SELF-DIRECTED IRA BASICS

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iPlanGroup Learning Center:

TODAY’S AGENDA

~ Introduction to iPlanGroup~ Self-Directed IRA Investing~ Benefits~ How it works~ Getting Started~ Questions & Answers

IPLANGROUP~ A Self-Directed IRA Administrator~ Formed by investors – for investors~ Experienced team with over 60 years of combined

financial services experience~ Located in Westlake, OH

Straightforward Fee Schedule

Outstanding Client Service

Superior Overall Value+ =

ACCOUNT TYPES Retirement Accounts for Individuals~ Traditional IRA~ Roth IRA~ Rollover IRA

Retirement Accounts for Small Business~ Individual 401(k)~ SEP IRA~ SIMPLE IRA

Tax Advantaged Savings Accounts~ Coverdell Education Savings Account (CESA)~ Health Savings Account (HSA)

WHAT IS A SELF-DIRECTED IRA~ Typically, self-directed retirement plans are administered

by financial service companies such as banks, insurance companies, and securities firms, which generally limit the kinds of retirement investments you can make to the investment products they sell

~ A truly Self-Directed IRA allows you, the account owner to chooses the investments and makes the decisions on behalf of your IRA; rather than allowing a financial advisor or representative to direct and manage your investments

~ It allows you to invest in virtually every type of investment allowed by law

DOES THE IRA ALLOW THIS?~ No matter what you may have heard before, you can legally invest

funds from your retirement savings in an almost unlimited variety of investment opportunities by carefully observing a very few, very clearly defined legal restrictions

~ This is not a grey area or a tax loop hole

~ Investing in real estate and other alternative assets has been legal since the creation of IRAs in 1974. (See IRS Publication 590 for more information)

~ Of $5.4 trillion in U.S. IRA assets less than 3% are invested in real estate and other alternative assets

PROHIBITED HOLDINGSThe IRS code doesn't tell you what you can invest in. It tells you what you can't invest in.

~ Life Insurance~ Collectibles, which include:

+ Works of art+ Rugs+ Antiques+ Gems, + Stamps + Alcoholic beverages+ Metals & Coins (except certain Bullion & minted coins)

~ Stock in a Sub-Chapter S corporation

PROHIBITED TRANSACTIONSGenerally, a prohibited transaction is any improper use of your IRA account by you, your beneficiary, or any disqualified person, such as:

~ Borrowing money from it~ Selling property to it~ Receiving unreasonable compensation for managing

it~ Using it as security for a loan~ Buying property for personal use (present or future)

with IRA funds

DISQUALIFIED PERSONSFor IRAs or 401(k)s, a disqualified person is:

~ The IRA holder and his or her spouse~ The IRA holder’s lineal descendants, ascendants and

their spouses~ Investment advisers and managers~ Any corporation, partnership, trust, or estate in which

the IRA holder has a 50 percent or greater interest~Anyone providing services to the IRA, such as the

trustee or custodian

(See IRS Section 4975 for a complete list of prohibited parties)

TAX-FREE OR TAX-DEFERRED PROFITSIRAs allow you to enjoy tax-deferred compounding~ You don’t have to pay taxes immediately on your IRA

investment earnings (rental income earned or profits from the sale of assets)

~ This can allow you to make more investments faster

~ With a Roth IRA, you may never have to pay income taxes again on the profits – ever.

THE POWER OF TAX-DEFERRED COMPOUNDING

Taxable(25% Rate)

$241,171

Tax Deferred(25% Rate)

$265,535

$100,000 invested at 6% for 20 years

would yield...By deferring taxes until you start taking withdrawals during retirement.

This may enable your savings to accumulate faster over time because your full contribution is working for you.

MORE INVESTMENT CHOICES

Stocks & Bonds

CDs

MutualFunds

PPMsTax

LiensMortgage

NotesTrust

DeedsPrecious Metals

LPs&

LLCs

FactoringLease Options

Mobile Homes

Unsecured Notes

Leasing

and more....

Real Estate

REAL ESTATE IRAs

Real estate can create a life-long, tax-free income stream.

~ Real estate investing is one of the major attractions of Self-Directed IRA investing

~ Rental income is tax-deferred (distributions are never taxed if in a Roth IRA as long as the asset is held in your plan for at least five years

~ Keep in mind that you may never personally use the real estate while it is held in your plan. After age 59½, you may distribute the real estate to yourself penalty-free, and then occupy it

REAL ESTATE PURCHASE STRUCTURES100% Cash – Property may be purchased with cash from an IRA. with your IRA with the IRA owning 100% of the property.

