need to use an llc or a trust um and really it's going to be a much better fit um with the nature of cryptocurrency and how it trades and uh and how people typically interact with cryptocurrency markets um utilizing an llc will will almost always give you a better experience than doing it through a custodian just for the speed in which you're in which you're able to trade and adapt to market conditions now we're getting towards the end so you know keep the questions coming in but an important thing to understand is that how do you get truck how do you get cash out of a trust or an llc if you want to take a personal distribution one of the worst things you can do is that if you want to take a personal distribution is write yourself a check out of the trusted llc that is one of the more common mistakes that i see and it's one of the easiest to avoid first thing you need to do is write a check from that llc or that trust back to advanta then we deposit the cash and then we issue you a check or a wire for what you want to take out because we have to do irs 1099 reporting on anything that you take out of those of those accounts all right we kind of already covered this um you can partner funds with checkbook control iras so if you want to be a personal partner i'm not just using iras of disqualified individuals you can partner disqualified individuals personal funds but keep in mind that if you do this you have to be very careful about when if about potentially adding any more partners into the deal and then also making sure that all income and expenses are properly split if you're going to be doing something like that as well now pros and cons of buying through the ira directly and then we'll get in uh here in a second to the pros and cons of checkbook control the pros are buying directly through the ira it is certainly much easier to keep an arm's length from your ira funds if you are very concerned about prohibited transactions doing things directly through the ira administrator is by far in a way probably one of the best and easiest ways for you to keep arms length you're less likely to engage in prohibited transactions and also you have the benefit of our extensive record-keeping experience you don't have to worry about if you paid a contractor a check five years ago about digging through your own records for that it's as easy as calling us we can get you a copy of anything that you need typically within 24 hours the cons you do have the potential for higher fees if you have multiple assets and you don't have the ability to write checks immediately for purchases uh let's see i got a couple questions can an llc buy a business or real estate in another country uh yes it can um but when it comes to buying property in foreign countries there is a lot of other considerations to give especially you have to deal with what that's what that host country's requirement on foreign direct investment is i have had a lot of experience buying real estate for clients in central and south america and for the most part most countries mexico and south require that you hold a a a business that has registered in that country as the holding company for the real estate that you in turn then own the shares of um it's kind of an odd scenario that you have to go through but a lot of foreign countries have that for foreign direct investors the united states doesn't have that requirement so the the answer is yes a little bit of a more detailed answer is is that it might be administratively infeasible or just too cumbersome for some countries but yeah you can certainly look into it and there's nothing prohibitive on the irs side um for that let's see um would you say that there is a minimum amount you recommend clients to come to advance with to make all the costs especially with chatbot not necessarily i've seen people come with five thousand dollar accounts for investing in cryptocurrencies that have done well i've seen people that uh you know maybe didn't have a good experience with just what they bought and they had hundred thousand dollar accounts it's um it's really kind of most determinant on you know what your expected rate of return is and what you're trying to accomplish i wouldn't necessarily necessarily say dollar figure wise there's there's a mark i will say that that we don't really see too many the bottom threshold of accounts we typically see us about five thousand dollars but again we don't have an account minimum so take that for what it's worth uh let's see did i hear you correctly a beneficiary is disqualified person yes if you name someone as a beneficiary they become disqualified uh our step children consider disqualified individuals not inherently but they can become let's say you have a step child so here's a situation when that could become disqualified let's say you have let's say you're married you have your spouse has children for previous marriage and your spouse is the primary beneficiary of your account you pass away your spouse inherits your account now if you had dealt with those stepchildren and or let's say you had let's say they were living in a property that your ira owned then that would automatically at the moment of your death would become prohibitive so while on face value maybe some of those people aren't necessarily prohibited um you have to kind of have a little bit of forethought and planning and that um you know in the event of your death there could be some very big issues caused let's get towards the end here uh pros and cons of using checkbook control we've kind of covered this but again if people are just looking at the slides later on you have quicker access to the ira funds as a big pro you can hold more assets with potentially lower fees and sometimes you do have the possibility for additional asset protection and anonymity but keep in mind that it's going to be predominantly based on whatever the state that you register the llc in and also the state in which you have your assets in are going to determine the ability for additional or less liability protection some cons responsible for keeping all of your accurate records you have a lack of oversight by the administrator and it is definitely easier to engage prohibited transactions so what's the best strategy for you ultimately it is a per purely personal choice i always i always recommend people pay for an hour of an attorney's time someone that's familiar with this stuff it is cheap insurance to get someone that is a consummate professional to answer you in a legal capacity although many of us at advanta have many years of experience um you know nine ten fifteen years here of doing this um you know we are not advisor we're not advisory company so even if you gave me all of the information i could not give you an opinion on whether or not it is a good idea for you to do something or not it is important to make sure that you understand that distinction that everything we give is for informational purposes only not a legally advisory opinion so if the strategy you're looking for has questions contact us first we'll get you a baseline but ultimately you know go to a go to an advisory professional to make sure that you're getting the right answer um and with regards to that that's that's uh pretty much it um you know if there's any more questions i'll stick around for a little bit if you want to learn more about of our events go to advanta ira.com