How to access IRA and otherContent/PD… · Individual Retirement Account Overview In 1974 the US Congress passed the Employee Retirement Income Security Act (ERISA) which is the

By Patrick Dague. © 2018. All rights reserved.

www.InvestorsForMyBusiness.com

http://www.investorsformybusiness.com/

© 2018 By G. Patrick Dague www.InvestorsForMyBusiness.com 2

About the Author 3 Introduction 4 What Exactly Is a Self-Directed Retirement Account? 5 Take Action and Help Others – It Works 6 Self-Directed Individual Retirement Account Overview 7 Types of Self-Directed Individual Retirement Accounts 8 Benefits for Your Venture When Using This Option 9 Benefits to Your Investor When Using this Option 11 Services Provided by Self Directed IRA Custodians 14 List of Self Directed Retirement Account Companies 18 Selecting a Self-Directed IRA Custodian 20 Things to Look For When Selecting an Account Custodian 22 How it Works 24 401K Rollovers 27 Getting Your Offering Documents Approved 28 Detailed Overview of the Process 30 IRA Ownership Vesting Examples 31 Where to Find Investors with Retirement Account Assets 33 Case Studies & Real Examples 35 Summary 35

Your Personal Investments and Investment Objectives 36

Form Examples - IRA Trust Services 37

Contents



About the Author

Mr. Patrick Dague was trained on Wall Street in New York City by a major

national investment brokerage firm. He became a registered investment

advisor, financial planner and stockbroker and helped his firm raise tens of

millions of dollars for various private business and real estate opportunities.

After gaining knowledge and experience

with that firm he joined a smaller

investment securities firm where he

specialized in raising private capital for

various real estate ventures, and for small

and medium-sized companies. Mr. Dague

gained considerably more experience

there then resigned as an investment

broker to focus on his own ventures.

Since resigning as an investment broker over twenty years ago Mr. Dague

has successfully raised millions of dollars in private capital for his own real

estate and business ventures and coached others about the process.

Mr. Dague holds undergraduate degrees in Aviation Science and Business

Management. His graduate work was in International Business. He is

currently active in certain types of charitable work in addition to funding his

own ventures, particularly real estate ventures, when opportunities arise.

DISCLAIMER CONCERNING LEGAL ADVICE: All information here is for educational purposes only. Each and

every business situation is unique and different. For specific legal questions related to your particular venture please

consult a lawyer. Mr. Dague is s not an attorney. He does not give legal advice and nothing herein should be

considered in any way to be legal advice. The information here will likely be of great help when speaking with your

own attorney and others, including potential investors, but it is not a substitution for having good legal counsel.



Introduction

Hey – hope your day is going well. You’re reading this so you likely want to

bring private capital into a business or real estate deal. You may want to:

(a) Fund a start up business such as an internet

marketing venture, manufacturing or services.

(b) Bring more capital into your existing business

(c) Put together a group of investors to buy a strip

mall, an apartment building, rental houses or

another kind of real estate related investment.

You may instead have some other kind of venture

in mind that could use private investor funds.

Whatever your objective, part of being really successful at raising investor

money for a private venture is having the ability to access and use Self-

Directed Retirement Account funds.

It is particularly important for you to know

how to access IRA funds and 401K rollovers.

It really helps to know how to access IRA funds & 401K rollovers

when funding a venture. There are other types of qualified Self-

Directed retirement plans as well. I’ll talk a bit about them too,

because they are also potential sources of funds for you.


https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions


So What Exactly Is a Self-Directed Retirement Account? A Self-

Directed retirement account, such as a Self-Directed IRA, acts exactly like

an IRA your bank might set up for you. However there is one key difference

– it allows an investor to hold much a wider range of investments.

A Self-Directed IRA, or any other Self-

Directed personal retirement account (such

as a Self-Directed 401K), gives a person

complete control over their investment

choices. Therefore, unlike far more common

bank, broker & mutual fund IRAs and 401K

accounts, they’re not limited to just CD’s or

the stocks, bonds, or mutual funds sold by the account custodian.

This means people who want to invest in YOUR BUSINESS can place

some portion of their retirement account funds, as an investment, into your

venture. (It also opens up a lot of other alternative assets for investment

such as real estate, limited liability companies, gold and much more.)

Since this is all done within their Self-Directed retirement account there are

no withdrawal taxes or penalties when making the investment. In addition

the tax-deferred growth that is allowed in all IRA, 401K and other types of

personal retirement accounts remains intact.

The result is a true win-win situation at the outset for you and your investor;

of course making their investment profitable over the long run for them is

up to you.



It is both a privilege and a responsibility to be trusted with part or all of

someone’s retirement account assets. Helping your investor get a good

return on the money invested is what it’s all about when you do this. It is

important to bear that in mind.