Partnering – An IRA may partner with another person, entity, or IRA.

~ Your IRA owns a percentage of the property ~ Can partner with personal funds (and/or disqualified persons)

Leverage – A (mortgage loan) to purchase property.~ Must be a non-recourse loan~ Typically for income producing properties with 35% to 40% down ~ Leveraged portion of the investment may be subject to UBIT

(Unrelated Business Income Tax)

HOW IT WORKS

1. Open & fund an

iPlanGroup IRA

3. Broker

writes offer with IRA as

buyer

2. Identify

investment property

4. Offer made & accepted

5. Earnest

money paid by IRA

6. Closing

documents prepared

7. You review

closing documents

8. iPlanGroup

signs closing

documents & funds

REAL ESTATE TITLING (“VESTING”)It is very important that all documentation throughout the process is titled correctly.

Example:

iPlanGroup, LLC FBO John Smith IRA27887 Clemens Road Suite 3Westlake, OH 44145

The Taxpayer Identification Number used for the transaction is iPlanGroup’s not the account owner’s.

AFTER THE INVESTMENT~ All income/profits generated by the property must be paid

to your IRA. Rental income is sent to iPlanGroup~ All expenses associated with the property must be paid by

your IRA . You simply direct iPlanGroup to pay the expenses from your IRA

~ You must plan for contingencies and maintain reserves of cash in your IRA account. Never use all of the cash in your account for the purchase of the asset; you may need some later

~ You cannot actively manage or perform work on the property “swing a hammer”

IRAs AND PRIVATE LENDING

Create your own Private Bank

Become a Private Lender

CREATE YOUR PRIVATE BANK~ Use other people’s retirement plans to fund your deals~ Show your friends, relatives and business associates how

they can earn attractive returns secured by real estate~ Have your investor contact iPlanGroup to open an account to

lend you the money from

Benefits:~ Build your assets faster by doing more deals~ No bank lending committees~ By offering cash you may be able to buy at discounts~ You are using other’s money to build your personal wealth

We strongly recommend that you consult with qualified legal counsel regarding applicable state and federal securities regulations prior to pursuing this strategy.

BECOMING A PRIVATE LENDER~ If you are seeking alternatives to the stock and bond markets~ If you are careful and diligent, you can earn solid returns while

minimizing risks as a private lender~ Do not consider becoming a private lender if you may need the

money before the maturity date~ Make sure you obtain title insurance which insures your lien

position as a lender and offers fraud protection against forgery~  If a borrower defaults, be prepared to foreclose on their

collateral.  (This process requires a significant amount of expertise and expense)

~ Documenting the loan, creating the appropriate security documents and disclosures to the borrower is very important

REMEMBER 1. You and your IRA are NOT the same thing.a. Your IRA is a completely separate entity from youb. You cannot sign on behalf of your IRA - If something needs a

signature, write “Read and Approved” and sign IN THE MARGINS; then, email/fax to us to sign as the buyer or investor

2. You may NOT pay any of the IRAs expenses.a. The IRA cannot reimburse youb. Any expense of the IRA’s that you pay becomes a taxable and penalized distribution from the plan - this INCLUDES earnest money.

3. UBI Tax applies to profits made as a result of using leverage (loans).b. It is the client’s responsibility to calculate, report, and pay this tax.

4. Any violation of IRS rules that results in a Prohibited Transaction will result in the distribution of related funds plus penalties.

WHY CHOOSE IPLANGROUP?~ Straightforward pricing with greater value

~ Personal attention

~ Clear, timely communication

~ Quick and efficient transaction processing

~ Decades of collective experience

~ Bigger isn’t always better

When you choose iPlanGroup – you’re choosing a dedicated partner that understands the sense of urgency that comes with real estate transactions – its what drives us.

GETTING STARTED~ Schedule a consultation with iPlanGroup

~ Determine which type of plan is best for you

~ Open your account with iPlanGroup

~ Determine your goals (such as the number of properties you want to own, estimate the monthly rent you’ll receive, etc.)

~ If funding is needed, find a non-recourse lender

~ Select the property

~Partner with other investors if purchasing a large property.

Questions & Answers