Missed Your 60-Day Rollover Deadline?

Here’s What Self-Directed IRA Owners Should Know

The bad news is that you only have 60 days to complete an IRA rollover, and if you miss that deadline, whether you’re rolling over funds from a conventional IRA or a self-directed IRA, you may find the IRS will force you to treat the entire rollover as a distribution, and demand taxes and penalties on the full amount.

The good news is that there is a way out for some of you – if you qualify.

The IRS recently released a procedure whereby individual taxpayers can self-certify that your transaction meets the IRS criteria for a waiver of the 60-day deadline, so you can avoid the penalties and interest. This is terrific news for many of our clients, who own and regularly engage in transactions with self-directed IRAs.

The IRS lists eleven acceptable reasons why an IRA owner may miss the 60-day rollover deadline and still qualify for the tax-free rollover treatment:

The taxpayer must have missed the 60- day deadline because of the taxpayer’s inability to complete a rollover due to one or more of the following reasons:

  1. an error was committed by the financial institution receiving the contribution or making the distribution to which the contribution relates;
  2. the distribution, having been made in the form of a check, was misplaced and never cashed;

 

(c) the distribution was deposited into and remained in an account that the taxpayer mistakenly thought was an eligible retirement plan;

(d) the taxpayer’s principal residence was severely damaged;

(e) a member of the taxpayer’s family died;

(f) the taxpayer or a member of the taxpayer’s family was seriously ill;

(g) the taxpayer was incarcerated;

(h) restrictions were imposed by a foreign country;

(i) a postal error occurred;

(j) the distribution was made on account of a levy under § 6331 and the proceeds of the levy have been returned to the taxpayer; or

(k) the party making the distribution to which the rollover relates delayed providing information that the receiving plan or IRA required to complete the rollover despite the taxpayer’s reasonable efforts to obtain the information.

 

To qualify for the self-certification route, you have to certify in writing to your IRA custodian or third party IRA administrator that your transaction qualifies for the waiver. You can find a model letter that you can use to write your administrator in the Appendix to IRS Revenue Procedure 2016-47.

To use this procedure, you must not have been denied a waiver previously by the IRS.

You aren’t entirely off the hook. If the IRS decides to come back and audit you, they could find that you didn’t qualify for a tax-free rollover after all, and still assess you income tax, penalties and fines. So the self-cert procedure allows you to list the transaction as a valid rollover on your tax return, for now, but that relief can be taken away if the IRS finds out the deal didn’t qualify at a later date.

The IRS is still going to know that there was a late rollover. Your custodian or administrator must report rollover dates to the IRS. So you will be on their radar screen. Consider your chances of being audited to be elevated after going through the self-certification procedure for your IRA or self-directed IRA.

If you violate any other rules besides blowing the 60-day deadline, the self-certification process will not bail you out. So if you are using a self-directed IRA, you still cannot violate rules regarding prohibited transactions or self-dealing and expect your self-certification affidavit to get you off the hook. You also cannot execute more than one 60-day IRA-to-IRA rollover or Roth IRA-to-Roth IRA rollover within a 12-month period.

The best bet is to avoid taking personal possession of rollover funds at all, but to have your administrator or custodian handle your rollovers via a direct trustee to trustee transfer. As long as you don’t take possession of the rollover proceeds and your funds stay within an IRA account, you don’t have to worry about blowing any deadlines at all.

Until you are due for a required minimum distribution, that is.

If you are looking at a rollover transaction soon, or if you want more information about self-directed IRA investing in general, contact American IRA, LLC at 866-7500-IRA(472) before making a move. American IRA, LLC is American’s leading authority on self-directed IRAs and providing administrative services and transactional support and record keeping.

With offices in beautiful Asheville and Charlotte, North Carolina, American IRA serves self-directed IRA owners anywhere in the country.

Call us today, or visit us on the Web at www.americanira.com. We look forward to hearing from you.

