Jake Marchini: Before we get started, I do just have to give this disclaimer that the Entrust Group does not provide investment advice or endorse any specific products, and all information presented today are for educational purposes only. All parties are encouraged to consult with their attorneys, accountants, and financial advisors before entering into any type of investment.
Jake Marchini: Some things to cover on today's agenda. We'll be reviewing important dates and deadlines for the coming year for your SDIRA, or other
Jake Marchini: retirement account type. We'll be analyzing some new limits and laws that will apply to 2026, and we will be going over some tax preparation best practices to keep in mind for the coming season.
Jake Marchini: Some information about me. My name is Jacob. I've been here at the Entrust Group for over 9 years. Matter of fact, next month will be my 10th year anniversary. I do have my CISP certification, that is my Bankers Association of America Certified IRA Services Professional designation.
Jake Marchini: some information about the Entrust Group. We are self-directed IRA administrators, for those of you who might be new and considering opening new accounts. We are very proud of our knowledgeable staff, many of whom have the same designation as I do, and we host monthly educational webinars for the benefit of our clients, like this one, on a variety of topics.
Jake Marchini: some stats for the Entrust group.
Jake Marchini: We have over $5 billion of assets under our administration across 24,000 plus active investors. We've been in the game a long time, since 1980, so over 40 years, over 45 years at this point of service in the industry. And if you're looking to possibly open a new account today as a result of viewing this presentation, we offer a single point-of-contact service model for our clients. You'll have somebody who will
Jake Marchini: Be your go-to person.
Jake Marchini: Here at the Entrust Group.
Jake Marchini: We'll start things off today by going over some important dates and deadlines in 2026 for your IRA that you'll want to keep in mind.
Jake Marchini: The first such date is coming up in just a few weeks, February 2nd, which would be January 31st, but since that's Saturday, it moves forward to the next business day.
Jake Marchini: On that date, the Entrust Group will send out its FMV, fair market valuation statement for our accounts, meaning that is the last day that we can backdate our client's fair market valuation for their assets.
Jake Marchini: For the end of the year in 2025, and I'll go over more why that matters and what that means in following slides.
Jake Marchini: That's also the time that we'll be sending out our required minimum distribution statement, meaning we'll be notifying our clients that we'll have to take an RMD in 2026 by that date, and it is the date by which we will send out our clients' Form 1099-Rs for the previous year in 2025. So if you
Jake Marchini: Had a transaction on your account with us.
Jake Marchini: in the previous year that necessitates a Form 1099-R, you will have that in the mail by February 2nd, and a digital copy will also be available to download from your client portal on that date.
Jake Marchini: Now, the fair market valuation, to give some more color as to why that matters.
Jake Marchini: Sorry. To give more information as to why that matters for self-directed IRAs. So, any IRA custodian, whether they be a self-directed IRA custodian or a brokerage custodian, like Schwab or Vanguard, has to report the value of their client's assets as a sort of record-keeping tool.
Jake Marchini: That typically does not matter for most clients as anything more than a record-keeping tool, except
Jake Marchini: for those who are of the age to take required minimum distributions from their IRA, because the year-end value, the 1231 value of their account assets, is used in the calculation to determine how much you need to take out of your IRA as a distribution in the following year, and thus determines the amount
Jake Marchini: of taxation you have to pay to the IRS for that year, for those distributions. So it behooves those of our clients who have assets that are not easily valued, like pieces of real estate or,
Jake Marchini: investments in partnerships, private partnerships, LLCs, joint ventures, private equity deals in general, if the value of their asset, if there's been something on the investment side of things that they think justifies a change in valuation of their asset.
Jake Marchini: They have until February 2nd to report that to us so that we can backdate that for 2025, so that they can take an accurate RMD for their account in the following year.
Jake Marchini: some more information about the required minimum distribution itself. This applies to IRA holders who are 73 years old for a given year. So if you turned 73 last year, you have an RMD for 2026, and if you turn 73 this year in,
Jake Marchini: 2026, you have an RMD for…
Jake Marchini: This coming year that you will need to take.
Jake Marchini: Failure to take your RMD will incur a 25% penalty on the portion that was not distributed. So, for some easy math, if you have a required minimum distribution of $10,000, and you take out only $6,000 as a distribution.
Jake Marchini: Then, you incur a 25% penalty on that
Jake Marchini: $4,000 that you did not distribute, which is $1,000, so you would owe a $1,000 penalty to the IRS.
