INVESTMENT NEWS

Real Estate Investor Meeting

On Tuesday November 10th, at MAREIs Monthly Meeting, we will
be learn about Using our Self Directed IRA to Invest in Alternative Investments such as Real Estate, Mortgage Notes and more.

MEETING

LOCATION
Holiday Inn & Suites
Overland Park West
8787 Reeder Road
Overland Park, KS

Special Guest Speaker is John Bowens from Equity University will be

defining the Self Directed IRA, what it is and what it is not. He will
explain the concept of disqualified persons. He will share a few of the
alternative assets that one can invest in. Best of all, we will learn how
Top Floor
to we can invest with tax deferred and even tax free profits.
Sunset Ballroom
As always we will have networking from 6pm to 7pm with a packed
600pm to 9pm
room full of Vendors who specialize in working with the Real Estate
Details at MAREI.org
Investor. Each meeting typically has 100 to 150 local real estate professionals.
Early Meeting 5:30
This meeting is no charge to members of MAREI and has a $25 at
the door fee for Internet Members and those who have not yet joined.
First Time Guests to a MAREI meeting can pre-register for FREE
Because so few people know about Self Directed IRAs, please invite
a friend to attend with you.

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November 2015 Issue

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IRA Q & A with

John Bowens
Should I Get a Traditional IRA
or a Self-Directed IRA?
The terminology regarding IRAs can be a bit confusing and counter-intuitive at
first glance. That being said, all accounts Equity Trust offers are selfdirected. This means you will have the option to invest in numerous asset
types beyond stocks, bonds, and mutual funds. A few of the more popular
assets our clients invest in, include; real estate, tax liens, promissory notes,
and even entities.
The type of an account opened may vary from traditional IRA, Roth IRA, or
even more. Lets start by defining a traditional IRA. A traditional IRA has a taxdeferred status. This means that taxes are not paid on contributions but taxes
are incurred on qualified distributions down the road. An alternative to the traditional IRA is the Roth IRA. Roth IRAs incur taxes on the initial contributions;
however taxes are not paid on distributions or gains. There are other differences and important details, but most important to know is both of these IRAs
are available through Equity Trust.
This means you can have a self-directed traditional account or a self-directed
Roth account; you can even have both (many clients do). Traditional or Roth
distinguishes the type of tax environment for the account, whereas selfdirected distinguishes the investment options and control you have over your
account.
There are important IRS rules and regulations, but as far as diversity of investment options, theres really nothing better than a self-directed IRA, whether
you choose a traditional, a Roth, or any of the other accounts we offer. Equity
Trust Company is a passive custodian and as such does not provide tax, legal
or investment advice. Whenever making an investment decision, please consult with a legal, tax, or accounting professional.
Is It Worth the Fees for a
Single Investment?
Fees are going to vary greatly depending on the custodian you choose. Equity
Trust uses an all-inclusive fee schedule. We dont charge you for each transaction and we dont penalize you for only completing a single transaction. The
annual maintenance fee for your account covers all your transactions. What
actually determines your fee will be the portfolio value of your account and
how that value fits into our tiered fee schedule.
Lets say for instance, you owned a property in your IRA with a value of
$120,000 and on top of that, you had $30,000 in cash in your account, perhaps to be used for maintenance or future investments. The total value of your

account would be $150,000. This would fall neatly into our fifth tier ($100,000-$199,999). Therefore your annual
fee would be $460.
This may lead some to believe that a single asset IRA would be better off with a custodian who charged per
transaction. However, you have to be careful what is considered as a transaction.
Possible transactions may include:

Rent check deposits

Property management payments

Utility payments

Payments for maintenance work

With Equity Trust Company, we wont nickel and dime you for each transaction whether its the purchase, sale,
or maintenance of a property. Its all included as part of your annual fee.
This may only be a single investment, but if its yielding a return, then a custodial fee may very well be a drop in
the bucket compared to the profits you may potentially make in a tax-advantaged environment. Its up to the individual to decide, of course, and you shouldnt make such a calculation without the help of your tax advisor, but I
can say that thousands of clients have found the self-directed IRA vehicle to be hugely beneficial and well worthwhile, even when theyre only working with one major investment.