What’s Popular Isn’t Always Most Effective: Why You Need a Self-Directed IRA

Famous investment guru Benjamin Graham once said: “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.” If someone were to ask you what the most popular way to fund retirement was, you would probably hear some version of the same response: find a wealth manager, use retirement accounts, and keep saving. And that is great. For some people, it is very effective. But what if there are tweaks along the way that could potentially boost your ROI in significant amounts, further bolstering your chances at a fully-funded retirement? The Self-Directed IRA is one such path.

Unfortunately, a recent article in WorldFinance.com—while offering plenty of insight about retirement—did not spend any of its time talking about the Self-Directed IRA. And while they talked about the five most popular ways to finance retirement, it is important to remember one basic fact: effectiveness and popularity are two different things entirely.

Why a Self-Directed IRA Makes Sense

The first item on the list at WorldFinance.com makes a lot of sense: taking advantage of retirement accounts to maximize investment growth. Putting aside money in this fashion allows investors all over the country to build wealth easily and passively. The article went into detail about the types of accounts—including SEP-IRAs—but never addressed what happens when an investor self-directs their own retirement.

A Self-Directed IRA is just that: an account that you control. And while the second item on the list at WorldFinance.com addresses real estate, there is little time spent pointing out that it is possible to hold real estate within a Self-Directed IRA account. Given that real estate is one of the most powerful ways to generate returns on investment, it is clear that what is “popular” is not always the total picture.

Understanding the Self-Directed IRA Landscape

Why is Self-Direction so powerful? It not only helps investors avoid the often-expensive management fees associated with money managers, but it allows investors to tap into those investments they would otherwise make through general accounts. For example, if an investor is strong in real estate, they would typically make the investment using the simple, routine processes of real estate investing. But with a Self-Directed IRA, they can hold real estate within a retirement account.

This does mean that there are some important regulations to keep track of. One cannot simply purchase a home and live in it through a Self-Directed IRA—the IRS prohibits these kinds of investments from being used within a retirement account. A Self-Directed IRA is considered a separate entity from the investor, which means that the property itself will also have to remain separate.

There are other options, such as investing in precious metals.  This opens up the possibilities of a more diversified investment portfolio. See our section on Investing to find out what these are.

Popularity vs. Effectiveness in Retirement Planning

There is nothing wrong with a strategy being popular. The concept of buying and holding mutual funds in an IRA is popular because it is effective, it works. Over the long-term, this can generate amazing returns for investors who have the patience to withstand challenging market conditions.

But that does not mean that what is popular is also the end of the available options, especially in the world of retirement investing. There is more to consider. There are other advantages investors can use. There are different asset classes that can potentially bring wealth to investors who understand them well. It is vital for investors to broaden their horizons so they know each and every potential advantage they can use on the path to financial independence in retirement age.

Want more information about Self-Directed IRAs? Visit our section on Self-Directed IRA accounts or call American IRA at 866-7500-IRA.

An IRA-Owned LLC Offers Checkbook Control – But Is it Right for Me?

When ordinary investors hear phrases like “IRA-owned LLC” and “checkbook control,” they tend to zone out. After all, these concepts sound a little wonky—a little too complicated for something as simple as a long-term retirement plan. But while this type of setup might sound like a lot of work, the truth is that a Self-Directed IRA can be a powerful and, yes, simple plan to help you maximize the results you get from your retirement investments.

But there’s another question that needs to be answered here, and you’ll rarely find it addressed in any articles about IRA-owned LLCs. Is this arrangement right for you? Here’s what you’ll need to know.

Defining the Self-Directed IRA Owned LLC with Checkbook Control

The concept of the Self-Directed IRA is simple: these are like any other retirement accounts, except you’re in charge. You’re not outsourcing investing to someone else or even necessarily investing in stocks. Rather, when you’re in control, you can make IRS-approved investments such as real estate and precious metals, provided you meet the requirements.

One potential avenue of investing is the LLC, or Limited Liability Company. This business structure can be a great way to shelter your assets from potential issues such as litigation—without requiring that you sacrifice the kind of control you would expect over your own retirement plans.

