The Checkbook IRA – Invest Like a Billionaire www ... · Checkbook / Self-Direction Rules • You MUST have a custodian / trustee between you and the plan. That custodian must be

The Checkbook IRA – Invest Like a Billionaire www.PremierOffshore.com

Contents

• Offshore Checkbook IRA LLCs •  Benefits and Guidelines •  How it Works •  Tax Benefits of Going Offshore •  Invest Like a Pro •  How Much does it cost?

www.PremierOffshore.com

Summary What is an Offshore Checkbook IRA LLC? •  Move your IRA or other retirement account in to an

offshore LLC that you control •  You manage your investments •  You write the checks and you have control •  Hold your money out of the United States in any

currency and in and permissible investment •  Protects your IRA from creditors

Offers maximum flexibility, protection & privacy


Benefits of Control

•  True Diversification – includes nontraditional assets

•  Real Estate •  Mortgages & notes •  Private business

•  You choose and control the deals, you decide on the investments you wish to make in your retirement plan.

•  Increase your buying power through leverage.

•  You may be able to generate higher returns on your investments. Whatever happens is on you.

•  You can diversify in to gold or foreign currencies


Keogh Traditional IRA

Roth IRA

TSP prior employer

TSA prior employer

Solo 401(k)

403 b prior

employer

401 k prior

employer

SEP/ SIMPLE

Only one Offshore IRA LLC structure is required. You may combine multiple accounts in to one LLC. Husband and Wife must each have their own LLC.


Checkbook / Self-Direction Rules

•  You MUST have a custodian / trustee between you and the plan. That custodian must be an approved IRA custodian.

•  With a self directed IRA, you suggest investments and, if the custodian agrees, he makes the investment.

•  With a Checkbook IRA, the custodian invests in your LLC and take sole reasonability from there.

•  You CAN NOT borrow from the plan or use it for your benefit.

•  You CAN NOT pledge your IRA as collateral for ANY purpose. Debt financed property held by IRA must be a non-recourse loan.


Self –Directed

Custodian

Investment #1

Investment #2

Investment #3

(Investor #4)

IRA LLC

IRA Funds

Membership Interest

Current Custodian Transfer or

Rollover

Investor #1

Investor #2

Investor #3


•  Administrative requirements - Annual valuation of IRA - Annual report to IRS - Books and records •  Prohibited assets - Life insurance contracts - “Collectables” such as artwork, rugs, antiques, metals (bullion OK) gems, stamps, coins, and alcoholic beverages. •  Disqualified persons: - Lending to you and your immediate family - Company if you own greater than 50% - Company if you are officer, director or highly compensated employee

Guidelines


Partnering

Q: I have $50k in an IRA and I want to buy a parcel of real estate that is $100k. How can I accomplish that?

3 Options

1.  Partnering (IRA funds and personal cash) 2.  Partnering with Personal Financing ( Home equity line, etc.) 3.  IRA gets non-recourse loan (UBIT issues) for difference


Real Estate via LLC

Your IRALLC & personal investors

fund 2nd LLC

LLC names a manager

LLC buys real estate

LLC manager manages real estate, collects rent and pays

expenses

LLC distributes cash to members

Self-Direction

•  You can invest in Commercial, Residential, or Rental properties –  You can rehab properties

•  You can invest in Notes and Mortgage Loans. •  You can invest in LLC´s and private placements. •  You can invest in Vacation investment property. •  You can invest in Raw land / Building Lots. •  You can invest in Real Estate Syndications. •  You can invest in Foreign Currency / Option/ Futures. •  You can invest in U.S. or Foreign Stocks / Bonds / Mutual funds. •  You can invest in IPO’s •  You can partner with yourself and anyone else including their

IRA LLC.


Q & A

•  Is this new? No, allowed by the IRS for 30+ years •  Why not common knowledge? Investment managers don’t want

you in control. –  Want you to invest in only products offered by their firm!

•  Do I get complete control? In a word, yes, so long as you manage the assets for the benefit of the account – NO SELF DEALING

•  Why do I need an LLC? So you can be the manager of the LLC and

gain control of the IRA. A self-directed IRA with no LLC, you can make recommendations, but not in control. Also, no tax benefits.

