Estate and mortgage
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Don"t Forget Main Street: If You Have An IRA, Now More Than Ever, It Is Time to Invest in Real Estate
are on this is if you"ve got someone with a very small portfolio, let"s say they just started an IRA a year or two ago. They"ve only got $10,000 in it. They can partner their IRA with a spouse or another IRA and can own a single piece of property. It can be split between two or more IRAs. Mosca: [caller David from Santa Fe]: If you convert from an IRA to a Roth IRA, is it true that you can convert all of your principal and you’re not limited to the normal $15,000 a year contribution? Galane: If you had an IRA for say $500,000, as long as your modified adjusted gross income is a hundred or less, you can convert the entire IRA to a Roth. You pay taxes on it but yes you can convert the entire thing and make it all tax-free at that point in time. David: I’m in a 401(k) and I believe for IRAs you are required at age 67 1/2 to start withdrawing the funds. In other words, is there a provision to force you to use that money in retirement? Galane: Yes, as a matter of fact, it is actually the required minimum distribution out of a traditional IRA or traditional 401(k) is age 70 1/2 whereas on a Roth IRA there is no minimum distribution. So, if you convert an IRA or a 401(k) to a Roth IRA from that point forward you don’t have to take any money out at that point in time. The theory behind it is that the person got a tax write off for putting the money in the IRA and that the money that is sitting in there is taxable so the government wants access to those taxes at some point in time. Whereas in the Roth, the taxes were paid up front on the money, which is nice because it’s paid on the seed instead of the tree that grew. It"s already been paid, the government doesn"t get any benefit from having distributions out of a Roth IRA so they don"t care when you take it out or if you take it out. Mosca: What is your golden nugget for today? Galane: Whether it’s traditional IRA, Roth IRA, Seps, 401(k)s, the fact is that investing in an IRA gives you so much benefit for tax deferral or tax-free status and it gives you access to cash. A lot of people think they are diversified when they have five different mutual funds. The fact is they are still all stocks. You want to diversify your portfolio outside of paper and inside of real assets also which real estate is. Diversification is not having everything in different mutual funds. Madsen: I would like to remind everybody that 75% of millionaires in this country have made their money in real estate and if you want to be a part of that and if you want to do that you"ve got to leverage deals and relationships and that"s what we do at RealSource. Give us a chance and give us a call and we would be happy to talk you.Pages: 1 [2]