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Individual Retirement Accounts (IRAs) and 401(k)s are commonly used to invest in stocks and bonds. Less commonly known is how to harness their full potential. Proper structuring expands the universe of investable assets to include investing in your own LLC. Once the LLC is funded, you are free to invest as you wish. There are additional benefits available to the self-employed. We have helped hundreds of clients secure their retirement and we can help you too. Feel free to contact us with any questions.

The primary reasons individuals choose for a self-directed or solo 401(k) / IRA are:

1) Flexibility - Invest as you wish. No custodian to oversee your choices and no fees to pay.

2) Taxes - Contributions are tax deductible and gains are tax deferred.

3) Asset Protection - Protection from corporate creditors via the LLC and protection from personal creditors via the retirement fund.

Tax Benefits

Contributions: The initial contribution is tax deductible. For an IRA the maximum amount is $5,500 per year or $6,5000 if you're over 50. For 401(k)s, the maximum is $54,000 per year. We can help you form your own company. When it contributes to your 401(k) the contribution is tax deductible. Find further 401(k) contribution limit discussions here on the IRS website.

Comounded Growth: Retirement funds compound tax deferred until you make withdrawls for retirement. This deferral can double your money if invested at 6% over 30 years when compared to being taxed yearly. Then, when you retire, you can structure your withdrawls so they take place at a lower tax-rate. We can also show you how to take advantage of IRA stretch our provisions. Through re-calculating your required minimum distribution you can pass more onto the next generation.

Learn about

Self-Direct 401ks

Taxes

Roth 401k

Roth IRA

IRA

Asset Protection Benefits

This strategy has the advantage of simultaneously protecting you from personal and corporate liabilities. You enjoy the benefits of the Limited Liability Company. If it accrues a debt, the debtor cannot pierce the corporate veil and seek a judgement against your other retirement assets nor your personal assets. If you accrue debts on your personal side, then the debtor cannot seek restitution from the retirement account. Retirement funds, such as 401(k)s are protected investments.

Tax deductible contributions and tax deferred earnings that are protected from creditors. This is what the solo 401(k) LLC is about. All this is possible so long as you follow the rules that we show you. It is as simple as it sounds.

Sample Scenario

This example will focus on individual’s who already own their own company. Those who have employer provided fund still stand to benefit. They will bypass the first part of this example and focus on establishing a self-directed 401(k). Once that is established they may invest as they wish.

Step 1: The first rule is your company may only have one employee. There is an exception if the second employee is your spouse. The company may then establish a 401(k) for its employee which is you. The maximum contribution per year is $54,000. This is per person not per plan.

So far the focus has been on business owners. The following section applies to anyone with a 401(k).

Step 2: Once funded, the 401(k) should be self-directed. That means there is no trustee to oversee the fund. If your employeer established the fund then there is some additional paperwork. If you are your employer then you do this from the beginning.

A self-directed fund provides two benefits. The first is you needn’t pay a trustee yearly for overseeing your fund and its management. The second is you needn’t confer with the trustee before making investment decisions. Essentially, you don’t pay for the hassle of having someone tell you what you can and cannot do with your money.

Once your fund is self-directed you form an LLC. The LLC is not owned by you but by your retirement fund. This requires a special operating agreement which we will provide. After organizing the LLC your retirement account funds the LLC. The LLC may now use these funds to invest as it chooses.

Summary

There are additional technical considerations that we can assist you with handling. What’s important to understand is the general outline. Our price of $1199 includes your LLC and attorney time. An initial contribution of $5,000 will provide approximately $1199 in tax savings. Additional contributions and benefits are free money. The compounding investment and asset protection features are added benefits worth their weight in gold.  

Read More

The 401(k) is a tax deferred retirement fund. They are commonly known for being provided by employers and generally invest in stocks and bonds. This is only a partial overview of a very powerful investing tool. What is not commonly known is how to harness their full potential. In short, a solo 401(k) LLC provides unparalleled tax and asset protection advantages.

Tax Benefits
Owning your own business it not required, but does provide for additional benefits. The contributions are tax deductible as a business expense. The funds will then compound free from tax until withdrawal. You may also invest the funds as you wish – not merely in traditional brokerage investments. Rather, you may invest the funds directly into an LLC which you control. Thus bypassing restrictions common to retirement accounts while avoiding the drawbacks.