However, if you have a good idea and an honest heart, then do not let that

responsibility worry you. Just be up front about the potential risks involved

as you move forward. In most cases it will be appropriate to create a

disclosure document, usually referred to as a PPM, to disclose details

about your venture, as well as any possible risk factors that might apply.

You can use a good template, such as the ones I have available at

https://www.investorsformybusiness.com/templates to get that done.

Then move forward and take action! There is something about being kind,

helpful and honest, combined with taking action, that just seems to work.

That has always been true in my experience – and my guess is that the

same is true for you.

One action to take every time you speak

with a potential investor is to ask about their

retirement accounts. Ask them, in particular,

if they have an IRA or a 401K.

If they do, ask them if they might like to get a

better return on those assets.

Ask them about their retirement accounts.


https://www.investorsformybusiness.com/templates/


Self-Directed

Individual Retirement Account Overview

In 1974 the US Congress passed the Employee Retirement Income

Security Act (ERISA) which is the law that makes individual IRA, 401(k)

and other types of Self-Directed Individual Retirement Accounts possible.

The controlling law can be found in IRS Code Sec. 401, IRC 408. For more

information on this see: https://ira123.com/learn/irs-rules/ and

https://www.law.cornell.edu/uscode/text/26/408.

Authorized Retirement Account Custodians: A Self-Directed

individual retirement account is created by a written document. The

account trustee or custodian must be:

(a) A bank,

(b) A federally insured credit union

(c) A savings & loan association,

(d) An entity approved by the IRS

to act as trustee or custodian.

///

///


https://ira123.com/learn/irs-rules/

https://www.law.cornell.edu/uscode/text/26/408


Types of Self-Directed

Individual Retirement Accounts

Types of Self-Directed Retirement Accounts You Can Access: Always

ask potential investors if they have one of these accounts. In most cases

they can be transferred to a Self-Directed account & used in your venture.

Traditional IRA

Roth IRA

SEP IRA

SIMPLE IRA

Keogh

401(k)

403(b)

Profit Sharing Plan

Qualified Annuity

Coverdale Education Savings

Money Purchase Plan

Defined benefit Plan



Benefits for Your Venture

When Using This Option

There are many reasons to consider accessing retirement account funds

for your potentially profitable venture, but here are the two primary ones:

(a) It is a fairly easy thing to do

(b) There is a lot of money available in retirement accounts

$5 Trillion: In the United States it is

currently estimated that IRA and other

retirement accounts hold nearly 5 trillion

dollars in total. That figure is according to

the Employee Benefit Research Institute.

You Can Use it Too: Wall Street Brokers

tap into this big pool of funds all the time

but it can easily get overlooked when

people raise private money for their own

ventures. Regardless of what others do, though, when raising investor

capital for your venture it is important to consider this funding source!

Investing IRA $ without Early Withdrawal Penalties: People invest

retirement account funds in private investment offerings all the time

without creating an early withdrawal tax penalty or taxable income.

You can easily set this up for your venture. More follows on this.



Just One Investor Can Make the Difference: Just one IRA or other

type of retirement account investor

may be enough to reach the

minimum funding level you set for

your own business or real estate

venture so you can get it launched.

Done Every Day: Money is invested every day in private investment

offerings (like yours) via Self-Directed Retirement Accounts for

business and real estate ventures.

Keep the Investment Inside a Retirement Account: To use

qualified retirement funds in your venture without creating a tax

liability or an early withdrawal penalty the investment itself remains

inside the retirement account. This is done by transferring the IRA or

other retirement funds to a Self-Directed retirement account.



Using Your Own 401K: Companies such as Guidant Financial

(http://www.guidancefinancial.com/) can also help you invest your own

retirement account funds directly into a venture you want to

fund, typically using your own 401K funds if you have them.

Certain Rules Apply. One rule is that you can’t invest

your own IRA or 401(k) money into a business in which

you a have 50% or greater interest. And you can’t derive

an immediate personal benefit from making an investment

into your own company or any other company.

Get Advice: Speak to your retirement account custodian

before proceeding if you do choose to invest your

retirement funds into your own venture. See

https://www.guidantfinancial.com/financing-solutions/401k-business-financing/

Benefits to Your Investor when

Using a Self-Directed Retirement Account

Diversification: Self-directed retirement account funds can be invested

directly into an extremely wide variety of investments.

Allowed investments include real estate, first and

second trust deeds, small businesses, personal

loans, foreclosures, gold, and many other alternative

types of investments not typically offered by banks or

commission-driven investment brokers.


http://www.guidancefinancial.com/

https://www.guidantfinancial.com/financing-solutions/401k-business-financing/

http://www.broadfinancial.com/self-directed-ira/true-diversification


Better Control: Most retirement account investors are interested in growth.

Quite often the only option they have for that is the stock market, so they

miss a lot of other potential opportunities, such as your venture. A self-

Directed retirement account gives them better control & a lot more options.

