Avoid the Hidden Costs of Holding Business Assets in a Self-Directed IRA

#UBIT #SelfDirectedIRA #RothConversion Schedule a free assessment with an experienced financial professional: http://bit.ly/PureAssessment Office locations: https://bit.ly/PureLocations Ask Joe & Big Al On Air: https://bit.ly/AskJoeAndBigAl Subscribe to our YouTube channel: http://bit.ly/YMYW-YT Subscribe to the Your Money, Your Wealth® podcast: https://lnk.to/ymyw "Problem: Retired and I’m having more fun than a grownup should in farm country. I (Billy Joe) am 65 and Bobby Sue is 64. Drink of choice is a Michelada and hers is Water. We are both Purdue Boilermakers. BS drives an Acura RDX and I drive a Chevy Traverse, both providing needed clearance for our driveways which are mostly made of grass and clay soil (and snow!) to our Indiana homestead. Hope to have $140,000 income annually this year and going forward, adjusting for inflation. Tax issues on IRA conversions are what this it about. Current income: Corporate Director fees of $25 K annually, and Partnership Business profits of $80 K annually, (both of which will continue until death) No pensions Then, At 70 1/2, Social Security of $60 K annually We have: $1.4 million in liquid, non-qualified savings $3.5 million in IRAs $ 420k in Roth IRAs $1.0 million is the value of my share of the partnership But, part of the IRA includes $750K invested in a self-directed LLC…. We are getting hit every year with a BRUTAL 37% UBIT tax on the profits! Distributions to us have been enough to cover the 37%, but little else. Fortunately, the share value is growing nicely. Should we “bite the bullet” and: 1.). Convert the LLC IRA (above) to a non-qualified account (which would hold the same security) in order to end the 37% UBIT, or 2.). Don’t worry about the UBIT, and convert other IRAs to a Roth that can grow tax free, and 3.). At what pace should we begin doing so? $200k per year? $300k per year? (We may have the liquid assets to cover the tax burden), or 4.). should we begin SS now and use that - along with cash - to “rip the bandaid off” and get very aggressive at conversions over these next few years? Other: No debt Home - $1.0 mill Inheritance soon - $200 K Desire to leave $1.0 million to kids We do not have LT care insurance Concerned too about what happens when one of us dies and the tax rate goes to the single-person household rate! Hope that helps. In summary, the big questions are: the pace of conversions, which to sell/convert first, and whether income needs will be met for the next third of life (thirty-three years). Love the show. It’s amusing and uber-helpful. I listen while I’m “on the mat” (yoga and abs) every morning - always learning - and have saved several shows to repeat. Great job, and thanks. - Bj and BS" IMPORTANT DISCLOSURES: • Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor. • Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations. • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. • Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. • All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. As rules and regulations change, content may become outdated. • Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors. CFP® - The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation. CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period. #UBIT #SelfDirectedIRA #RothConversion