What is a Self Directed 401(k)?

A Self Directed 401K, referred to after this as the  “Enterprise^sm“, is a 401K plan setup for your company.  As the Manager of the company, you can act as the Trustee for the Plan’s monies. This enables you to self direct investments on behalf of your 401K hence the term self directed 401K. The investments can be in real estate, other companies, or your own C-Corp. The use of this type of structure enables you to have investment and checkbook control over the 401K.

Benefits of the Self Directed 401 K, Enterprise ^SM:

1. 401K Plans do not permit direct ownership of real estate or other non-traditional investments in an 401K, so indirect investment via the self directed 401K (Enterprise^SM) is the only choice.
2. When an (Enterprise^SM) (Self Directed 401K) sells real estate or other investments, the capital gains are deferred through the 401 K, like any other 401K investment. The headaches of 1031 exchanges are never necessary.
3. Ownership of the property in a Enterprise allows you, as manager, to have direct, hands-on control of and investment decisions over Enterprise assets, including control of the checkbook. Custodian involvement and hassles are eliminated, regardless of whether the investments are in securities, real estate or other assets.
4. An Enterprise can use its 401K funding as a down payment for a real estate purchase, with the Enterprise financing or borrowing the balance. The use of debt financing for real estate is not subject to UBIT tax.
5. Since you control and handle all Enterprise transactions, and act as the “custodian”, then there are no expensive annual fees.
6. Litigation threats which accompany investments such as real estate are substantially reduced. This is done by isolating the investment inside a title holding company or Trust holding company, and away from the rest of your 401K funds and estate.
7. Continues to provide deferral of income and gains inside the 401 K.
8. If the company sponsoring the plan generates income, then you can make contributions of up to $44,000 annually to the 401K plan ($15K for employee and $29K for employer for the year 2006)

How does the Self Directed Enterprise^SM work?

1. Create Entity (LLC or C-Corp). Our attorneys will create the entity with the appropriate state.
2. Create the Plan (Trust with Plan documents). Our atorneys will create the Plan and file with the IRS.
3. Rollover monies from IRA or 401K to your New Enterprise.
4. Setup Checking Accounts for the Company and the Plan.
5. Direct Investments by purchasing membership or stock in a company (your C-Corp or another entity).

Strategies for using the Self Directed 401K, Enterprise^SM:

• Purchase real estate
• Loan to yourself or others
• Buying or starting a business
• Use purchase options on real estate
• Flip properties
• License intellectual properties

Our premise for investing follow the precepts of Professor Markowitz’s Modern Portfolio Theory:

• History repeats itself
• All assets do not go up or down at the same time
• When markets recede they return stronger

The problem is that most investors are driven by the market swings (don’t be one of these investors) and rarely profit from the market changes when they occur. If you have been investing for a while you know this to be true. Our advisors will help you position your portfolio so you minimize risk and maximize return on your investment in your Self Directed IRA portfolio.

Click here to see what the SEC says about investing in Mutual Funds and why you may be going around in circles not reaching your goal.

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