So what exactly does “checkbook control” entail? It means that you’ll have the power of buying and selling within your IRA—the power of the checkbook. This can have advantages and disadvantages, including:

  • Checkbook control means you’re in charge of avoiding IRS penalties. When working with an IRA custodian, these custodians can help make sure that you adhere to all tax requirements. When you have more control, you also have more risk.
  • Checkbook control requires being proactive. If you enjoy the responsibility of seeking out experts including lawyers and tax professionals—great. If not, then you might want to think about working with a Self-Directed IRA custodian instead.

How to Get Started in Atlanta with a “Checkbook IRA”

The so-called “Checkbook IRA” can be of tremendous benefit for those in Atlanta or in the surrounding areas. Not only is Atlanta’s local real estate market a tremendous opportunity for those who live there, but the same investments can perform well within an IRA with checkbook control. That means that it’s possible to make investments in real estate for retirement while still retaining the kind of control you would normally enjoy in other arrangements.

Why Atlanta? As local station WSB-TV recently reported, the current market looks similar to previous housing booms, especially with higher prices than there were in the housing boom of the early 2000s. That could represent a prime opportunity.

Real estate also functions as a way to hedge against inflation. Inflation should be a concern for any investor—after all, it’s vital that your retirement dollar old on to its value. By holding real estate, you move money out of dollars and into real property. That real property then can go up in value, which in turn helps you hold on to the initial investment.

With a Self-Directed IRA owned LLC and checkbook control, you’ll have plenty of options for seeking out opportunities in the Atlanta area. That means that you don’t have to depend on other markets or even look into moving to make retirement happen just where you are. And that’s at the core of Self-Directing: making your own destiny when it comes to your retirement investments.

However, checkbook control also means that you can give yourself too much responsibility in too big of a hurry. What’s right for you? Keep reading. For more information on these “checkbook power” arrangements, keep checking out our website. You can also call American IRA with your retirement inquiries by calling 866-7500-IRA or visiting more of our information right here at www.AmericanIRA.com.

Affected by Hurricane Damage? You May Be Able to Tap Your Self-Directed IRA or 401(k)

If you are undergoing financial hardship because of damage from one of this years’ devastating hurricanes, Congress just cut you some slack: People affected by Hurricanes Maria, Harvey or Irma may make an emergency hardship withdrawal from their retirement plans, including self-directed IRAs, without having to pay the usual 10 percent excise tax on early withdrawals.

Withdrawals from traditional tax-deferred IRAs and self-directed IRAs are normally assessed a 10 percent excise tax if the account owner is younger than age 59½, unless some specific ‘hardship’ circumstances apply.

Also, the six-month moratorium on new contributions normally imposed on those who take hardship withdrawals will not apply for taxpayers who take hurricane-related hardship withdrawals.

The relaxed rules may benefit IRA accountholders who live in one of the areas designated by the Federal Emergency Management Authority as an eligible disaster area. You can find FEMA’s list of qualifying localities. To qualify for the benefit, you must make any withdrawals by January 31, 2018.

Tapping Your Self-directed 401(k)

The waiver of the 10 percent excise tax for early distributions has also been waived for 401(k) plans, including self-directed 401(k) plans. Normally in order for you to make an in-service withdrawal from an employer-sponsored plan like a 401(k), the plan’s documents must allow them. However, the IRS is now allowing plan sponsors to release 401(k) assets to those experiencing hurricane-related hardships even if plan documents have not yet been formally updated to allow for withdrawals.

401(k)s and self-directed 401(k)s allow for a lower early distribution cutoff: Those who have left the service of a company may begin taking early withdrawals penalty free at age 55, as opposed to age 59½ for individual retirement arrangements (IRAs).

401(k) Loans

In some circumstances, you may be able to take a loan from a 401(k) or self-directed 401(k). However, your plan must allow for 401(k) loans. If you do take out a loan, you will not have to pay the 10 percent early distribution penalty or income taxes, provided you pay the loan back to your 401(k) within five years. After five years, any outstanding loan balance may be deemed a taxable distribution and you may owe taxes and penalties.