Jake Marchini: Your RMD is generally due to be taken out of your account by December 31st of a given year.
Jake Marchini: But, if it is the first year that you have your RMD, so if it's the year that you turned 73, you have until April 1st of the following year to take that, so you have a little bit of a grace period for the first time you're taking your RMD.
Jake Marchini: Moving on from there, the next date, March 16th, is the tax deadline for S-corporations and partnerships, and it is also the date by which those types of entities, can normally
Jake Marchini: establish SEP and individual 401K plans, and contribute to them for the previous tax year in 2025.
Jake Marchini: Unless they file a… Tax extension, which will be covered in a later slide.
Jake Marchini: Then again, April 1st, this matters for those of our clients and anybody who turned 73 in 2025 and had their first RMD last year. So if you turned 75… 73 last year in 2025, and you realize that you haven't taken your RMD,
Jake Marchini: then there's no cause for concern quite yet. You have until April 1st of this year to take that RMD, and put that correct, so you don't have to pay that 25% distribution… non-distribution penalty.
Jake Marchini: And here's a date that I hope everyone was already familiar with before this presentation. April 15th is Tax Day, is the time for individuals to file their tax returns and make contributions to your IRA if you did not file an extension.
Jake Marchini: is also the date for C-Corps and sole proprietors to establish and contribute to SEP or individual 401K plans.
Jake Marchini: Whereas S-Corps and partnerships have that earlier date. Is also the date by which you need to re-characterize a… says current, but what it means is previous year, so 2025 contribution
Jake Marchini: to your IRA, or issue a corrective distribution. So if you…
Jake Marchini: did the math wrong for your contribution, and you contributed too much or made a contribution you weren't eligible to make, you can correct that and remove that contribution to your IRA account by means of either a corrective distribution or a re-characterization to an eligible type of account by tax day.
Jake Marchini: April 30th, very simply, is the date by which ESA holders, so education savings accounts holders, will get their IRS Form 5498 ESA.
Jake Marchini: And then June 1st is the date where HSA holders and IRA holders will get their Form 5498SA for the HSA accounts, the Health Savings Plans accounts.
Jake Marchini: and 5498 forms for IRA holders will be issued on June 1st. And that 5498 covers the contributions, rollovers, Roth conversions.
Jake Marchini: and gives your R… and, you know, gives a calculation for your RMD. So if you, you know, reach the middle of the year, and you haven't taken your RMD yet, and you're not sure how to calculate that, you can just read your… a calculation of your required minimum distribution for the previous year to be taken this year, on
Jake Marchini: your Form 5498.
Jake Marchini: June 1st is the deadline for ESA holders to remove ESA contributions, those education savings accounts. If you have a special purpose education savings account that you've been contributing to for your child, and you
Jake Marchini: make an excess contribution, you have until this date to remove that by means of an excess contribution distribution. And if not corrected, you will continue to incur a 6% annual excise tax on the excess amount for every year it remains in the account. So, best to correct that timely.
Jake Marchini: Now, moving forward from that previous slide, September 15th is the deadline for S-corporations and partnerships that filed a tax return, so if you…
Jake Marchini: have an S corporation or tax return, or a partnership for which you have a SEP IRA or an individual 401 . This is the date by which you need to,
Jake Marchini: make that account and contribute to it for 2025, if you file the tax extension. It's also the deadline for S-corporations and partnerships to make simple plan employer contributions.
Jake Marchini: Moving on to October, that is the… for October 1st is the deadline for existing businesses to establish a new simple plan, a simple IRA for tax year 2025, and the deadline for C-Corps and sole proprietors, again, as different from S-Corps and partnerships to make simple plan contributions for tax year 2025.
Jake Marchini: Then on the 15th, that is the deadline for C corporations and sole proprietors who file tax extensions to establish and contribute to SEPs.
Jake Marchini: And for taxpayers who filed a tax extension. So if you, missed tax day, and you filed an extension, you can,
Jake Marchini: Make their… make your contributions.
Jake Marchini: Or make a… or re-characterize a 2025 contribution by this date.
Jake Marchini: Moving on near the end of the year, for November 2nd, 60 days before the following plan year, businesses must provide notices to their employees about the type of contribution they'll be making for tax year 2027, so for employer-sponsored plans.
