INVESTMENT NEWS MEETING

LOCATION

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

Top Floor Sunset Ballroom

600pm to 9pm Details at MAREI.org

Early Meeting 5:30

Real Estate Investor Meeting

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

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 to we can invest with tax deferred and even tax free profits.

As always we will have networking from 6pm to 7pm with a packed room full of Vendors who specialize in working with the Real Estate Investor. Each meeting typically has 100 to 150 local real estate pro-fessionals.

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 IRA’s, please invite a friend to attend with you.

November 2015 Is-

sue

FIRST

TIME

ATTENDEES

pre-register

FOR

FREE

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 “self-

directed”. 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. Let’s start by defining a traditional IRA. A traditional IRA has a tax-

deferred status. This means that taxes are not paid on contributions but taxes

are incurred on qualified distributions down the road. An alternative to the tra-

ditional 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 differ-

ences 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 “self-

directed” distinguishes the investment options and control you have over your

account.

There are important IRS rules and regulations, but as far as diversity of invest-

ment options, there’s 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 con-

sult 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 don’t charge you for each trans-

action and we don’t 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.

Let’s 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, per-

haps to be used for maintenance or future investments. The total value of your

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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 won’t “nickel and dime you” for each transaction whether it’s the purchase, sale,

or maintenance of a property. It’s all included as part of your annual fee.

This may only be a single investment, but if it’s 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. It’s up to the indi-

vidual to decide, of course, and you shouldn’t 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 worth-

while, even when they’re only working with one major investment.

I Want to Start Self-Directing,

but I Don’t 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 you’re ready for more active

investing; at least, that’s 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 po-

tential deal in time. I’ve heard from many of our clients that a great oppor-

tunity can pass them by, even when they do have their ducks in a row,

simply because they didn’t act quickly enough. If you throw in the extra

steps of opening an account, moving your funds, and having the neces-

sary 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. They’re 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 you’re interested in self-directed investing, don’t

wait until you’ve 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. There’s 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.

Lending of money or an extension of credit between a plan and a dis-

qualified person.

Furnishing of goods, services, or facilities between a plan and a dis-

qualified 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 ac-

count 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 No-

vember 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. Unfortunate-

ly, 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. Ac-

countants will often say that by rolling over your account into a self-directed IRA in order to purchase real estate,

you’re 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 you’re 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 Check-

book Control – Exposed.”

Reporting IRA activity to the IRS requires special paperwork when investing with real estateQuite simply,

according to Federal Law you’re 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 you’ve 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 oth-

ers 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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Mortgage Pulaski Bank Beth Langston 816-234-8660 PulaskiBank.com

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Realty & Management Home Rental Services Kandy Meehan 913-469-6633 Home4Rent.com

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Title & Escrow Continental Title Sharon Bower 913-744-7011 CTitle.com

See full details on all Business Associates at MAREI.org/Business-Directory/ 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 assis-

tance is required, the services of a competent professional should be sought. Everyone should com-

plete their own due diligence!

** Companies marked with a ** offer member discounts for our members. Companies such as The Home De-

pot, Real Protect, Investigative Screening & Consulting, PartnerShip, Build A Sign, Rentals.com, Local Market

Monitor and more offer discounts to MAREI members that can be found by logging into MAREIMember.com.

Contact Us

Learn more about Mid-America Association of Real Estate Investors

Chapter of National REIA

Kansas City Office PO Box 1022

Raymore, MO 64183

(913) 815-0111

info@MAREI.org

Visit us on the web at www.MAREI.org

www.MAREImember.com

Member Discounts Home Depot 2% Rebate

RealeFlow Discount Pricing

Rentals.com 20% Off Reg Price

ISC Tenant Screening

More . . . .

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.

Meeting Agenda

5:30 pm: Early Meeting—Market Update

6:00 pm: Networking & Vendor Hall

6:30 pm: Member Benefits—Little 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

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 start-

ed 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 in-

formed of the issues and tools to take action. The new investor will find the edu-

cation 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 es-

tate 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 . . . .

COMING next month Tuesday December 8th: Speed Networking Benefiting Toys for Tots Brush up on your elevator pitch and grab an un-wrapped toy to get ready for our 2nd Annual Event. Visit MAREI.org for complete details & registration.