Note: In-service hardship distributions are generally not permitted from pension plans or from accounts holding qualified non-elective contributions (“QNECs”) described in § 401(m)(4)(C) or qualified matching contributions (“QMACs”) described in § 401(k)(3)(D)(ii)(I). However, you may be able to withdraw assets in these plans attributable to a rollover. Amounts in these plans attributed to a rollover from an IRA may be withdrawn at any time.

Furthermore, the IRS also allows you to take out a hardship distribution or loan from a retirement plan and send the proceeds to assist a family member financially affected by one or more of this year’s devastating hurricanes.

Real Estate IRA -Tips and Strategies for Getting the Most Out of Yours

If you want to get the most out of your retirement, we have three words for your: knowledge is power. No, we’re not talking about any sort of “inside” knowledge when it comes to investing, or any sort of illegal trips and tricks. We’re talking about real investing knowledge: knowledge about the different types of accounts and investments you have available to you, and how to use those accounts and investments to the best of your ability. And one of the most important things for people to learn is how to use their Real Estate IRA in the best way possible.

Why a Real Estate IRA? Because self-directing this type of IRA allows you to utilize some amazing things that you simply can’t get when you invest in other types of accounts and asset classes. With real estate, you’ll be able to tap into your experience with this asset class…and possibly even get a lot of value out of it if this is your first foray into the world of real estate. How is that possible? Well, knowledge is power. Here are some tips and strategies for getting the most out of your Real Estate IRA.

Know Your Real Estate IRA Options

It starts with knowing your options. You can check out our Real Estate IRA tips and advice for greater detail, but here are some of the things that most beginning investors don’t know about this type of IRA:

  • Selling property within a Real Estate IRA means that you won’t have to worry about capital gains taxes. Since this is a major issue for anyone dealing with a lot of real estate, it’s important to know that this is an option if you want to invest in real estate for retirement.
  • When owning real estate within a Roth IRA, you can collect rental income tax-free. This gives you a major leg-up and helps you maximize your returns.
  • You can borrow money within a Real Estate IRA in order to purchase real estate. This happens through non-recourse loans; non-recourse loans allow you a certain amount of protection for your other assets.
  • In using a Real Estate IRA, a property manager will collect rent and handles expenses, allowing you to collect the profit with barely living a finger.

Using a Real Estate IRA in the right way for your goals means knowing these options available to you, knowing how the IRA works, and the specific strategies above that investors use to maximize their gains.

Know the Rules

Of course, a Real Estate IRA is not a license to do anything you want with the real estate. There are rules, such as the fact that you won’t be able to live in the real estate while you invest in it. This prevents people from using their own home in a Real Estate IRA for any tax benefits. And you’ll want to remember that your IRA will be the owner of the property, which is important for tax purposes.

Are you interested in using a Real Estate IRA—or even simply learning more about how the process works? If so, be in touch with us. You can browse the link above, continue to read our blog articles here at AmericanIRA.com, or you can get in touch with us directly by calling 1-866-7500-IRA. We’ll be glad to talk to you and help you understand what Self-Directed IRAs are and how they work. After all, knowledge is power—especially when it comes to making sure that you have a retirement plan you can be proud of.

Finding the Next Facebook: Self-Directed IRA Investment Tips from Peter Thiel

It’s not well understood in the consumer financial media, but Self-Directed IRA and 401(k) money has long been a valuable source of investment capital for successful startup and VC-stage companies. And, yes, for quite a few unsuccessful ones, too! But the successes historically have been sufficiently successful to more than make up for the companies that don’t work out.

Some prominent examples of successful private equity/venture capital placements that involved a  Self-Directed IRA include Facebook and Yelp, which both received significant early-stage funding by PayPal founder Peter Thiel and Max R. Levchin, respectively.

Both were overwhelmingly successful plays made by experienced venture capitalists using their IRA money.