Asset Protection Benefits
This strategy has the advantage of simultaneously protecting you from personal and corporate liabilities. You enjoy the benefits of the Limited Liability Company. If it accrues a debt, the debtor cannot pierce the corporate veil and seek a judgement against your other retirement assets nor your personal assets. If you accrue debts on your personal side, then the debtor cannot seek restitution from the retirement account. Retirement funds, such as 401(k)s are protected investments.

Tax deductible contributions and tax deferred earnings that are protected from creditors. This is what the solo 401(k) LLC is about. All this is possible so long as you follow the rules that we show you. It is as simple as it sounds.

Sample Scenario
This example will focus on individual’s who already own their own company. Those who have employer provided fund still stand to benefit. They will bypass the first part of this example and focus on establishing a self-directed 401(k). Once that is established they may invest as they wish.

Step 1: The first rule is your company may only have one employee. There is an exception if the second employee is your spouse. The company may then establish a 401(k) for its employee which is you. The contributions to the fund may not exceed the greater of 25% of the company’s profits or $55,000 per year. The latter number is a round figure, the amount changes every year and older individuals enjoy a catchup provision which raises that figure. You may find more information regarding the exact contribution limits here.

So far the focus has been on business owners. The following section applies to anyone with a 401(k).

Step 2: Once funded, the 401(k) should be self-directed. That means there is no trustee to oversee the fund. If your employeer established the fund then there is some additional paperwork. If you are your employer then you do this from the beginning.

A self-directed fund provides two benefits. The first is you needn’t pay a trustee yearly for overseeing your fund and its management. The second is you needn’t confer with the trustee before making investment decisions. Essentially, you don’t pay for the hassle of having someone tell you what you can and cannot do with your money.

Once your fund is self-directed you form an LLC. The LLC is not owned by you but by your retirement fund. This requires a special operating agreement which we will provide. After organizing the LLC your retirement account funds the LLC. The LLC may now use these funds to invest as it chooses.

Summary
There are additional technical considerations that we can assist you with handling. What’s important to understand is the general outline. Our price of $1199 includes your LLC and attorney time. An initial contribution of $5,000 will provide approximately $1199 in tax savings. Additional contributions and benefits are free money. The compounding investment and asset protection features are added benefits worth their weight in gold.  

The Pros and Cons of a 401K Retirement Plan

So many people have seen their 401k plans disintegrate before their eyes. Most people probably don't want to talk about their plans right now because it would be too painful. We won't see those plans start to prosper again any time soon, at least not until the economy turns around and begins to pick up. Nevertheless a 401K program is a great way to save for your retirement. The one thing you want to keep in mind is that you are focusing on the long term and this money is for your retirement.

One of the great things about a 401K retirement plan rests in the fact that they are real simple to implement and very convenient. In fact you don't really do a whole lot except fill out the necessary paperwork and turn it in to your employer. With a plan such as this it allows you to defer your taxes on a portion of your salary just by making contributions to an account, again which is set up by your employer. Any amount that is contributed is free from the burden of taxes; you don't pay taxes on the contribution amount nor on the interest or earnings generated from the contributions until you start to take money out which for the most part doesn't happen until retirement.

Any amount that you contribute is not listed on your W-2, therefore this does not go to the IRS and in the process your taxable income is reduced for the year. It's always a good idea to look at an example for further clarification. During the year if your salary was $80,000 and you made contributions of $10,000 to a 401K plan this in essence leaves your taxable income at $70,000 which is the amount that's reported as income.

There is no need to worry about keeping tabs on the records, although that's not a bad idea, your employer will provide you with statements every now and then so you will know exactly where you stand. You are also given the option of choosing how much you want to designate for each category in terms of the growth, aggressive growth and several other categories. You choose a percentage for each category and your percentages should all add up to 100%. Of course you can change your contribution percentages but this can only be done, for the most part on a quarterly basis. Your statement also let's you know how each category performed. You can get an updated status on the amount of your contributions. Maximizing the amount that you contribute to the plan will help your secure your financial future.