um especially uh you know this kind is really going to tie into uh crypto for next week if you want to learn more about cryptocurrency investing and how to actually do it with procedures on how to interact your llc with a particular brokerage um you know how those things work what it looks like to use cold storage what it looks like kind of from top to bottom to do these kinds of investments that's gonna be a really good one i'd recommend it next week we catalog all of our all of our presentations so if you want to go back and listen to the audio from this it's going to be on our youtube channel by about tomorrow and then we do an updated blog that has plenty of good information with regards to uh current events and uh things that are going on in the retirement market so keep keep an eye out for that i'm just putting it up here again we covered exactly how to get started you need to fill out an application you fund the account and then you start investing it's really a simple process so with that said i see some people got their hands up ask the question type it into the box like i said i'll stick around cause we have about a third of the amount of people that we had on initially so we got plenty of people on feel free to answer questions um see daniel asks how does all this work with metals i mean if you have an llc you can certainly buy precious metals it has to be platinum silver gold or palladium so keep that in mind there are minimum finest requirements for those uh will yubit become automatic of using an llc or a trust no uh ubit unrelated business income tax kicks in if you buy a trader business so if you have a single member llc that just invested real estate that wouldn't trigger it but let's say you went and bought a a laundromat right well that would you know kind of the ubit tax essentially levels the playing field because if you could just buy businesses that would be completely exempt from any uh tax then the irs would be losing out on entire revenue so that's where kind of the unit trigger would come in udfit which is a close step child of ubit is related to debt financing so if an ira has a property and it wants to finance it you will have a trigger for a type of unit can i store metals at a bank yes but keep in mind that that you would need to have a separate storage agreement for the metals if you're doing it underneath the llc couldn't be in your name personally with regard to that deposit box let's see for an llc that owns real estate without a mortgage what are the annual reports or information that the ira would need to provide to advanta good question you just need to provide us with some type of update to value if the if llc owns real estate in that case essentially what you can do is you can provide us with a copy of a comparative market analysis and a copy of the bank statement for the llc is of 1231. you can provide us with a copy of the tax bill for the property or property that you hold but at bare minimum we would need to see an unaudited balance sheet which can just be an excel spreadsheet and a copy of the bank statement ultimately you as the manager are responsible for making sure that you keep the backup documentation uh for providing valuation to the ira seasonals has their hand raised um uh you know um please just type the question because audio is muted so um type those in so plenty of people signed on so uh again if you got questions uh time in we had had about 50 people on the call today we're down about 36 still live on the call so please uh please get those questions and i'll stick around so there's probably about 15 people left on here uh iva the irs does not approve investments uh they just give you a list of things that you cannot invest in so unfortunately there's not like an approval or disapproval process so for what that said you know the irs doesn't the irs doesn't say you can buy securities you know they don't they don't say that you can buy stock that's that wouldn't be an approved investment either they just they give us guidance on things you can't and people you can't invest directly with all right looks like that we've uh pretty much uh got one more question a couple of questions uh let's see oh can an owner work do home improvement real estate without getting oh so can the ira owner do home improvement without getting paid no let's see um how easy it to manage notes for a client if they're using a self-directed ira um i mean it's as easy as doing it for a personal person i'd imagine i mean having not been a note servicer myself um you know it's really no different to say on the services side than someone that owns them personally you know you just need to make sure that the payments are made either back to the llc that owns the notes or that the payments are just being made directly back to the ira but um you know conceptually there's really no difference of just making sure that you know the proper note holder in that case is paid but i you know if i were to be a note servicer i really wouldn't see any difference from my experience in this profession to doing something for someone personally uh again i i i they don't look too far into that um with investments and the ira approving checkbook llc's versus unrelated parties um that's just not something that they don't get so specific into that they just give guidelines on whom you can and can't invest with um and then the rest of the guidelines have kind of been born out of uh case law that that has come up either by irs tax courts or the like see i have some money in a roth ira my wife has money in an ira do we have to form a multi-member llc if we want to combine assets i mean you don't have to there's other ways to do it i mean you could use a trust um but if you want to specifically have them in one entity yes you would have to do that but keep in mind that if you do combine those one you're gonna have to file a federal tax return and two um you know it can cause issues down the road if um if you try to add more money or something into that llc from another ira not necessarily profit so while the answer on face value is yes i would i would really recommend kind of taking a very comprehensive look to see if that's a good fit but you could let's see can you be a partner with your 1031 exchange typically no there's really not too many reasons where an ira would need to participate in the 1031 um and also if you're talking about buying or selling the assets um or the re-allocation of your profits that are going to that you're trying to exempt in a 1031 exchange then that would be self-dealing if you were trying to use ira assets to buy or sell in that scenario to yourself or 1031. so if i understand your question correctly i think the answer would be no um but an ira can um in instances trying to execute from ubit or udfi liabilities it can participate in a 1031 but again that's a very specialized kind of niche for iras all right well again thank you everyone for participating today uh oh before i go uh the asset is a beach condo can my wife and i stay there for a week uh the answer is no sorry that's uh that's a pretty clear-cut one on a personal utilization assets at ira so again everyone thank you very much for attending today if you have any other questions um you know please feel free to reach out to me via email or phone all my information is right there on the site here at the end have a great day you