However, when you self-direct your IRA investments, you are your own head of due diligence. While you can delegate certain tasks to finance, investment and tax experts, ultimately you are the quarterback. You can delegate taskings but not overall responsibility.

Peter Thiel has spoken publicly on due diligence best practices that apply directly to Self-Directed IRA investors. Here are some highlights from his own experiences:

  • He gets the best results from his larger investments. These are companies where he came into the investment with a lot of conviction, and was willing to commit enough money to make a real difference. Have the courage of your convictions.
  • Don’t get involved in “pooling” arrangements, in which you combine money with a bunch of other VC investors and take a small position in a bunch of investment opportunities. Why? People in pools sometimes get lazy about their due diligence, assuming that everyone else in the pool is doing it for them.
  • Beware of buzzwords. If a startup is part of a trend that already has its own buzzword, just say ‘no.’
  • A great startup will have a monopoly that can generate cash flows many years into the future.
  • Understand the “moat. “If you want to capture lasting value, don’t build an undifferentiated commodity business,” Thiel advises.
  • There’s nothing so good it doesn’t have to be sold. A great product or service isn’t enough. A business should have a plan for getting the word out – and management with a proven track record of doing just that.

You can see a full discussion with Peter Thiel here (beginning at 2:27 and following). You can also read more about Thiel’s due diligence and screening process here. And if you want even more, check out his book, Zero to One: Notes on Startups or How to Build the Future.

If you are interested in using a portion of your retirement money to invest in an early stage company – be it a start-up, a venture capital opportunity, private equity or mezzanine finance opportunity – we want to work with you. Our unique transactional fee structure is perfect for investors who measure their holding period in years, who are risk tolerant and patient, and who take substantial positions in investments.

With offices in Asheville and Charlotte, North Carolina, American IRA, LLC is a leading administrator for Self-Directed IRAs and 401(k)s. Our services are for investors anywhere in the United States who see the value in thinking and investing “outside the box.”

For a no-obligation consultation or for more information, call us today at 866-7500-IRA(472). Or visit us at www.americanira.com.

We look forward to working with you.

 

 

 

Self-Directed IRA -How To Fund Yours

This piece is for those who are interested in starting a new Self-Directed IRA account but who aren’t yet sure how to fund it. It’s important to know a few things about how Self-Directed IRA and other related retirement accounts work.

Funding Self-Directed IRA accounts is not complicated, but it’s important to execute them right in order to avoid future headaches and possible unwanted tax consequences.

There are three ways to fund a Self-Directed IRA:

  • Contributions
  • Transfers
  • Rollovers

We’ll deal with each one in turn.

Contributions

A contribution is a direct movement of fund from a non-taxed advantaged account to a retirement account. In the case of IRAs and Roth IRAs, these are transfers of personal assets. Contributions to traditional IRAs allow you to take an income tax deduction in the current year as long as you make the contribution by April 15th (normally) of the following year, and you meet certain income requirements.

If you make over a certain amount, your allowable deduction may be reduced or eliminated. But you can still make contributions on a non-deductible basis, no matter how high your income is.

Roth IRAs do not allow for current tax year reductions, but growth is tax-free, provided you keep the money in your Roth IRA for at least five years.

Again, You must meet certain income requirements for the Roth IRA.

Under current law, total contributions to all traditional or Roth IRAs are limited to $5,500 per year, with an additional $1,000 ‘catch-up’ contribution allowed for those age 50 and older.

Transfers

A transfer is simply a movement of funds from one custodian to another, within like accounts. For example, if you have a traditional IRA at a conventional investment company, such as Fidelity, and you decide you want to open a self-directed retirement account with American IRA, you would simply transfer the funds from your Fidelity account to American IRA, using our transfer form.

In most cases, we recommend doing a trustee-to-trustee transfer of the funds. This simply means you authorize us to forward your request to the existing custodian and have us receive the funds directly from them. This ensures that there will be no negative tax consequences and prevents botched transfers.