Investing with YOU: Once a Self-Directed retirement account is set up it's

easy to use it to buy and hold private investments. A third-party investor

can easily use it to invest with you in the startup business, internet

marketing venture or commercial real estate opportunity you’re offering.

More Benefits: There are several other benefits that accrue to your

investors when they use a Self Directed retirement account.

No Early Withdrawal Penalties:

A Self-Directed retirement

account enables your investor to

invest in your private offering,

and in other investments of all

kinds, without incurring any early

distribution taxes or early

withdrawal penalties.

Tax-Deferred Investment Growth: Profits generated from an

investment made inside a Self-Directed retirement account will flow

back into your investor client’s retirement account and continue to

grow tax-deferred, or tax-free in the case of a Roth IRA, helping them

build a nest egg for the kind of retirement they want.


http://www.broadfinancial.com/self-directed-ira/tax-deferred-investing


Transfer and Rollover Options: A Self-Directed

retirement account can be funded by transferring or

“rolling-over” funds from any of your investor client’s

existing retirement accounts or plans, such as an

IRA, 401K, Roth IRA, SEP IRA, Keogh, 403b, etc. Of

course they can also fund it by making an initial

contribution. (See: https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-

retirement-plan-and-ira-distributions)

Advisers Available: Although your investor clients will have complete

control over the investments they select, they do not need to make all

investment decisions alone. Outside fee-based professional advisers (as

opposed to commission driven investment brokers) can assist them with

their investment choices and help answer questions.

Fees & Costs to Switch to a Self-Directed Retirement Account: Fees

vary from one Self-Directed IRA Account Company to the next; however

many of them have low fees which are structured in one of two ways:

(a) Asset-based-holding &transaction fees. IRA Services Trust Co.

(https://www.iraservices.com/) is an example of this type of fee structure.

(b) Fixed fees. A few companies offer a fixed annual fee that remains

the same, regardless of how large your investor client’s account is

or how many transactions they place during a given year. This

may to be more expensive in the early years when investors are

putting money into their retirement accounts.


http://www.broadfinancial.com/self-directed-ira/rollover-options




http://www.broadfinancial.com/self-directed-ira/limited-fees

https://www.iraservices.com/


Guidant Financial (https://www.guidantfinancial.com/) for example has a

fixed fee structure. They do not charge holding or transaction fees

and instead charge a fixed annual fee.

Services Provided by

Self Directed IRA Custodians

Keep Records: Self-Directed

Individual Retirement Account

Trustee / Custodians (Custodians)

must maintain a record of all

transactions that pertain to the assets

in a given retirement account and file

required IRS reports.

Statements and Other Services:

Those custodians are also responsible to issue client statements and

perform various other administrative and accounting duties. They’ll also

help with other services, such as transferring assets & explaining rules.

Deal with Established Companies: It is important to deal with established

IRA Custodian companies with a good reputation. They hold assets,

sometimes for decades, and they are responsible to provide services to

clients for the life of an IRA or other retirement account. In exchange they

earn certain fees which allow them to operate as a profitable business.


https://www.guidantfinancial.com/


In House Investments Offered by Some Custodians: Some Self-

Directed IRA Custodians also offer a selection of standard in-house asset

types that the account owner can choose as an investment. Those assets

may include more customary types of investments typically sold on Wall

Street, such as stocks, bonds, and mutual funds.

Other Investments Permitted: All Self-Directed IRA Trustees and

Custodians must, by definition, permit the account owner to make other

types of investments, including loans, private equity, privately offered

shares in a small company, or participation in a real estate venture.

Your Venture is Allowed: The overall range of permissible

investments in a Self-Directed retirement account is in fact quite

broad, and can certainly include an investment in your venture.

Investment Stays In Tax Protected Account: So to be clear a Self-

Directed Retirement Account allows an investor to hold non-standard

investments within their IRA or other personal retirement account.



Investments: Allowable Investments

include private offerings, secured real

estate promissory notes and many

others; whereas “regular” IRAs are

typically limited to bank CDs and

traditional Wall Street investments

like stocks, bonds, and mutual funds.

Two Kinds of Investments Not Allowed in IRAs: Two types

of investments are not allowed under ERISA and IRS Codes.

Those two specifically excluded investments are:

(a) Life Insurance Contracts

(b) Collectibles like art, jewelry,

coin collections & such.

So congress apparently found it

easier to identify which investments are not permitted!

Can’t be of Immediate Personal Benefit: The investments held must be

real. They can’t be used to drain IRA money for vacations and such.

Everything Else: Everything except the above two specifically excluded

types of assets are allowed as investments in Self-Directed retirement

accounts.



Self Directed

Retirement Account Companies

Third Party Trustee Required: IRS rules

require that either a qualified trustee or a

third party account custodian hold the IRA

assets. Basically, a retirement account

trustee or a third party custodian holds the

retirement assets “for benefit of” the real

owner of those assets.

