As you can read below, the IRS has limits on using your IRA money to invest in property you want to own. SaverNotes can solve this problem for you. By investing in SaverNotes we in turn can invest your money back into your property.
SaverNotes engaged Messerli & Kramer Attorneys at Law to seek the State of Minnesota approval which we secured, Venture Bank to handle banking and Cornerstone Private Asset Trust to handle all the account paperwork and to open self-directed IRA accounts.
If you would like to know how to do this please email me: drasmussen@SaverNotes.com or call me at 612-868-9187 and I would be glad to explain it further.
In general, the investor would direct their current IRA account to open a self-directed IRA at Cornerstone Private Asset Trust. Once those funds appear at Cornerstone they are transferred to Venture Bank to SaverNotes. SaverNotes will in turn reinvest those funds into the investor’s real estate transaction. This meets all the IRS requirements but also allows the investor to use their funds for their own transactions.
For example, the investor buys a SaverNote five year note which currently pays 6.00% at the time of this article. SaverNotes and the investor agree to drop that return to $1/year and in turn SaverNotes lends the funds back to the investor as a secured loan at 4.00% . The loan is for a three year term, interest only and pre-paid 12 months in advance. This allows the borrower the use of the cash as they wish to invest with no monthly interest payments for the 12 months. Upon maturity the investor can renew the loan subject to being in good standing and in compliance or pay it off with proceeds from the real estate investment.
Please consult with your financial and legal advisors as SaverNotes does not guarantee the information in this article and you should not rely on this solely for your information in making an investment decision.
The following information is from this source: https://newdirectionira.com/ira-info/self-directed-ira-basics/irs-rules
Self-Directed IRA Prohibited Transactions
All IRA accounts are subject to certain IRS rules and regulations. You, the IRA investor, get to enjoy the tax advantages granted to IRAs, HSAs, and other types of retirement accounts, as long as you follow the parameters set forth by the IRS for that account type; in addition to complying with the documentation practices of your IRA provider.
IRS rules regarding IRAs are dependent on which type of account you own (Traditional, Roth, SEP, etc.) and determine each account’s proceedings for contribution limits, distribution age and amount, prohibited transactions, and disqualified persons; among other things. The assets inside your account do not affect the IRS rules for your account.
Every IRA has a list of persons and entities that are considered disqualified from interacting in certain ways with the IRA. IRS rules prohibit the IRA from dealing with these people and entities. These prohibited parties are called Disqualified Persons.
Disqualified persons to an IRA include the account holder and their spouse, as well as lineal ascendants and descendants (parents, children and their spouses, grandparents, grandchildren and their spouses), and certain fiduciaries (CPAs, Attorneys, Financial Planners, etc.).
Disqualified Persons to Your Plan are:
Disqualified Persons Cannot:
Any transaction that takes place between an IRA and disqualified persons results in what is called a prohibited transaction.
Persons and entities that are disqualified from transactions with an IRA cannot buy or sell any asset from the plan; nor can they make personal use of an asset. Disqualified persons cannot live in or rent IRA-owned real estate, nor can they provide “sweat equity” to that property.
According to the IRS, other prohibited transactions between a plan and a disqualified person include the sale, exchange, or lease of assets, lending money, or extending credit; in addition to the furnishing of goods, services, or facilities relating to the plan’s assets. Retirement plans and entities owned or controlled by disqualified persons are prohibited from dealing with an IRA.
The IRS requires that IRA money is meticulously accounted for. A disqualified person may not pay for asset expenses from their personal finances. For IRA-owned assets, all income must flow back into the IRA, and all expenses must be paid from the IRA. Failure to maintain this funding structure may make your IRA subject to tax penalties, or even early distribution.
Disqualified persons to a plan may not take a commission on the purchase or sale of an asset. Ultimately, it is the IRS’s desire that disqualified persons should remain at arms-length from any IRA transactions. A disqualified person cannot be reimbursed by the IRA.
Fiduciaries must also follow strict IRS rules in regard to IRAs. Any act in which a disqualified person to an IRA uses the plan’s income or assets personally or in her or his best interest is a prohibited transaction. A fiduciary cannot hold a receipt of consideration for her or his personal account from any party dealing with the plan in a transaction that includes the plan’s income or assets.
Headquartered in Eden Prairie, MN., SaveNotes, LLC provides a unique alternative to stocks, bonds and CD’s by providing fixed income with high return, while remaining easy to invest.
SaverNotes pays interest to its investors based on a variety of available investment amounts and maturity dates. SaverNotes have no fees or expenses and are available for any Minnesota investor. Current rates range from 3.00% to 6.00% based on terms of two to five years. Investors can also invest through their IRA account.