Posted by Entrust Sacramento on Tue, Aug 10, 2010
We are nearing the end of the Bush tax cuts, which are due to expire at the end of 2010. Unfortunately, it does not appear they will be extended because of the drastic decrease in federal tax revenue. This of course, is relative to the federal government’s continued massive spending in an effort to jump start an ailing economy, bail out banks and corporations, fund social programs, etc. At some point we all should have known a new bill was due.
With the federal deficit at record levels and growing, and continuously declining tax revenue in every sector, that bill is coming by the end of the year. Are you prepared to shelter your income and gains from these looming taxes? In addition to increased federal taxes, we can expect increased state taxes, local taxes, property taxes, sales taxes, capital gains taxes, etc. Couple these various looming tax increases with declining incomes and inflation, and you must ask yourself: Are you in the best shelters available to you?
Now more than ever, you should consider a self-directed IRA to shelter your retirement savings from taxes, as well as to take advantage of the many alternative investment vehicles available to build your retirement account with less volatility than traditional investments. If at all possible, you should seriously consider establishing a Roth IRA and/or converting all or a portion of your tax-deferred accounts into a Roth IRA.
In 2011, when the Bush tax cuts expire, we will just see the beginning of tax increases. Do you think that will be the end of the tax increases? If not, consider the worst-case scenario of what tax bracket you could end up in at retirement, and consider converting your funds into a Roth IRA.
Many believe that they will be in a lower tax bracket at retirement age than during their income earning years. But what will that tax rate and/or bracket be in the future, compared to what it is for those who are retiring now? It’s all relative. Many people have lost up to half of their retirement savings as a result of the losses in the market over the past two years. They may not recoup those loses and cannot afford to have their nest egg further devastated at retirement when it’s time to take distributions, due to higher taxes, inflation, etc.
Make an appointment with your CPA or tax professional to discuss the various tax shelters you might want to consider in order to protect your retirement account(s). If you would like more information regarding the various investment options available using a self-directed IRA and/or other account types, please call us at (916) 509-7271.
By Lamarr Baxter, Business Development Manager
lbaxter@theentrustgroup.com
Posted by Entrust Sacramento on Tue, Apr 06, 2010
As a result of volatility in the stock markets and the lack of lending on the behalf of institutional lenders, purchasing real estate using a self-directed IRA is a very popular option. However, in order for this process to go as smoothly and as seamlessly as possible, there are some things you and your agent should know prior to entering into contract on a purchase.
As the real estate market has changed over the past two years, so has the screening process by banks and selling agents. In most cases, the offers that are seriously being considered are cash offers with verifiable funds prior to the offer being accepted. Therefore, it’s very important that the list below is reviewed and followed prior to entering into contract:
- Make sure the contract for purchase is entered under the vesting of the self-directed IRA
and not yourself as an individual, or any entity other than the IRA account.
- Your self-directed IRA account should be established and funded prior to entering into contract to avoid a prohibited transaction or cancellation of your contract. The contract cannot be changed at a later date.
- Seek a real estate agent who is knowledgeable about how to process a transaction using a self-directed IRA (obtain references if necessary).
- Be sure to obtain and follow the Real Estate Funding checklist provided to you once your account is established, and provide this list to your agent prior to entering into contract. This will ensure that IRS rules are followed when your investment transaction is put together.
- Be sure both you and your agent communicate with our Real Estate Department throughout the process, to ensure mistakes are not made, or to at least minimize those that could affect your deal.
- Always perform your due diligence on the investment property by consulting with your real estate agent, CPA, and/or attorney prior to making the investment.
It’s really important that these steps are followed to ensure that you have a chance at your offer being accepted, as well as it closing. Over the past few months, I have noticed that both banks and selling agents are becoming impatient with transactions that seem like they may not close, or close on time. As a result, they are not accepting offers on such transactions and/or are terminating the contract if all terms to close are not met throughout the transaction.
For more information on the information discussed above, please
contact us at (916) 509-7271.
The above listed information is NOT intended to be tax nor legal advice as Entrust do not provide legal and/or tax advice. The variables are designed to educate investors and for your to factor in these variables when consulting with your tax professional when making the decision on whether to convert or not.
By Lamarr Baxter, Business Development Manager
lbaxter@theentrustgroup.com
Posted by Entrust Sacramento on Mon, Feb 08, 2010
The new year is here, and the 2010 Roth conversion plan is in effect. In the past, many people were restricted from converting their employer-sponsored retirement plans and Traditional IRAs to a Roth because of the income restrictions. Well, the income restrictions are gone, and you can now covert tax-deferred retirement accounts to a Roth, regardless of income. You can now enjoy tax-free returns on the growth of your investment in a self-directed Roth account. If you are an existing real estate investor or seeking to invest in real estate using retirement funds, review some of the pros and cons to help you decide whether you should convert now, later, never, or only a portion of your retirement account.