There are a lot of companies that offer

this service.

Some also offer Third Party Administrator (TPA) services, which may be

helpful for really large retirement account assets or useful if large annual

contributions are made using less common types of retirement plan such

as a Defined Benefit Plan or a Money Purchase Plan.



List of Self-Directed Custodians: Here is a partial list of companies that

offer Self-Directed retirement account services:

Self Directed IRA Custodians with $2 Billion or More in Assets

IRA Services Trust Company ...... (https://www.iraservices.com/)

The Entrust Group ....................... (http://www.theentrustgroup.com/)

Pensco Trust Company .............. (https://www.pensco.com/)

Equity Trust Company ................. (https://www.trustetc.com/)

Millennium Trust Company .......... (http://www.mtrustcompany.com)

Provident Trust Group .................. (https://trustprovident.com/)

Trust Company of America .......... (http://www.trustamerica.com/)

Self Directed IRA Custodians - $500 Million to 2 Billion in Assets

Advanta IRA (TPA) ..................... (http://www.advantaira.com/)

GoldStar Trust Company .............. (http://www.goldstartrust.com/)

Midland IRA (TPA) ....................... (http://www.midlandira.com/)

New Direction IRA (TPA) ….......... (http://newdirectionira.com/)

NuView IRA (TPA) ……………….. (http://www.nuviewira.com/)

Self Directed IRA Services, Inc. ... (http://www.sdiraservices.com/)

SunWest Trust Company ............ (https://www.sunwesttrust.com/)

Vantage IRA (TPA) ..................... (http://www.vantageiras.com/)

Others Custodians (Less than $500 million or not disclosed.)

American IRA (TPA) ................... (http://www.americanira.com/)

Quest IRA (TPA) ......................... (http://www.questira.com/)

Next Generation Trust Services... (http://nextgenerationtrust.com/)

American Estate & Trust .............. (https://www.americanestatetrust.com)


http://selfdirectedira.nuwireinvestor.com/ira-services-trust-company/


http://www.theentrustgroup.com/

http://selfdirectedira.nuwireinvestor.com/pensco-trust-company/

https://www.pensco.com/

http://selfdirectedira.nuwireinvestor.com/equity-trust-company-2/

https://www.trustetc.com/

http://selfdirectedira.nuwireinvestor.com/millennium-trust-company/

http://www.mtrustcompany.com/

http://selfdirectedira.nuwireinvestor.com/provident-trust-group/

https://trustprovident.com/

http://selfdirectedira.nuwireinvestor.com/trust-company-of-america/

http://www.trustamerica.com/

http://selfdirectedira.nuwireinvestor.com/advanta-ira/

http://www.advantaira.com/

http://selfdirectedira.nuwireinvestor.com/goldstar-trust-company/

http://selfdirectedira.nuwireinvestor.com/goldstar-trust-company/

http://www.goldstartrust.com/

http://selfdirectedira.nuwireinvestor.com/midland-ira/

http://www.midlandira.com/

http://selfdirectedira.nuwireinvestor.com/new-direction-ira/

http://newdirectionira.com/

http://selfdirectedira.nuwireinvestor.com/nuview-ira/

http://selfdirectedira.nuwireinvestor.com/nuview-ira/

http://www.nuviewira.com/

http://selfdirectedira.nuwireinvestor.com/self-directed-ira-services/

http://www.sdiraservices.com/

http://selfdirectedira.nuwireinvestor.com/sunwest-trust-company/

https://www.sunwesttrust.com/

http://selfdirectedira.nuwireinvestor.com/vantage-ira/

http://selfdirectedira.nuwireinvestor.com/vantage-ira/

http://www.vantageiras.com/

http://selfdirectedira.nuwireinvestor.com/american-ira/

http://www.americanira.com/

http://selfdirectedira.nuwireinvestor.com/quest-ira/

http://selfdirectedira.nuwireinvestor.com/quest-ira/

http://www.questira.com/

http://nextgenerationtrust.com/

http://selfdirectedira.nuwireinvestor.com/advanta-ira/

https://www.americanestatetrust.com/


Companies I’ve Used: IRA Services Trust Company, Entrust and Pensco

Trust Company are among those I’ve used. All three are responsive &

reliable, as were others I used. You of course should make your own

investigation concerning which one best suits you & your investor.

Do NOT Have Investors Directly Withdraw Funds: Best practice is

for your investor clients to not ever take personal control of retirement

account money they plan to invest in your venture. Instead they

should keep their retirement account funds inside the Self-Directed

retirement account they are using and have the plan custodian make

the investment on their behalf. That is because if the funds are

withdrawn that will can create a tax liability for your client. If they are

under age 59 and a half there is a 10% early withdrawal penalty as

well. There are exceptions, though, and more on this follows below.

