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Ep. 118: DIRECTED IRA - Retire Rich; REITs and Taxes; IRAs vs. LLCs; Why Fair Market Value Matters; Unpacking U.B.I.T.

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Part 2
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Part 4
Part 5

In this episode of "Kiss My Assets," Jamison welcomes special guest Matt Sorenson from Directed IRA to discuss retirement accounts, self-directed investing, and the benefits of investing in a Real Estate Investment Trust (REIT). They begin by introducing Matt and his book, "The Self-Directed IRA Handbook," emphasizing the importance of understanding retirement account rules and regulations. Matt explains the differences between traditional and Roth accounts, highlighting the tax advantages of Roth accounts and the backdoor Roth IRA strategy for high-income earners. The hosts stress the significance of starting early and maximizing contributions to retirement accounts for long-term wealth building.

The conversation then shifts to the opportunities presented by self-directed retirement accounts, allowing individuals to diversify their portfolios beyond conventional options. The focus is on the potential tax advantages of investing in a REIT through an IRA or 401(k), such as exemption from certain taxes and no corporate tax at the REIT level. They highlight that investing in a REIT simplifies the tax process for IRA investors and provides favorable tax treatment.

Addressing the technical aspects, the speaker advises accurately filling out the K-1 form, indicating that the partner is a retirement plan or IRA. They stress the importance of reviewing the K-1 form as it may contain information related to Unrelated Business Income Tax (UBIT) or Unrelated Debt-Financed Income (UDFI) that could impact tax liability. The discussion also touches on the necessity of a fair market valuation of IRA accounts for filing the 5498 form with the IRS.

Regarding the decision to set up an LLC for checkbook control or rely on a custodian, the speaker suggests consulting with a financial advisor or accountant based on individual circumstances. They mention that setting up an LLC with checkbook control may be beneficial for investors looking to engage in multiple assets or participate in an investment club.

Overall, this episode of "Kiss My Assets" provides valuable insights into self-directed retirement accounts, the tax advantages of investing in a REIT through retirement accounts, accurate reporting on the K-1 form, fair market valuations, and the considerations when deciding between an LLC or a custodian for checkbook control. Listeners are encouraged to take control of their financial future through informed investing and explore the opportunities available within self-directed retirement accounts.