I Want to Start Self-Directing,

but I Dont Have an Investment Lined Up Yet
This is a common reason many investors hesitate to open a self-directed IRA, even when they are interested in
alternative assets and self-directing investing. Not having a deal ready, may, at first glance, appear to be a lack of
urgency. After all, you may as well let your retirement funds sit in a mutual fund until youre ready for more active
investing; at least, thats their mentality. The problem with this, of course, is that a great opportunity can arise

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when you least expect it and then it may be too late to act upon that potential deal in time. Ive heard from many of our clients that a great opportunity can pass them by, even when they do have their ducks in a row,
simply because they didnt act quickly enough. If you throw in the extra
steps of opening an account, moving your funds, and having the necessary time for the funds to settle, then you have less time to act on the
deal.
The best thing to do is to be realistic. Whether from another custodian or
a 401(k) administrator, transferring funds takes time. There have also
been occasions where a custodian has dragged their feet a bit with the
transfer process. Theyre not always in a rush to let go of your money.
You have to allow for the time necessary to roll these funds over and for
the account to open. If youre interested in self-directed investing, dont
wait until youve found a deal. Get your account open, get your funds
moved over, and get yourself educated so you feel comfortable grabbing
that excellent deal as soon as it comes along. Theres a lot more to be
said on this topic, but I hope that answers your question for now.

Can I Pay Myself a Salary with IRA Funds?

As you explore all the possibilities for alternative investments, remember
to keep in mind the purpose of an IRA; accumulating and growing savings
for retirement. The IRS Internal Revenue Code (IRC) 4975 details what
activities are considered prohibited transactions in order to protect IRA
funds from premature use.
ince your IRA is designed to provide for your future, there are taxes and
penalties that discourage individuals from personally benefiting from the
funds. Paying yourself a salary from your retirement funds goes against
IRC 4975 and will result in taxes and penalties.
Below is a listing of prohibited transactions as outlined under IRC 4975:

The sale, exchange, or leasing of any property between a plan and a

disqualified person.

Currently there are over 50

Available Investment and
Cash Flow Rental Properties
Available from MAREI Members, please visit

MAREI.org/Property

Lending of money or an extension of credit between a plan and a disqualified person.

Furnishing of goods, services, or facilities between a plan and a disqualified person.

Transfer to, or use by or for the benefit of, a disqualified person of the
income or assets of a plan.

The act by a disqualified person who is a fiduciary whereby he deals

with the income or assets of a plan for his own interests or account.
The receipt by a fiduciary of any consideration for his own personal account from any party dealing with the plan in connection with a transaction
involving the income or assets of the plan.

Thanks for all the questions. Please join me at MAREI on Tuesday November 10th to learn even more.
John Bowens

Register Online at www.IRAevents.com / Discount Code MAREI

3 Common Misconceptions that Trip Up

New Self-Directed IRA Investors
By John Bowens
With the advent of the Internet, more information has become available for investors on
the concepts and strategies that can be deployed within self-directed IRAs. Unfortunately, the growing popularity has also led to a lot of misinformation, myths, half-truths and
flat-out wrong statements about self-directed IRAs.
To combat some of the biggest misstatements about self-directed IRAs, and in order to
help investors avoid penalties here are three of the most common misconceptions about
self-directed IRAs and the truth regarding them
Taxes and penalties are associated with rolling funds over into IRA accounts for
real estate purchasesThis is a common issue when consulting with many CPAs or financial advisors. Accountants will often say that by rolling over your account into a self-directed IRA in order to purchase real estate,
youre going to create a taxable situation. The truth is that due to the Employee Retirement Income Security Act of
1974, your IRA is considered a tax-free environment. This means that as long as youre using your self-directed IRA
correctly and investing in the proper vehicles, all profits generated are tax-free.
You must have an LLC in order to invest in an alternative investment with an IRAYou do not need an LLC to
invest with a self-directed IRA. The notion that you do is associated with the marketing of product by companies
that offer to set-up the LLC for investors. Also called a checkbook-controlled IRA, certain providers with set-up
a single-member LLC is created, funded by an IRA and the managing member is the owner of the IRA. This is
not necessary and can potentially cause problems for an investor for details, access 10 Myths about Checkbook Control Exposed.
Reporting IRA activity to the IRS requires special paperwork when investing with real estateQuite simply,
according to Federal Law youre not required to report any income or loss associated with your self-directed IRA
on an annual basis. There are only two times you need to report information associated with your self-directed
IRA:

When you file your personal return, you show how much you contributed to that IRA.

When you distribute the funds associated with your IRA for non-investment purposes, you report this on your
personal return.
If youve run into one or all of these situations or are intimidated by the idea of getting started with your self-directed
IRA, we have an online webinar training you have to attend.
On Thursday, October 29th, Equity Trust is offering a free webinar titled: 5 Real Estate IRA Myths Busted. National
Education Specialist John Bowens will help debunk many of the more common misconceptions around real estate
and your IRA so you can have the confidence to jump into that first self-directed deal.
This hour-long presentation is jam-packed with insights that may have kept you from investing using a self-directed
IRA. Let the professionals at Equity University set you straight so you can start making money today!

Go to www.MAREI.org/IRA to Register for this informative webinar as well as several others over the next few weeks.
On Thursday, February 7, Equity Trust is offering a free webinar titled: 5 Real Estate IRA Myths Busted. National
Education Specialist John Bowens will help debunk many of the more common misconceptions around real estate

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Mid-America Association of Real Estate Investors does not render legal, tax, economic or investment
advice. All programs, properties and services are provided with the understanding that Association is
not engaged in rendering legal, tax, or other professional services. If legal, tax or other expert assistance is required, the services of a competent professional should be sought. Everyone should complete their own due diligence!
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COMING next

month

Tuesday December 8th:

Speed Networking
Benefiting Toys for Tots
Brush up on your elevator pitch and grab an unwrapped toy to get ready for our 2nd Annual Event.
Visit MAREI.org for complete details & registration.

A Trade Association for

Real Estate Professionals
For landlords, wholesalers, rehabbers, note sellers, multifamily investors,
exchangers or anyone else who use real estate as a way to build
wealth. We welcome full time investors as well as those just getting started or people who provide a product or service to the industry.
With something for everyone from beginner to pro!
The experienced real estate professional will find the support they need stay informed of the issues and tools to take action. The new investor will find the education they need to get started and the products, services and connections to build
profitable businesses. The product or service provider that caters to the real estate industry will find active professionals who need their services. And everyone
benefits from our community, from live meetings and events to our very vibrant
social media destinations. Please join us . . . .

Meeting Location
MAREI Meets every 2nd Tuesday at the Holiday Inn & Suites at 8787 Reeder
Road in Overland Park, KS. Conveniently located just off 69 & I35 Highways
at 87th Street.

Member
Discounts
Home Depot 2% Rebate
RealeFlow Discount Pricing
Rentals.com 20% Off Reg Price
ISC Tenant Screening
More . . . .

Contact Us
Learn more about
Mid-America Association
of Real Estate Investors
Chapter of National REIA
Kansas City Office
PO Box 1022

Meeting Agenda

Raymore, MO 64183

5:30 pm: Early MeetingMarket Update

6:00 pm: Networking & Vendor Hall
6:30 pm: Member BenefitsLittle Board Room off Vendor Hall
7:00 pm: Announcements
7:15 pm: Discover the Power of Self Directed IRA Investing.
9:30 pm: Late Night Networking in the Lounge 1st Floor
November Meeting on 8th Floor in Sunset Ballroom

(913) 815-0111
info@MAREI.org
Visit us on the web at
www.MAREI.org
www.MAREImember.com