Inherited IRA Exception: If

your client has inherited an

IRA from a non-spouse, then

even if he or she is under

age 59 1/2 that investor may

not have to pay the penalty

tax on amounts withdrawn.

Deceased Spouse IRA: If your investor inherited an IRA from a

deceased spouse they have other options to access those

funds without withdrawal penalties. See this link:

https://www.thebalance.com/i-inherited-an-ira-from-my-spouse-what-are-my-choices-2388695.


https://www.thebalance.com/i-inherited-an-ira-from-my-spouse-what-are-my-choices-2388695


Selecting a

Self-Directed IRA Custodian

CYA – But They Worked Well for Me: Choosing a good Self-Directed IRA

custodian is important and I already mentioned several I’ve used with

excellent results, although of course I can’t and don’t warrant their products

or services. Information here is for educational purposes only.

Must be U.S. Based Firm: IRA

assets are required by law to be

held by a licensed custodial firm

set up in the United States for the

exclusive benefit of the account

holder or their beneficiaries. The

firm you select must meet that

requirement.

Other Requirements: The

complete list of requirements to

become a retirement account

custodian as set forth by the U.S.

Government is available

at:https://www.gpo.gov/fdsys/pkg/CFR-2008-

title26-vol5/xml/CFR-2008-title26-vol5-sec1-408-2.xml.



More Information: As another reference see IRS Publication 590, the IRS

document that lays out rules for IRAs. It’s a bit long at 114 pages but those

interested can see it here: http://www.irs.gov/pub/irs-pdf/p590.pdf.

Avoiding Custodian Fraud: Best practice is to use long-

established, financially strong account custodians. Being

approved by the IRS to act as trustee or custodian does not

carry guarantees of proper handling of investor client funds.

Rare Rotten Rascals: There have unfortunately been some

rare cases of fraud and theft by

IRA custodians. For that reason it

is important to do some checking

on your own, especially as to

licensing, assets held, reputation

and their years in business before

referring your investor client to a

Self-Directed retirement account

custodial firm.

Fraud Example in the News: This really is a vey rare

occurrence; however one possible fraud example that was in

the news just a few years ago concerns fraud and theft charges

leveled against American Pension Services and its founder.

For more information – AND IT IS A SAFE LINK - go to:

https://www.sec.gov/litigation/complaints/2014/comp-pr2014-86.pdf and

http://www.apsreceiver.com/.


http://www.irs.gov/pub/irs-pdf/p590.pdf

https://www.sec.gov/litigation/complaints/2014/comp-pr2014-86.pdf

http://www.apsreceiver.com/


Things to Look For

When Selecting an Account Custodian

Some are Better: There are differences between the available account

retirement custodial firms. When deciding which Self-Directed IRA

custodian is going to be the best fit for your venture, and for your investor

clients, you will want answers to some very specific questions which are

suggested just below.

Do Your Homework: Many of these questions can be answered simply by

visiting the Self-Directed retirement account custodian company websites:

(1) Do they accept Private Placement offerings as an approved

investment? If so how what is the process to get your venture

approved so that your investor client

can use those retirement account

funds in your venture?

(2) Is the Self-Directed Retirement

Account trustee or custodian properly

licensed to act as a custodian for

your investor client’s IRA or other

type of approved retirement account?

(3) Will your investor client’s

un-invested cash be FDIC insured?



(4) Are there any alternative investment types the account custodian

will not allow, and if so where does your venture fall with regard to

that question.

(5) What are their fees?

(6) How long have they been in business?

(7) What is their typical turn around time for investment authorization

requests?

(8) What is their typical turn around time for check requests?

(9) What type of support do they provide for you as the investment

company they are funding with your investor client’s money and

what type of ongoing support do they provide for your investor

clients?

(10) How many clients do they currently have?

(11) As of their last audited financial statement, what was the ‘then-

current’ dollar value of assets under their control.

(12) Do they have online client references and testimonials that

discuss their service?



Don’t Get Held Up by Slow Processing: You will not want to wait weeks

for an investment check to arrive so be sure when choosing the custodial

firm you intend to use to ask question # 7 shown above!

How it Works

Overview: The process of working with a Self-

Directed IRA custodian to bring capital into your

venture varies a bit, depending on the custodial

firm you and your investor client use. Here is a

general overview.

98% Not Self-Directed: First, keep in mind that while most all

retirement accounts can be easily transferred to a Self-Directed

retirement account custodian, only about two percent (2%) of

retirement account assets held in the United States are actually in a

true Self-Directed retirement account.

Mistaken Claims – Ability to “Direct” Limited to Mutual Funds:

Some mutual fund IRA account custodians, or their representatives,

may say clients can “direct” their investments when in fact their choices

are limited to mutual funds offered by that mutual fund company.

Actual Control: In a true Self-Directed retirement account investors

actually do control their funds and can choose – as already noted -

from a wide range of non-standard investments, including private

equity, private debt, real estate, and of course your venture!