Jake Marchini: And for simple IRAs, so for Simple IRA specifically, this is the date by which
Jake Marchini: those of you who are trustees and have, you know, operate a simple IRA for your business, and for your employees of that business must send out the documents required to satisfy the plan requirements, so things like your employee's,
Jake Marchini: Allocations and elections for participating in the plan must be sent out by this date, so they have the end of the year to make those decisions and updates.
Jake Marchini: November 13th is the date at which IRA custodians, like the Entrust Group, will send out the reminders for our clients to make fair market valuation updates. So, not really something that clients need to take action on, but just that is the date on by which we need to notify our clients
Jake Marchini: To make required minimum… or to make fair market valuation updates for their accounts for the end of the year, just so you get a notice.
Jake Marchini: Then finally, at the end of the year, on December 31st, this is the date by which you have to take your required minimum distribution for 2026, unless you are turning 73 this year, in which case you have until April 1st of the following year.
Jake Marchini: And if you have a loved one who passed away in 2025, and you, for whatever reason, have not
Jake Marchini: established an inherited IRA, if they left you, the contents of their IRA, and you have not dealt with that during
Jake Marchini: 2026, you will have to do that for December 31st.
Jake Marchini: To handle their estate. The consequences of not doing so, you can… you can still handle it at that point, but not…
Jake Marchini: Handling, your… deceased loved one's IRA and getting a beneficiary or inherited IRA set up by this date.
Jake Marchini: results in you losing the option to stretch distributions over your own life expectancy and forces you to use the oldest beneficiary's life expectancy for the RMDs for your beneficiary account, which just robs you of options and leads to potentially larger, faster taxable withdrawals from that account.
Jake Marchini: All right, and with the conclusion of that calendar portion, we're just going to move on to new laws and limits in 2026, so changes to, the contributions and things for your IRAs and other retirement accounts in 2026 as compared to 2025.
Jake Marchini: Before we start talking about the new income, the contribution limits, though, I would just like to discuss the modified adjusted gross income limits for traditional IRAs and also for Roth IRAs on the next slide, because that
Jake Marchini: that one is also being updated for 2026, and is relevant for your contributions for how much you can either effectively or at all contribute to either a traditional or a Roth IRA.
Jake Marchini: So, if you look here, you'll see ranges of income for people in various situations, for single individuals, married, married filing separately, etc. This lower end of the range.
Jake Marchini: indicates the level at or below which you get the full benefit of your contribution to a traditional IRA. So if you make, equal to or less than this $81,000 mark for 2026,
Jake Marchini: you can write off the full amount of your contribution to your traditional IRA from your taxable income and get the full tax benefits there.
Jake Marchini: As you move upward from 81,000 towards $91,000, though.
Jake Marchini: For a traditional IRA, you can always contribute the maximum amount, but as you move upward through this range, you lose the ability to write off a portion of that contribution from your taxable income, up to the point where if you are a single individual.
Jake Marchini: you… and you make more than $91,000, even though you can contribute a certain amount to your traditional IRA, you don't get to write that off of your taxable income for 2026. And that applies to all of these other ranges for folks in different situations.
Jake Marchini: Right? And then similarly, for the Roth IRA max,
Jake Marchini: adjusted gross income limits, for… these are also being raised from 2025 going into 2026, but as a reminder, and you…
Jake Marchini: instead of the situation with the traditional IRAs, where you can still contribute, but you just lose the tax deduction benefits.
Jake Marchini: For a Roth IRA, you lose the ability to contribute at all as you move upward from $153,000 to $168,000 until, you know, when you reach $168,000, you are simply not eligible to put any money from your
Jake Marchini: income into a Roth IRA for 2026.
Jake Marchini: And these are the ranges at which that applies for 2026.
Jake Marchini: Alright, and then we'll move through these next slots. These are very easy to reference, but just for your information, there have been contribution increases for both traditional and Roth IRAs. You can contribute, you know, $500 more if you are less than 50 years of age, and the catch-up contributions for those over 50 years of age.
Jake Marchini: have also increased a little bit from $1,000 to $1,100, so for the maximum contribution is $8,600 if you are over the age of 50, or $8,000.
Jake Marchini: Or 8,600 if you're over the age of 50, or,
Jake Marchini: 7,500 if you are less than 50 years of age.
Jake Marchini: Now, for employer-sponsored plan contributions, for simple IRAs, there's also been a small increase.
