Entrust New Direction Blog

Like most Americans, Juan did his best.  He worked 50 hours a week, took his kids fishing in the summer and sledding in the winter, occasionally fit in some golf games with his pals.  Every day, Juan tried to be the best dad, best husband, best friend he could be.  Juan also wanted to provide for himself and his family as well as possible, for now and the future.   So Juan contributed to his 401(k).  He figured as long as they matched 3%, he should figure a way to get that free retirement money, even if it meant a little less income right now.  

Then the stock market sunk and his 401(k) dropped 40%.

Then Juan was laid off.

Talk about a flying drop kick to the stomach. 

While surfing the web, ostensibly looking for a new job, Juan ran across a press release targeting the newly unemployed.   "What? I can invest the retirement money however I want?  No way!  I can't believe it!"  Since Juan was screaming in the empty basement, his wife ran downstairs to make sure the idleness of unemployment wasn't atrophying his brains.

When Juan explained about DIY retirement investing, and the discount, Juan's wife, Jenny immediately thought it was a scam.  "I don't think so.  Why haven't we ever heard about this?  The government is going to let regular people decide what to do with their retirement money?  There must be a catch." 

Still, Jenny had a small hope that this self-directed IRA investing was true, because she knew exactly where to invest some of the money - in her friend's new start-up kitchen gadget company.

Juan continued researching and discovered that there is an entire industry of self-directed IRA custodians and administrators, and one was located right in town!  Juan and Jenny happily transferred the funds from their 401(k) into a new self-directed Roth IRA.  Juan and Jenny took the buy direction letter home, and Jenny called her friend the kitchen gadget start-up company CEO.

Her friend the CEO was so excited, she knew Jenny loved the idea.  But then she  remembered the words of her start-up lawyer, "Accredited investors only." 

"Um, Jenny, are you an accredited investor" the CEO asked, knowing the answer.

Jenny's investment dream was smashed.

Jenny and Juan's IRA was not an accredited investor.

Juan and Jenny were able to find some other investments - they put some money in real estate, some in gold and some in CDs, but Jenny watched her friend's gadget company double, triple and quadruple in size.

Has this happened to you?  Maybe you know of a great investment opportunity but you don't have the requirements of an accredited investor.  Questions?  Watch this blog for more information on accreditation and discussions and what the little person can do.  

Kick photo courtesy of mighty mighty bigmac.

Bottles photo courtesy of shkumbin.

I just got off the phone with a person who has a self-directed IRA and their custodian has terminated their self-directed IRA program. In this particular case the custodian was TD Ameritrade and the holding in the IRA was a private stock investment. We have had quite a number of individuals call with the same issue from IRA custodians ranging from large organizations such as Charles Schwab to small local bank trust departments. These companies have decided that the intricacies and rules related to recordkeeping and reporting for self directed accounts doesn't fit in with their growth plans and/or skill set of their staff. Unfortunately, the resigning custodian generally doesn't provide much assistance with helping find a new custodian.

Entrust New Direction specializes in providing just those services, plus education on how the plans work. If you find yourself in receipt of a letter giving you 30 days to find a new custodian, call us! We are happy to provide assistance for individuals who have IRAs that the current custodian has resigned from. We will help you establish a new account and help work with the old custodian to get the assets transferred over. We focus on making sure you don't end up with a taxable distribution of your valuable retirement assets.

When working with your new self directed IRA, be sure to take advantage of our extensive educational offerings. Entrust New Direction provides live classes in our Lafayette, Colorado learning center, continuing education classes through the University of Denver School of Law, and at other sites around the country, plus we offer many classes via the internet. 

The investment power of self directed IRAs and other plans is the perfect tool in this economy to allow you to make investments in the micro economy that you or your network of friends and colleagues live and work in. Choices include start up companies, real estate, private lending, private company stock, gold, oil wells and more. The choice is as varied as your life experience. However, to understand the rules and process be sure to work with a company with a solid background in education and willingness to help explain the rules.

For more information: Broker dropped the ball?