The other alternative is to have your existing custodian transfer money to you – either via wire or a paper check – and then have you wire or mail the funds in to us. If you go this route, you must complete the transfer to us within 60 days, or the IRS will deem you to have taken a withdrawal. Taxes and early withdrawal benefits may apply, though in some cases your tax professional can write a letter to the IRS explaining why you were unable to complete the transfer in 60 days.

Otherwise, properly executed transfers are not taxable events. As long as the money moves from one account to another like account, there is no taxable distribution, no capital gains and no income tax due.

Unlike contributions, there are normally no limits on the amount of funds you can transfer during a single year, and there are no income requirements you have to meet to qualify.

Rollovers

A rollover is a movement from one type of account to another. It can happen between to accounts with the same trustee, or it can involve a movement of funds between two trustees. The receiving account is normally an IRA.

Examples of rollovers include:

  • 401(k) to IRA
  • SIMPLE IRA to IRA
  • 403(b) to IRA

Getting started with a Self-Directed IRA is very easy, and the contribution, transfer or rollover process is very simple. Simply download the appropriate form from American IRA, LLC, fill it out, sign it and mail it back, or FAX it to 828-257-4948.

As always, representatives from American IRA, LLC are happy to answer your questions about the process and about self-directed retirement accounts in general. We are one of the leading experts nationwide on self-directed retirement accounts, and work in tandem with your existing team of financial advisors to ensure your transactions are executed accurately and on time.

For more information, visit us at www.americanira.com, or call us today at 866-7500-IRA(472).

We look forward to working with you.

Self-Directed IRA Update: The Fiduciary Rule

This week, the Treasury Department is expected to release a series of new rules that could affect how securities and other investments are sold – whether in or out of a Self-Directed IRA.

In the past, when a stock broker/registered representative from a FINRA-regulated broker/dealer made a recommendation to you to invest in a given security, he or she did not have to act as a fiduciary. That is, they didn’t have to have your best interests at heart – and they often didn’t.

Instead, the recommendations these advisors made only had to rise to a much lower standard of suitability. Basically, as long as the stock or bond or other investment was suitable – that is, not an outrageously bad idea – the advisor was essentially doing his or her job.

Predictably, the Wall Street investment companies exploited this window of opportunity to maximize their own revenue streams at the expense of the client. For example, while most of us realize that it is quite easy to buy an S&P 500 index fund for 0.2 percent expenses or less, Wall Street brokers routinely put their clients in mutual funds that cost five or ten times that much to own – or even more. This was true even as the vast majority of these actively-managed funds could not beat an unmanaged index fund, once you took their expenses into account.

Wall Street advisors have been steering their clients into products with higher commissions, or into products that have nasty hidden expenses, or fees, or that generate ridiculous capital gains taxes because they are not managed to keep the owners’ tax bill down.

The new rules, however, would essentially force most of these advisors to move into the role of a fiduciary.

The effects will be numerous. If you buy stocks or bonds or mutual funds through a broker, either within your Self-Directed IRA or separately, you will soon buy fewer securities on a commission basis. Instead, a lot of these investment firms will charge a percentage of assets under management.

This is fine for a lot of investors, who are not being well-served by the commission model. But for most of our clients who use a Self-Directed IRA and prefer to diversify into non-traditional asset classes for their retirement funds, this is not a great deal.

Consider:

If you don’t trade a lot, but prefer to take a buy and hold approach to investing, and you measure your typical holding period in years rather than days, you will likely be better off paying only for the transactions you engage in.

For example, you can open an account with American IRA, fund it, and own several investment properties, C-corporations, partnerships, LLCs, direct ownership of precious metals, or own a private lending portfolio with competitive returns for a fraction of what it would cost you to own equivalent assets within a conventional investment company account.

The new rules will also probably make it easier to sue your broker or brokerage firm for wrongdoing, since their actions and recommendations will have to rise to a higher fiduciary standard.

The new rules will have an especially significant effect on 401(k) rollovers to IRAs – one of the sensitive transactions that earned the scrutiny of the Labor Department in the first place.