Jake Marchini: This applies to SEP IRAs as well, small increase in the amount that you can contribute, as well as to the maximum compensation limits and to the minimum compensation that you can receive
Jake Marchini: While, being part of a set plan.
Jake Marchini: Individual 401Ks also have a small increase in the amount that can be contributed, as employer-employee contributions and employee elective deferrals.
Jake Marchini: As well as catch-ups.
Jake Marchini: And then for those holders of health savings accounts, also small contribution increases for single as well as family coverage. No increase for catch-ups, though.
Jake Marchini: And then the education savings accounts have the dubious honor of being the only thing that was not edited, or not updated or increased, so that one doesn't change.
Jake Marchini: And there are also some…
Jake Marchini: recent laws that will take effect in 2026 that our clients and other people who are new to having self-directed IRAs should be aware of for the year going forward. So, we have mandatory Roth catch-ups.
Jake Marchini: So, starting January 1st of 2026, for employer-sponsored plans, like Simple IRAs, SEP IRAs, and individual 401Ks.
Jake Marchini: If an employee's prior year wages exceeded $150,000, so for relatively high earners, your catch-up contributions must be made as Roth contributions to those types of accounts. You can no longer do pre-tax catch-up contributions, too.
Jake Marchini: Your employer-sponsored plans.
Jake Marchini: And that does also mean that if you are not in a plan that allows for Roth contributions, you can't make catch-ups unless the plan is amended somehow.
Jake Marchini: So, something to keep in mind.
Jake Marchini: Very important follow-up to that is that Secure 2.0 for 2026 now allows employers
Jake Marchini: to make Roth contributions to SEP and Simple IRAs. That is a new thing, that is now in effect. So, previously, SEP and Simple IRA contributions could only be made on a pre-tax
Jake Marchini: basis. Now, they are allowed to make post-tax Roth contributions. So perhaps keep that in mind going forward.
Jake Marchini: And then finally, there are a few things regarding ESAs. So Education Savings Accounts have expanded qualified expenses. So funds for an ESA can now be legally used and distributed for use for new things without taxation. Funds can now be used for textbooks, tutoring, and dual enrollment fees for high schoolers that are taking college
Jake Marchini: courses, so you can use those ESA funds and access them
Jake Marchini: More easily for more things now.
Jake Marchini: On a related note, there's also been the introduction of a new type of account called a Trump account, which is sort of a mini IRA for kids.
Jake Marchini: For children born between 2025 and 2028, their parents can contribute $1,000 per year to these new Trump accounts for… for savings, so it's perhaps something to look into.
Jake Marchini: Alright, now for the final portion of the presentation, we just want to go over some things to get ahead of 2026 tax season, and things to really keep your eyes out for to avoid pitfalls in the coming year.
Jake Marchini: Now, those things to avoid, are… oh, excuse me… are dealing in prohibited transactions, and the easiest way to do that is to interact with disqualified persons to your IRA, which I will define on the next slide.
Jake Marchini: Also, using tools that can be very helpful, like Roth conversions and rollovers between your IRAs. Those can be very useful for moving money around, making new investments, but require tactical
Jake Marchini: consideration before making those types of transactions, and I'll cover that. And also, bringing attention to UBIT, which is a sort of esoteric, concept that many of our clients
Jake Marchini: Find out about the hard way, so we wanted to bring it to your attention today as part of this presentation.
Jake Marchini: Now, we talked about disqualified persons and prohibited transactions on the previous slide, and I'd like to define those persons for you today. So, per Section 4975 of the Internal Revenue Code, a disqualified person to an IRA is the account holder.
Jake Marchini: The spouse of the account holder.
Jake Marchini: Millennial ascendants and descendants of the account holder, so children, grandchildren, parents, grandparents, however many generations of your family you are lucky to have with you at this time, up or down, in
Jake Marchini: and spouses of those parties are disqualified parties to your IRA, as well as fiduciaries and plan service providers. So anybody that you are a fiduciary for, or a plan service provider for.
Jake Marchini: or anybody that is a fiduciary or plan service provider to you is a disqualified party to your IRA, meaning you cannot meaningfully interact with them, cannot buy from them, cannot sell to them, cannot allow them to
Jake Marchini: get any…
Jake Marchini: benefit from, or any material benefit or use from your IRA or the assets in your IRA. This comes up with more regularity than I really wish it did. Even just yesterday, I had a conversation with a potential client
Jake Marchini: And he was one of the lucky ones who I had a wonderful conversation with, who described how he wished to perhaps use IRA money to purchase a property, purchase a rental property.