First Thing - Transfer or Rollover Funds to New Custodian:

Most all of the several trillion dollars held in retirement accounts

(again about 98% of it) are not held in a Self-Directed

retirement account so in most cases the first thing to do is

transfer or rollover your investor client’s IRA, 401K or other

retirement account to the Self-Directed retirement custodian

you have jointly agreed to use. (See below.)

Transfer: If your investor client’s funds are in an IRA then

the process is referred to as a “transfer” of IRA assets to

a custodian such as IRA Services trust Company

(https://www.iraservices.com/).

Rollover: If your investor client’s funds are in a 401K the

process is referred to as a “rollover” of all or part of his

401K assets into a Self-Directed IRA account. His current

401K plan custodian will have to tell him if an IRA

“rollover” is or is not allowed.

Self Directed 401K: An investor can also select a custodian

such as The Entrust Group that offers a Self-Directed 401K

http://www.theentrustgroup.com.

First Convert to Cash: When transferring or rolling over retirement

account assets have your investors sell stocks, mutual funds, bonds

or other assets held in their “normal” IRA. That way the cash (and not

the assets) is what is transferred to the new account custodian.





http://www.theentrustgroup.com/


Cash-Out Phone Call: To convert his retirement account assets to

cash simply have your investor call his current IRA custodian. He

should tell them he wants to sell his assets and hold the money in a

cash account for transfer or a rollover & then follow their instructions.

One an investor’s retirement account assets have been liquidated

they will then be transferring liquid funds for use with your venture!

Use Direct Transfer: Best

practice is for the transfer of

cash or assets to go directly

from one retirement account

custodian to the next without

passing through the hands of

your investor client.

Avoid Using the 60 Day Rule: There is a “60 day rule” that

may allow an investor to briefly take personal control of funds

being transferred to another retirement account custodian.

However, using it incorrectly could result in taxes and penalties.

“Missing the Boat” Risk: If your investor client uses the

60 day rule then “misses the boat” – meaning they fail to

return the funds to a qualified retirement account within 60

days, withdrawal penalties and income taxes will probably

have to be paid. For more information on the 60 day rule go

here: https://www.investopedia.com/articles/retirement/06/rollovermistakes.asp


https://www.investopedia.com/articles/retirement/06/rollovermistakes.asp


401K Rollovers

Simple Procedure: As a general rule 401K assets can be easily “rolled

over” into a Self-Directed IRA if your investor client is no longer working for

the same company that he was employed with when his 401K was funded.

If Still with Same Company: If your

investor client is still working for the

same company that funded his 401K

then it will depend on how the plan

documents are written. In many cases

rollovers are allowed even while the

employee is still with the firm that is

currently funding his 401K. However

some plan documents will prohibit an IRA rollover while the investor

remains employed with the same firm. If that is the case it will probably not

be possible to access those particular funds for your venture.

403(b), Money Purchase and other Retirement Plans: if your investor

has another type of plan, such as a 403(b), a defined benefit purchase plan

or money purchase plan, ask them to check with their plan custodian about

the rules that govern that particular plan.

Less Common Plans Can Be Used: In almost all cases the less

commonly used types of retirement account plan funds, such as a

Money Purchase Plan, can be made available for your venture.





Some Custodian Representatives

Don’t Know the Rules: If your

investor client has a 401K plan with

an investment firm or broker where

commissions are generated, it is

quite possible their representative will

simply say “NO” without even looking

at the plan documents. If that

happens have your investor client

speak directly with the top plan

official. They should ask for the exact

wording that prohibits a 401K

rollover. A prohibition might not exist

and the 401K can be rolled over.

Getting Your Offering Documents Approved

Documents Approval: Self-Directed retirement account custodians must

review and approve your offering documents before they will send you

money from a client’s retirement account custodian. It is just a matter of

emailing them to the account custodian. They will also want to see a blank

copy of the proposed investment contract (subscription agreement) that

you intend to use.

Suggest Use Templates: If you use the templates offered for sale on

my website, and properly complete them, your offering documents

will likely be approved by the Self-Directed IRA account custodian.



Merits of the Deal Not a Factor for Approval: Self-Directed

account custodians will not analyze the relative merits of your

deal. They simply need to confirm that certain requirements

have been met, such as confirming that your offering is for a

properly formed business entity, and that the investment

documents otherwise meet certain normal standards.

If Not Approved: If, for any reason, your offering documents

are not approved the account custodian will let you know what

is needed. Once those concerns are resolved your offering

documents will then most likely be approved.

This breaks down into three main steps:

(1) Have the Self-Directed account custodian

approve your offering documents.

(2) Have the investor sell stocks or other

assets held by the former custodian.

Once sold and cash is sitting in the old

“regular” retirement account tell your

investor to transfer all of it, or at least as much money as

needed for an investment with you, to the new Self-Directed

IRA account custodian they’re now using.

