Self Directed Retirement Accounts

Did you realize that you may use all or a portion of your retirement funds to invest in real estate?

Retirement accounts are basically Trust accounts for your benefit when you retire. In the 1970s, the IRS approved of Real Estate as an investment option.

Now you may also obtain a non-recourse real estate loan that is granted to your self directed IRA which will increase your purchasing power. Typically, the lender, will loan up to 50% loan to value and an interest rate equal to approximately 2% higher than a standard 30 year fixed conforming loan program. Programs are 3 or 5 year adjustable rate mortgages.

This is an incredible tool for investors. Real estate has historically been a good investment as it typically appreciates. Most individuals currently hold stocks, bonds or mutual funds in their IRA funds and have been disappointed with the last few years of growth results. You may want to consider selling your stocks and/or funds, creating a self directed IRA and using those funds, plus a loan if required, to purchase a real estate investment. You are able to defer the tax on the gain from the sale of the stocks as they are held in your IRA account. Please be sure to check with your account manager regarding any fee or charges related to the sale of your current IRA investments.

Similar to stocks, you can buy and sell real estate within the IRA account and defer your tax payment on the gain.

Click here for more information: www.theentrustgroup.com

In addition, if you desire information on non-recourse financing, contact Larry Enselman at Pacific Crest Savings Bank: lenselman@paccrest.com

General Program Information

All real property is either purchased or sold for your benefit using your Qualified Plan and/or IRA funds.

Types of Property your IRA Can Own:

• Single family and multi-unit homes
• Apartment buildings
• Co-ops
• Condominiums
• Commercial property
• Improved or unimproved land, whether it's leveraged or unleveraged, may be purchased by your Qualified Plan or your IRA

Purchasing and Selling Real Property
A real property purchase or sale is initiated by executing either a Buy or Sell Direction Letter For Real Estate. Specific Instructions for completion of these direction letters are contained with the forms packet supplied to each account holder. Real property may be bought at auction for your Plan through our unique auction purchase program. Such purchases cannot be made with personal funds and later be reimbursed.

Financing the Purchase
You may finance or leverage any property you purchase for your Plan. The property is the collateral for the loan. As the property is an asset of the Plan, repayment of the underlying debt must come from contributions to or income from the property or other assets in the Plan.

Ensuring the Tax-Deferred Status of the Account
The entire transaction must flow through the tax-free or tax-deferred retirement account. The escrow must be opened by the account, and not in the name of the beneficial owner. Vesting is always in the name of the account. Only Qualified Plan or IRA funds may be used as good faith deposits, down payments, or purchase money.

If title is vested in individual account holder names, it may not be subsequently sold to the tax-deferred or tax-free account.

Buying or Selling Fractional Interests in Property
While fractional interests in real property may be purchased or sold, such interests may not be bought from the beneficial owner of the Plan or IRA or members of their family or business, except siblings.

Additional Requirements:
When purchased, these properties become assets of your Plan or account. In addition:

• You may not personally own property which you intend to purchase with Plan funds and you must ensure that your intended purchase is not a prohibited transaction
• It must be for investment purposes only
• Neither you, your spouse, nor your family members (other than siblings) may have owned the property prior to its purchase by your Plan
• Neither you nor your family members (other than siblings) may live in or lease the property while it's in your Plan
• Your business may not lease or be located in or on any part of the property while it's in your Plan
• You may receive any property as a distribution from your Plan as a retirement benefit

Managing the Property
You may receive a fee for managing the assets in your IRA. Managing Assets does not include property management conducted by the beneficial owner of an IRA or a company owned more than 50% by the beneficial owner of real or personal property in the IRA. Managing Assets means managing your IRA portfolio. Management fees can be paid to you or other persons or entities you designate on receipt of invoices. A 1099 will be issued to you or other designated asset manager for the year in which such invoices are paid. All of the income and expenses are for the benefit of the account. This includes all property rental or lease income, taxes, property management and repairs. Invoices for expenses are paid on client approval. The record keeping and administration expenses may be paid either directly from separate funds or through the Plan, and may be tax deductible.

Title and Escrow Companies
When title and or escrow companies are involved, proper instructions will be provided to them for all documents for your account. In the event that a local title or escrow company has additional requirements other than those provided in our comprehensive package, delays and additional costs may result. For ease of completion, in many cases facsimile (FAX) transmission of information is acceptable, followed by hard copy originals.