Jake Marchini: And rent that out. And that is a fantastic sort of investment. Many of our clients do similar things, but about 20 minutes into the conversation, he mentioned that it was his intention to have his son live in the property and rent
Jake Marchini: the property from his IRA, and that immediately is… that's a red flag. You cannot…
Jake Marchini: allow a disqualified party, like your child, to take benefit from your IRA or the investments in it, even if they are paying, and especially if they're paying, really.
Jake Marchini: That is a prohibited transaction. And the consequences, the ultimate consequences of a prohibited transaction, if you are discovered to be engaging in prohibited transactions with disqualified parties.
Jake Marchini: can end with the total disqualification and distribution of your IRA, if that is discovered and not corrected timely. And even just correcting it without the ultimate
Jake Marchini: penalty is… can be very costly to correct that, and it disrupts things. So just be aware that no disqualified party, is allowed to take benefit from your account.
Jake Marchini: Or the assets in it.
Jake Marchini: Alright, moving on to the next item, some tactical decisions to be made and things to keep in mind regarding Roth conversions and rollovers.
Jake Marchini: Now… A Roth account is a great tool to make for maximizing your return tax-free.
Jake Marchini: with your investments, and it can be very, very tempting to want to have a lot of money in your Roth IRA to make an investment, especially if you expect a large return, because you get
Jake Marchini: the benefits of a Roth IRA, meaning tax-free income from that investment, tax-free return. However, it's very important that you keep in mind that any money that you
Jake Marchini: convert. You move from your pre-tax accounts
Jake Marchini: into your Roth account will be taxable to you in that year. So make sure that that major tax hit is something that you can cover, and is something that will be worth it, with the
Jake Marchini: returns from your Roth IRA investments, so just make sure that that is a consideration you keep in mind.
Jake Marchini: And something on a… an administrative side of things. Again, something that I deal with many times with my clients.
Jake Marchini: that I explain that might benefit those of you here on this webinar is a difference between
Jake Marchini: rollovers and transfers. And this gets confused by many, financial professionals who
Jake Marchini: talk about these things as though they're sort of interchangeable, and they are not, and I'd like to explain the difference to you.
Jake Marchini: Now, when money is moved between IRA accounts, from an IRA at Company B to an IRA at Company A, or vice versa.
Jake Marchini: Typically, how that is handled is as a transfer, and a transfer is a pull transaction. It is initiated typically by speaking with the receiving company.
Jake Marchini: And filling out their paperwork. The receiving company sends a request for funds to the sending company, and the sending company, after receiving that request, delivers the requested cash or investments.
Jake Marchini: And this type of transaction, a transfer, is non-taxable, non-reportable, it generates no forms, it's not recorded on
Jake Marchini: any tax forms, and you can do it as many times as you wish. There's no limit on how many times you can do it in a given time period, or how many dollars you can transfer.
Jake Marchini: Per transaction or per time period. So that is the… the gold standard for how you want to move money between IRA accounts or other types of retirement accounts, if you can.
Jake Marchini: A rollover is a different type of transaction. A rollover, to explain the difference, is a push. So you can typically initiate a rollover by speaking to the sending party, telling them, you want money moved from
Jake Marchini: point A to point B, fill out their paperwork, and they send the money out.
Jake Marchini: And they do that either
Jake Marchini: directly to the receiving IRA, or they will sometimes send it to the client and account holder directly, before having them send that on to the receiving IRA account. Now, in the case of a
Jake Marchini: of them sending the money from one IRA to the other IRA directly, that's called a direct rollover, whereas a distribution from
Jake Marchini: IRA A to client and then on to IRA B is called either an indirect or a 60-day rollover, which is a term that some of you might be familiar with and not have had the appropriate context for.
Jake Marchini: And this is a valid way to move money between IRAs. You can do this, but
Jake Marchini: very importantly, it… the rollover, either direct or indirect, gets recorded on a Form 1099-R as a taxable distribution by the sending firm, and recorded on a Form 5498 by the receiving firm, which basically renders the 1099-R
Jake Marchini: moot. It makes that distribution non-taxable.
Jake Marchini: So it's reportable without being taxable, and you can only do one of these transactions per year.
