A recent article by John Sullivan, Editor in Chief of 401K Specialist, entitled, “Small Business Owner’s Like (and Want) the SECURE Act,” briefly discusses the popular favor of the SECURE Act by small business owners.
Sullivan’s intel comes from a Nationwide survey from November of the SECURE Act, which stands for “Setting Every Community Up for Retirement Enhancement.”
Sullivan states, “Among business owners who are familiar with the SECURE Act, one of the largest proposed overhauls of the U.S. retirement system in decades, 84% believe the legislation should make it easier for small business owners to offer a 401K.”
The study by Nationwide also found that, “Nearly nine in ten business owners agree that it provides both their business and employees tax advantage (88 percent), it helps attract and recruit top talent (88 percent), and it helps improve employee retention (86 percent).”
Not on Santa’s List This Year
Despite the major bipartisan and public support of the SECURE Act, it’s highly unlikely to get passed by Christmas or 2019 for that matter. With that being said, if you have a large IRA, you should definitely be researching your options if (more like when) the SECURE Act is passed, because along with the SECURE Act, comes the death of the Stretch IRA. (An estate planning strategy that extends the tax-deferred status of an inherited IRA when it is passed to a non-spouse beneficiary.).
For those of you who eventually plan to pass your IRA to your children or grandchildren, a provision in the SECURE Act that kills the Stretch IRA would force them to withdraw the entirety of your large IRA in ten years. In other words, the non spouse beneficiary(s) would suffer major tax consequences over those ten years and would end up losing a big chunk of the account to the IRS in taxes.
Financial advisors are suggesting a few exhausted strategies such as converting your IRA into a Roth, Life Insurance, and the Charitable Remainder Trust. But, each of these strategies will still result in a huge lost opportunity cost to your heirs and honestly make Lasaii Benefit’s pull our hair out in frustration. (For more details on how each of these strategies still result in major tax consequences for your heirs, learn more here):
Lasaii Benefit’s Creative Solution:
Lasaii Benefits offers a better strategy by using those ten years to invest the funds to help purchase real estate that you and your family can occupy and/or use to create income with the SAFE HARBOR®-Directed IRA™ (SHIRA™).
Our proprietary program allows for occupancy of the real estate by direct family members because the title of the real estate is in your name, not in the name of the IRA. Therefore, there are no prohibited transactions with the SHIRA™!
With our creative solution, the tax liability (if you qualify) of taking those distributions over the ten years would either be completely offset or minimized because of the tax benefits associated with owning real estate.
Our IRA real estate program also has the benefit of Step Up in Basis, therefore your heirs would inherit the real estate at it’s appreciated value with no tax consequences to them whatsoever.
The SHIRA™ offers choices in what type of real estate to invest in, such as, a primary residence, vacation home, investment property or commercial real estate.
If you are a charitable-minded individual, you could instruct your heirs to donate the real estate after the tenth year to a charity of your choice and receive that tax write-off as well. (Read more about our Charitable Legacy Program here):
Among the tax benefits (if you qualify) of real estate ownership, the Step Up in Basis to heirs, the potential appreciation of the real estate, possible interest earnings of the SHIRA™, and rental income payable to you that the real estate could provide, you would also be leaving your family with a tangible legacy and a solid foundation to build family memories because of the intrinsic value of occupancy that our SAFE HARBOR®-Directed IRA™ offers.
We specialize in helping clients structure customized, tax effective IRA real estate investments that enhance their portfolios, lifestyles, market positions, and legacies. At Lasaii Benefits, smart investing starts at home.
Please share this with friends and family that could benefit from our proprietary IRA real estate structure!
Visit www.lasaiibenefits.com to sign up to receive our “Understanding the SAFE HARBOR®-Directed IRA™” PDF brochure to learn more. You may also visit our website to see if you qualify for our program.