(3) Have your investor client sign and send in the investment

paperwork.



Detailed Overview of Process

(a) Your investor agrees to place retirement

account funds into your venture and you

get your offering documents approved

by the retirement account custodian.

(b) Your investor uses the new account form

supplied by the Self-Directed custodian

to set up his Self-Directed retirement account. He also uses their

’Transfer Form’ to instruct the old retirement account custodian to

send the money to the NEW Self-Directed account custodian..

(c) When your investor buys into your venture using his Self-Directed

retirement account the vesting will read something like this:

ABC IRA Services CFBO ‘John Doe’ IRA.

(“CFBO” means “Custodian For Benefit Of”)

(d) Your investor client fills out and submits an investment authorization

form to the Self-Directed account custodian. The investment

authorization form says exactly what he or she is investing in, where

to send the money and etc. He submits it with his signed investment

contract for placing funds into your venture, which you also signed

showing that you will accept his investment. That document is usually

referred to as a “Subscription Agreement”.



(e) The Self-Directed retirement account custodian then reviews and

authorizes the investment. Once it’s approved the account custodian

then physically signs the investment agreement (the investment is

held inside the retirement account) for benefit of the investor.

(f) The Self-Directed retirement account custodian then sends the

agreed upon amount of money to you for use in your venture, along

with a copy of the signed subscription agreement.

(g) You send the account custodian a Stock Certificate, Membership

Certificate, promissory note or other document that identifies what

type of investment was sold to your investor. You also send copies to

your investor client.

IRA Ownership Vesting Examples

“Custodian for Benefit of”: To expand on a point made earlier, ownership

interest when using a Self-Directed retirement account is typically titled:

Account Custodian Name CFBO: First / Last Name – IRA Account Number.

Example: As an example lets assume you have an investor client

named Robert C. Smith. Lets further assume Mr. Smith used IRA

Services Trust Company as his retirement account custodian when

he made an investment in your venture through his Self-Directed IRA,

IRA account # 123456.



“CFBO Robert C. Smith”: Given the above example, the ownership

interest of Mr. Smith in your venture would be titled as follows:

IRA Services CFBO: Robert C. Smith, IRA Acct # 123456.

Money held in a Self-Directed Retirement Account, as in this

example, is considered by the IRS to be in a tax protected retirement

account and is therefore not subject to withdrawal or tax penalties.

Don’t You Do It, Billy: “Don’t You Do It, Billy” is a quote from a movie

about Billy the Kid. It’s a scene where ‘The Kid’ makes unnecessary

trouble. If Mr. Smith in the above example did withdraw money from his

IRA, put it into his bank account and write you a check, that also could

cause trouble. The reason is that it would be a “Taxable Event”. Moreover,

if Smith were under 59 ½, taking money out of his retirement account would

probably also create a 10% early withdrawal tax penalty for him. That

would be in addition to the “taxable event”, i.e. in addition to a requirement

for him to pay taxes on the withdrawn funds. Ouch!

Notice that in the first example

Mr. Smith did not take money out

of his IRA, put it into his personal

checking account and write you

a check. Instead the money

comes directly to you from his

retirement account custodian. So

there is no taxable event.



Where to Find Investors

with Retirement Account Assets

In each of the following investor list categories you’ll find people with

significant amounts of IRA or other Retirement Account Money. There is a

lot more information about finding & working with investors in my Core

Training videos. See: https://www.investorsformybusiness.com/core-training3/

(1) Friends, Family and Co-workers:

Many people you’re personally acquainted

with have will IRA & retirement account assets.

(2) Angel Investor Groups: Most Angel

Investors have substantial assets in retirement

accounts and it is entirely possible that an “Angel” will make an

investment in your venture using those funds. That may be especially

true if it is viewed as safe and conservative, such as a conservatively

financed real estate deal, or a venture with an already proven market

that is looking for Angel capital to expand. I suggest getting my

training about working with Angel Investors to learn more. See:

https://www.investorsformybusiness.com/angel-investor-secrets/

Make a Good Impression: If you get your private offering

approved by a Self-Directed IRA account custodian before

talking to Angels that is impressive. It demonstrates a level of

sophistication many others talking to them just don’t have.


https://www.investorsformybusiness.com/core-training3/

https://www.investorsformybusiness.com/angel-investor-secrets/


(3) Local Investment Clubs: Many or most of the people who belong to a

local investment club will also have substantial assets in retirement

accounts. Some of that money can be access for YOUR venture.

(4) Referrals: The same as said above applies to the referrals you’ll get.

(5) Local Businesses: Virtually all successful local business owners that

you know will have retirement account assets

(6) Bringing a Partner into Your Venture: If you bring a partner into your

venture you can usually access their contact list as well yours. And

again, many of those contacts are likely to have IRA or other

retirement account money which they would like to see grow.