Pros of Converting to a Roth to Purchase Real Estate
- Tax-free gains on investment returns
- Because of economic conditions, you might be in a lower tax bracket this year—conversion taxes are based on current tax rates
- For conversions occurring in 2010, the tax liability can be spread over two years (keep in mind that potential long-term profits can make it worthwhile to pay the taxes now)
- No required minimum distributions with a Roth IRA
- Avoid taxes on gains on higher anticipated income in the future
- Take advantage of the recent lost value of your IRA portfolio to reduce the tax liability of conversion
- Property values are currently depressed. If you currently own real estate in a Self Directed IRA, now would be great time to convert at the lower property value
Cons Converting to a Roth to Purchase Real Estate
- Less capital after paying taxes to make investments
- Conversion could result in a cash-flow problem
- Conversion income could result in putting you into a higher income tax bracket
- Contributions are not tax deductible whereas tax-deferred account contributions are deductible
This information is not intended as tax advice. Entrust does not provide legal or tax advice. Consult with your tax professional whether converting to a Roth fits your financial plans.
For more information on the Roth conversion relative to real estate investment, call me at (916) 509-7271.
By Lamarr Baxter, Business Development Manager
lbaxter@theentrustgroup.com
Posted by Entrust Sacramento on Sat, Aug 01, 2009
Your financial planners/advisors and other financial professionals have always emphasized the importance of diversifying your investment and retirement portfolio. But are your investments and retirement portfolios TRULY as diverse as they should be? Diversification isn’t just relative to high versus low risk investments.
A truly diverse retirement portfolio goes well beyond stocks, bonds, mutual funds, CD’s and level of risk. In addition to the traditional forms of investments there are alternative investments that you should consider such as:
Real Estate (residential, commercial, raw land, etc….)
Offshore Real Estate
Private Notes
Private Stock
Precious Metals
Foreign Currency
LLC’s
Futures & Commodities
If you are seeking to truly diversify your retirement portfolio you should consider some of these options.
The storm within the stock market has not completely subsided. With the institutional banks still in crisis and the U.S. automakers on the brink of collapse, there may still be more upcoming losses to endure in the stock market. Take back control of your retirement dollars and invest in what you know through an Entrust Self-Directed IRA account.
To start taking advantage of these investment options call me at 
916-708-0235.
Lamarr Baxter, Business Development Manager
Lbaxter@theentrustgroup.com
Posted by Entrust Sacramento on Wed, Jul 01, 2009
If you are a real estate investor or private lender, be aware of the pending passage of H.R. 1728, which places limits on private financing. H.R 1728, called the Mortgage Reform and Anti-Predatory Lending Act, has passed in the House and is pending passage in the Senate. Passage of this bill in its current form could change real estate financing in that it places limitations and restrictions on private financing, even for the individual homeowner seeking to sell a home using the seller carryback option as an alternative method of financing for the purchaser.
Some of the restrictions and limitations contained in the proposed bill include:
• Restrictions and limits on how many homes you can sell within a 36 month period
• Restrictions and limits on seller carryback financing
• Restrictions and limits on private financing
• Restrictions and limits on terms for "creative financing"
I strongly suggest that if you are investing in real estate using your self-directed IRA to conclude any proposed or pending transactions in the event this bill passes. If you are seeking to loan monies from your self-directed IRA, I also suggest that you move forward on completing the loans to avoid being affected by the bill's restrictions. This might be your last chance to take advantage of this investment option.
Posted by Entrust Sacramento on Mon, Jun 01, 2009
Many of you have suffered great losses in both the stock market and your retirement accounts. While prices are low for traditional investments (i.e. stocks, bonds, mutual funds, annuities, etc…) the market continues to be volatile because of many other external and global factors.
The real estate market is set to be an excellent long term investment vehicle. With interest rates at historic lows coupled with low home prices, you are in the position to leverage monies using your existing 401(k) and IRA accounts. Transferring or rolling over to an Entrust Self-Directed IRA would allow you to take advantage of this wealth-building investment opportunity.
With so many people losing their homes to foreclosure and now becoming renters, the demand for rental housing for many qualified displaced families has increased. Now is the right time to investment in Single Family Residences with your Self-Directed IRA. You can enjoy immediate monthly cash-flow, annual property appreciation and the excellent income tax shelter.
Other forms of real estate investments can come in the form of purchasing and offering Real Estate Trust Deed loans. With institutional lending limited and in some aspects frozen, the opportunity for your IRA to be the bank is becoming more common among investors who seek a decent rate of return on their cash. Loans to homeowners with your investment secured by the property in the form of a lien until the borrower refinances or sells the property makes the IRA investor secure. You can choose to invest in either a 1st Trust Deed or 2nd Trust Deed, the choice is yours. Also keep in mind, many account investors are also invest their funds together with friends, relatives and other investors to achieve the investment objectives described above.
Once your Entrust account is established, you are ready to begin investing in real estate. What are you waiting for? Call us today for more information 
916-509-7271
.
To determine which type of IRA account would be best for you, we strongly encourage you to consult with you tax professional. Seeking professional advice would also apply to the investment aspect of your transaction as well, be sure to consult with a licensed real estate professional and/or real estate attorney before investing. Entrust provides excellent educational resources, we do not endorse, sell or recommend any investment products.
Lamarr Baxter, Business Development Manager
lbaxter@theentrustgroup.com