8 Roth IRA Benefits You Should Know 

Do you have a 401k? you should contribute to your retirement diligently, or better still look into financial planning

Very true, I find myself lucky enough exposed to money management at an early age. Worked full time when I was 19, purchased first home at 28, fast forward time... I'm 50 now, got laid off March 2020 amidst lockdown, a blessing in disguise. At once, I consulted an advisor to stay afloat and with subsequent investments, I'm only 15% short of $1m as of today.

@@simone_maya this is huge! would love to grow my reserve regardless of the economy situation, my 401k has lost everything accrued since early 2019, at this point, i'm in need of guidance, can you point me?

@@xavier_lucas I’ve shuffled through a few experts in the past, but settled with ‘LOREN LENA WALKER’. The strategy they use is recession-proof, more specifically profit-oriented, and most likely, you'd find her basic info on the net, she's a renowned advisor.

@@simone_maya thanks for info! curiously copied and pasted her full name on my browser, spotted her page easily, she actually looks very distinguished

With a Conversion from a Traditional IRA to a Roth IRA. Any amounts you convert, if you were to withdrawal prior to 59.5, you would be subject to a 10% penalty on that amount. Any growth/earnings, you would be subject to 10% penalty and ordinary income taxes.

@@equitytrustcompany A quick follow-up, per answer above would the 10% penalty applicable if the duration of contribution and conversion both exceed over 5 yrs, thanks in advance

@@ves6613 The 10% penalty always applies while under 59 ½ . If you were still within the 5 year seasoning, and after 59 ½ you also have the 10% penalty. In other words, you have to be seasoned under 5 year rule and be of the age of 59 ½ or older to avoid the 10% premature withdrawal penalty.

If the decedent passed prior to 2020, then you are under the old rules, and 10 year rule does not apply.

It is possible to purchase a property, partnering your Roth IRA funds with personal funds; however, you need to ensure the ownership interest is established proportionately with the cash investment. Additionally, all income and expenses going forward must flow proportionately. Example, if you purchase a property for 100k, 25k from IRA and 75K personally, the ownership is 75%/25%, and all income and expenses must flow 75/25. Regarding obtaining a personal loan, the loan would need to be made to the IRA and you personally proportionately, you could not fund a portion with the IRA and portion from a loan to yourself personally. Additionally, if your IRA is involved any financing cannot be a loan that you are signing a personal guarantee as this would be considered a prohibited transaction.

Thank you for the question Mr. Joseph. I presume you are referring to UBIT, which stands for Unrelated Business Income Tax. If so, yes, the Roth IRA can be subject to UBIT, providing engaging in an investment activity that triggers this special tax. For example, if your Roth IRA engages in investing in an ongoing trade or business, that is not paying corporate tax, then your Roth IRA can be subject to UBIT. Additionally, if the IRA is purchasing a debt financed property, the net proceeds can be subject to UBIT. We always encourage investors to work with their CPA or other tax professional as they navigate these types of transactions.

Investor A and Investor B are NOT considered disqualified persons to one another. They created a joint venture and agreed that the net proceeds would be split 50%/50%. In other words, it was a negotiated agreement.

Yes, you can convert funds from a Traditional IRA to a Roth IRA, despite not having any earned income

Yes, you can make a loan from your self-directed IRA to a niece. A niece would not be considered a disqualified persons, but you should be aware that the IRA is to make investments for the benefit of the IRA. If you make a loan to a niece that charged below commercially reasonable terms, additional implications can occur. We would encourage you to speak to your CPA or tax professional before proceeding.