During tough economic times some people will borrow from their plans. There is definitely a lot of that going on right now. If you can avoid that then I would but sometimes emergencies will arise especially if you are having a tough time meeting day to obligations. If you borrow your loan must be repaid with regular payments at market rates normally. Your plan is to repay this money therefore it's not designated as a withdrawal therefore you pay not taxes.

If you decide to take a withdrawal it would be a good idea to review all of the repercussions. First of all you must pay taxes on withdrawals not to mention a 10% penalty if your withdrawal takes place before you reach the age of 591/2. Sometimes your ability to make contributions can be effected, depending on your employers program. They could stop you from making contributions for a certain period of time. There are some hardship cases that will allow you to take withdrawals.

Read More

The 401(k) is a tax deferred retirement fund. They are commonly known for being provided by employers and generally invest in stocks and bonds. This is only a partial overview of a very powerful investing tool. What is not commonly known is how to harness their full potential. In short, a solo 401(k) LLC provides unparalleled tax and asset protection advantages.

Tax Benefits
Owning your own business it not required, but does provide for additional benefits. The contributions are tax deductible as a business expense. The funds will then compound free from tax until withdrawal. You may also invest the funds as you wish – not merely in traditional brokerage investments. Rather, you may invest the funds directly into an LLC which you control. Thus bypassing restrictions common to retirement accounts while avoiding the drawbacks.

Asset Protection Benefits
This strategy has the advantage of simultaneously protecting you from personal and corporate liabilities. You enjoy the benefits of the Limited Liability Company. If it accrues a debt, the debtor cannot pierce the corporate veil and seek a judgement against your other retirement assets nor your personal assets. If you accrue debts on your personal side, then the debtor cannot seek restitution from the retirement account. Retirement funds, such as 401(k)s are protected investments.

Tax deductible contributions and tax deferred earnings that are protected from creditors. This is what the solo 401(k) LLC is about. All this is possible so long as you follow the rules that we show you. It is as simple as it sounds.

Sample Scenario
This example will focus on individual’s who already own their own company. Those who have employer provided fund still stand to benefit. They will bypass the first part of this example and focus on establishing a self-directed 401(k). Once that is established they may invest as they wish.

Step 1: The first rule is your company may only have one employee. There is an exception if the second employee is your spouse. The company may then establish a 401(k) for its employee which is you. The contributions to the fund may not exceed the greater of 25% of the company’s profits or $55,000 per year. The latter number is a round figure, the amount changes every year and older individuals enjoy a catchup provision which raises that figure. You may find more information regarding the exact contribution limits here.

So far the focus has been on business owners. The following section applies to anyone with a 401(k).

Step 2: Once funded, the 401(k) should be self-directed. That means there is no trustee to oversee the fund. If your employeer established the fund then there is some additional paperwork. If you are your employer then you do this from the beginning.

A self-directed fund provides two benefits. The first is you needn’t pay a trustee yearly for overseeing your fund and its management. The second is you needn’t confer with the trustee before making investment decisions. Essentially, you don’t pay for the hassle of having someone tell you what you can and cannot do with your money.

Once your fund is self-directed you form an LLC. The LLC is not owned by you but by your retirement fund. This requires a special operating agreement which we will provide. After organizing the LLC your retirement account funds the LLC. The LLC may now use these funds to invest as it chooses.

Summary
There are additional technical considerations that we can assist you with handling. What’s important to understand is the general outline. Our price of $1199 includes your LLC and attorney time. An initial contribution of $5,000 will provide approximately $1199 in tax savings. Additional contributions and benefits are free money. The compounding investment and asset protection features are added benefits worth their weight in gold.  

 

 

 

View our additional articles on holding companies and asset protection trusts.

The Details

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Asset Protection Trusts

The benefits of an offshore trust, without the drawbacks.

Solo 401(k) LLC

Secure your retirement, while enjoying unparalleled tax and risk management benefits

Holding Company

A staple in tax management and asset protection. Combinable with your Self-Directed 401(k) LLC strategy.

Wyoming LLC

Read about the benefits of a Wyoming LLC.

Wyoming Corporations

Learn more about what makes Wyoming Corporations unique.

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