In the wake up the news regarding the SECURE ACT, the new bill that is fast approaching the house floor, financial advisors are coming out of the woodworks with different solutions as to what to do with those big IRA accounts. And it’s understandable because if this bill is passed, it would mean a paradigm shift for those of you who eventually plan to pass the IRA to your family members because a provision in the new bill would gut the “Stretch IRA” and force a non spouse beneficiary(s) to withdraw the entirety of the 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.
For instance, one strategy that is being highlighted as the strategy to take would be converting the large Traditional IRA into a Roth IRA. In order to achieve this strategy, one needs to take a hit on the value of IRA because it would force the account holder to pay the taxes now in order to open a Roth IRA account that would grow over time tax-free for their heirs. For instance, if you have $1,000,000 in an IRA which has approximately a 40% tax bracket, then said IRA would have a tax liability of around $400,000. $400,000 lost! Forever! The lost opportunity cost of choosing this strategy is enormous and unfortunate for your heirs and your hard earned money.
The Charitable Remainder Trust is another option that financial advisors and estate planning attorneys are talking about as a solution to the new bill. This strategy does not provide tax-write offs on the distributions that the new bill would force your non spouse beneficiary(s) to take.
The third strategy is life insurance. The IRA account holder could invest the distributions into life insurance, but would also not receive any tax write-offs, and therefore he or she would still be losing a big chunk of money to the IRS in taxes.
There has to be a better strategy! All the strategies listed still end up with an huge lost opportunity cost for you and your heirs. Wouldn’t you rather integrate your IRA with real estate that you and your family could occupy and/or use to create income? We would too, and that’s why we created our proprietary IRA real estate program in 1992.
LASAII BENEFITS HAS A BETTER WAY!
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™).
IRA Real Estate to occupy!
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™! (Read the differences between the three IRA used to invest in real estate here:)
With Lasaii’s 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 consequence 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.
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.
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.