Under the expected new rules, any advisor getting paid to move 401(k) money to an IRA, for example, must not only affirm that the strategy was appropriate, but that the fees and other expenses in place are reasonable.

American IRA, LLC was never involved in the kinds of abusive transactions that became all too common among many investment companies. We have always believed that a flat fee approach to self-directed investing is a superior alternative for most of our clients. In the vast majority of cases, our fees are a fraction of those charged by most big Wall Street firms that charge a percentage of assets under management, or even mutual fund ownership in some cases, since the average expense ratio of a mutual fund is still almost 1 percent.

For more information, or to arrange a head-to-head fee comparison with your existing strategy, call American IRA at 866-7500-IRA(472), or visit us online at www.americanira.com.

 

 

Interested in a Self-Directed IRA -Ask Your Advisor These Key Questions

Many of our clients come to a Self-Directed IRA relatively late in life, after they have been investing for a while.

Only after spending a number of years in the work force and saving and investing do they even discover that a Self-Directed IRA or other retirement account is even an option!

By that time, of course, many of them have saved up some significant assets in their more conventional retirement accounts – and they may have some comfortable relationships with advisors.

It’s important not to let those relationships become too comfortable, however. Any financial advisor worth his or her salt should be ready to answer some questions. The answers they give you may tell you that you have a terrific all around advisor, or they may tell you it’s time to scale back or change that relationship.

More often, we find that a financial advisor may be a fantastic stock and fund picker, but at this stage of your life you may need to diversify beyond stocks and mutual funds into different asset classes in which your advisor doesn’t have much expertise.

And that’s where the Self-Directed IRA concept comes in.

Next time you meet with your advisor, ask these questions:

  • If the S&P 500 falls by 40 percent next month, what happens to my portfolio?
  • If interest rates fall by 20 percent, what happens to my income?
  • If interest rates rise by 20 percent (say, from 5 to 6 percent), what happens to the value of my bonds?
  • What is my current allocation?
  • How are you compensated? How much is in commissions versus fees?
  • Have these funds you recommended to me outperformed their benchmark indexes?
  • Can you explain each of these funds to me and tell me why you chose this fun, rather than an index fund?
  • Am I paying 12-b-1 fees? If so, what do I get in return for those fees?
  • What is the total amount in fees, expenses and commissions I’ve paid out last year?
  • What aspects of financial planning are you best at?
  • Are you compensated differently for selling A-shares versus B-shares?
  • Can I see the sales loads? How are they calculated?
  • (For annuity salespeople) Can you tell me what the M & A fees are?
  • Can you tell me what the subaccount fees (in variable annuities) are, and compare them to similar mutual funds?
  • Why a variable annuity and not a mutual fund?
  • How much of this sales load do you earn, and how much goes to your broker/dealer?
  • What aspects of financial planning are you weakest at?
  • How does the cash sweep account work? Do I earn interest on uninvested money?
  • Do you or your company receive “soft dollar” money from mutual funds and other financial companies to promote them in 401(k)s?
  • Do you discount your AUM fees or commissions for larger accounts? What is the threshold?
  • Are my dividends being reinvested?
  • What is my exposure to unrealized capital gains taxes?
  • Do I pay more fees if I don’t convert to a Roth?
  • What financial designations, licenses and qualifications do you have?
  • Are you acting as a fiduciary?

These and other similar questions almost invariably spark a useful and valuable conversation – especially for clients. Most advisors do just fine – though many people find they are paying higher fees than thought they were. Or they discover that they will be much better off using a flat rate fee structure, such as the one we have at American IRA, LLC, rather than paying a 1-2 percent AUM fee or paying mutual fund expense ratios – especially on larger balances.

As always, we’re happy to take a look at your current strategy and speak with you about the exciting self-direction option. Though American IRA, LLC has offices in Charlotte and Asheville, North Carolina, we work with investors all over the country.

Call us today at 866-7500-IRA(472). Or visit our extensive online library at www.americanira.com.

We look forward to serving you.