–  Couldn’t even change a light bulb in a rental property owned by the IRA.


Q & A

•  May I use my IRA funds to make improvements or renovations? Yes. In fact, you must use IRA funds to make the improvements and pay all expenses associated with the property. All expenses of the property are paid with IRA funds, and all profits made on the property are returned to the IRA.

•  Can I buy my dream home with my IRA and then live in it when I reach the age of retirement? Yes. Your IRA would be the original owner. You would use your IRA money to make the purchase and maintain the property. Any rents generated would be returned to the IRA. Upon reaching retirement age, the property could be distributed out to you. Of course, you would have to pay taxes at that point but without penalty (in a traditional IRA…no tax in a ROTH IRA).


Q & A

•  May I use my IRA to make loans? –  You can make loans to unrelated persons for any reason. –  You can loan money to friends for any purpose –  According to IRC 4975, siblings, aunts, uncles, cousin and “step relations” are not

included in the definition of disqualified persons. –  You can make loans to real estate developers –  You can make loans to just about any business where you do not own 50% and are

not a highly compensated employee.

•  Are the gains that my IRA LLC makes taxable? –  Not in most cases. If an IRA buys a piece of property and then sells it at a profit,

the gains stay within the IRA. If you have a traditional IRA, the gains are tax-deferred. If you have a Roth IRA, the gains are tax free.

–  Note, you alter that result if you use leverage through borrowing. If you borrow 1/3 of the money then 1/3 of the profits are taxed.


Q & A

•  I have a 401K with an old employer. Can I move it into the IRA LLC? Yes. You can start controlling this money immediately.

•  I have a 401K with my current employer. Can I move it into an LLC? Most of the time you cannot move money a current employer.

–  If you have been at that company for many years, you may be able to take over management of some of your retirement money. There are many exceptions!

•  I have several IRAs and old 401Ks. Can I combine them? Yes. They can all be combined and then invested into your IRA LLC so that your buying power is maximized. The only restriction is on 401(k)s; is that you generally must no longer work for the employer.



Tax Benefits of Going Offshore

•  Self Directed IRAs and Domestic IRA LLCs must pay Tax (UBIT) on profits from certain investments.

•  Offshore IRA LLCs can avoid this tax by adding a UBIT Blocker Corporation. Only available offshore because the offshore corp is in a tax free county.

•  Most real estate is passive, so no blocker required.

•  For the sophisticated investor, the tax benefits of going offshore can be enormous!


Types of Unrelated Income (1 of 2)

•  Investments in certain types of hedge funds –  Typically the best performing –  Master / Feeder Structures

•  Investments in active businesses, especially those structured as partnerships –  Profits from an offshore corporation that

flow in to an offshore IRA LLC with blocker might be completely tax free without the need to retain earnings offshore.


Types of UBI (2 of 2) – This is the BIG One!!

•  Income from leverage –  Buy a home with $50,000 from your IRA and

$50,000 from a non-recourse loan. 50% of the rental income and sale profits are taxable.

–  Leverage your brokerage or FX account 10 times, 20 times or 100 times, profits on that leverage are taxable.

–  Make these investments through an Offshore IRA LLC with Blocker and no tax is due.

How I Can Help

•  IRA LLC structure setup •  Protected “checkbook control” •  LLC documentation & operating agreement •  Opening foreign bank accounts •  Referral to U.S. Administrator •  Foreign structures as necessary •  Structuring partnership investing •  UBIT Blocker and Tax Planning •  Structure Maintenance


Get Started Now •  My focus is international Retirement Accounts •  Offshore structure cost $3,150.00

–  Includes foreign bank account and standard documentation

–  Includes 12 months of consulting service on operations –  Includes introduction and setup with U.S. administrator

experienced in international investing •  Annual tax about $800 to your State •  Administrator startup fee about $150

•  See PremierOffshore.com for detailed articles



Documents

The Checkbook IRA – Invest Like a Billionaire www ... · Checkbook / Self-Direction Rules • You MUST have a custodian / trustee between you and the plan. That custodian must be