(7) Accredited Investor Lists: These lists are available for purchase from

online resources. Moreover the 2013 Jobs Act now allows solicitation

of accredited investors within certain parameters. See

http://www.mondaq.com/unitedstates/x/264860/Securities/SEC+Amends+Rule+506+To+Permit+Ge

neral+Solicitation+In+Securities+Offerings and

http://thecaliforniasecuritiesattorneys.com/2013/07/12/sec-approves-advertised-rule-506-offerings-

bruce-e-methven.

Accredited & Non-accredited Investor Definition: See

respectively: https://www.sec.gov/fast-answers/answers-accredhtm.html

and https://www.investopedia.com/terms/n/nonaccreditedinvestor.asp for

definitions of those terms.

This Works: Entrepreneurs “in the know” do this successfully every day!


http://www.mondaq.com/unitedstates/x/264860/Securities/SEC+Amends+Rule+506+To+Permit+General+Solicitation+In+Securities+Offerings

http://www.mondaq.com/unitedstates/x/264860/Securities/SEC+Amends+Rule+506+To+Permit+General+Solicitation+In+Securities+Offerings

http://thecaliforniasecuritiesattorneys.com/2013/07/12/sec-approves-advertised-rule-506-offerings-bruce-e-methven

http://thecaliforniasecuritiesattorneys.com/2013/07/12/sec-approves-advertised-rule-506-offerings-bruce-e-methven

https://www.sec.gov/fast-answers/answers-accredhtm.html

https://www.investopedia.com/terms/n/nonaccreditedinvestor.asp


Case Studies &

Real Examples

Case Study in Core Training: In the Core Training offered on my website I

include a case study, as well as a lot more information about finding

investors. There’s a 30 day guarantee and it is definitely worth getting. See:


Summary

Quick Review: Here is a quick summary of the main points:

Not Just for IRAs: IRAs are one of the oldest types of retirement

plans. There are in addition many other kinds of Self-Directed

retirement plans that can be accessed to fund your venture.

Tax Advantaged Investing: Investments made in your venture

through a Self-Directed retirement plan are tax-deferred or grow tax-

free, depending on the type of plan.

Wide Range of Options: With a Self-Directed traditional IRA, as well

as other types of Self-Directed retirement

plans, the investment options can go beyond

common Wall Street offerings, while still

retaining all of the benefits of an IRA or other

qualified plan. That can include the option for

the investor to place funds in your venture.




Huge Pool of Potential Resources: The Employee Benefit

Research Institute estimates that IRA and other types of private

retirement accounts in the USA hold about 5 trillion dollars in total.

You Can Use It Too: Wall Street investment brokers tap into

retirement account assets all the time. With this information you too

can easily access IRA or other kinds of retirement account funds held

by a willing & interested investor to fund YOUR venture.

Your Personal Investments & Investment Objectives

Although this training is all about showing folks how to raise private

capital for their own ventures, you or others may instead be reading

this more as a guide for investing your own money. If so, it might

make sense for us to connect on that level.

*One of the lessons I’ve learned over the years

is the importance of maintaining the safety of

invested capital because lost capital gets harder

to replace as we get older. From time to time I

may have investment opportunities available. If you want to know

more about this please, respond to the brief survey on my website

and I’ll send a short personal note in response. The url for it is

http://www.investorsformybusiness.com/investors-survey/ *This is not in any way whatsoever a solicitation for money nor an offer to sell an investment. Investments, if any

are offered and / or sold, will be offered and sold only to those persons or entities who meet the requirements of that

particular offering in advance, and will be offered and sold ONLY by written prospectus. No offers to invest will be

made or accepted via public or online formats of any kind, but you can learn more about this if interested.


http://www.investorsformybusiness.com/investors-survey/


Self-Directed

Retirement Account Form Examples

Please note: I am not employed by, affiliated with or associated with IRA

Trust Services Company or with any other retirement account custodian.

The attached forms are for example

purposes only. For a complete set of the

forms needed to set up a new Self-

Directed IRA account with IRA Services

Trust Company use these links:

https://www.iraservices.com/.

https://www.iraservices.com/sites/default/files/downloads

/Investor%20Kit.pdf .

There are many other Self-Directed retirement account custodians to

choose from. I recommend looking at several before moving ahead.

- - - - - - - - - - - - - - - - - - - - - - - -

In closing, the information provided here gives you a significant advantage.

Many other people have accessed investor retirement account money to

fund a business or real estate venture, including internet marketing-based

ventures, and as I already said, you can too, if you put your mind to it.

With best wishes to you for joy in life & success in business,

Patrick Dague

PS. Knowledge is power – use it wisely!



https://www.iraservices.com/sites/default/files/downloads/Investor%20Kit.pdf

https://www.iraservices.com/sites/default/files/downloads/Investor%20Kit.pdf


Form Examples - IRA Trust Services




