Jake Marchini: So, and that's per calendar year, per 365 days, not per, you know, it's per 365 days, not per calendar year. So if you do a rollover in… in December of a given year, and then try to do another rollover in January of the following year.
Jake Marchini: you won't be able to do that. You will be ineligible to roll over the money that was distributed from your previous IRA, and you'll be left holding a taxable distribution in your hands without the ability to
Jake Marchini: roll it into another IRA account. So please do keep that sort of thing in mind to avoid issues and troubles
Jake Marchini: In the coming year.
Jake Marchini: All right, and finally, we'd just like to, bring to our clients and other guests' attention UBTI, or Unrelated Business Taxable Income, and I'd just like to read off of the slide.
Jake Marchini: Here, unrelated business taxable income is money earned by a tax-exempt entity, like your IRA, not related to its tax-exempt purpose.
Jake Marchini: The IRS defines UBTI as income from a trade or business regularly carried on that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization's exemption.
Jake Marchini: Now, the Entrust Group, again, as we disclaimed earlier in this presentation, does not give tax advice, and it's difficult for us to really define
Jake Marchini: what is…
Jake Marchini: When an investment generates unrelated business taxable income, but as a general anecdotal example, this sort of thing can come up in the case of our clients who make
Jake Marchini: frequent real estate purchases. So if you use your IRA to sort of do a fix and flip transaction, so if you use your IRA to buy a property.
Jake Marchini: And then improve it, and then sell it.
Jake Marchini: Just once is generally fine. That is something that you can certainly do and has been done, but if that is done continuously.
Jake Marchini: Then…
Jake Marchini: That might be something that gets flagged as UBTI, which will trigger you to have to pay UBIT, which is Unrelated Business Income Tax. So UBTI is something that you earn that causes you to pay UBIT.
Jake Marchini: Which is a way to, you know, unexpectedly get hit with taxes for your IRA investments. So, perhaps just in your… for those of you, especially who are real estate investors, you know, check in with your
Jake Marchini: With your financial advisors to be sure about whether the,
Jake Marchini: actions that you are taking going forward in a given year, might qualify for generating, UBTI, which would cause you to pay UBIT for your investment activity.
Jake Marchini: Alright, and that is the end of my presentation today, and so we will be moving on to the end here for the wrap-up.
Jake Marchini: What's next? At the end of this presentation, we'll be sending you a replay and additional resources. Our follow-up email will include a video replay of the presentation, slides, and more education.
Jake Marchini: And you can also take this time to register for February's webinar, The Hierarchy of Protection, Mastering the Commercial Real Estate Capital Stack.
Jake Marchini: If you want to learn more information about self-directed IRAs, you can visit our website and our Learning Center. We have many helpful articles there for the benefit of our clients. You can follow us on social media for updates.
Jake Marchini: And now we are going to open things up to our question and answer section, which you can type your questions about this material into chat for the presentation, and I'll do my best to answer all of your questions, before I have to leave.
Jake Marchini: Look, I have a hard cutoff at 1230, but for the next 55 minutes, I'll be available to take questions if we have them.
Jake Marchini: And here is my personal information. If you have further questions after the Q&A session, or you'd like to get more information that wasn't covered about self-directed IRAs, please feel free to contact me here at these contact
Jake Marchini: details.
Jake Marchini: Alright, and where… Let's see if we have any…
Jake Marchini: questions to answer.
Jake Marchini: In chat.
Andrew Crawford: I see 6, Jake, can you see that in your Q&A box within your panel?
Jake Marchini: I am not seeing… oh, here we go, Q&A.
Jake Marchini: Gotcha. Thank you, Andrew.
Andrew Crawford: Oh, good.
Jake Marchini: difficulties there.
Jake Marchini: Okay, so Reginald Grady Jr. comments, if self-directed IRA is invested in a private company that is not traded, it is impossible to determine present value. And that is… that is correct, Reginald… Reginald. So the…
Jake Marchini: answer to… so I guess the answer to the question that is implicit there is, do I have to… like, how can I value an investment in a private company that's not traded? What is… what could possibly be used as the value? And the answer to that is the price you paid for it. So for private equity.
Jake Marchini: investments in LLCs and joint ventures, limited partnerships that are not publicly traded, unless, you know, in the vast majority of cases, what is the current value and what continues to be the current value until either the company goes IPO,
Jake Marchini: or there is some other, like, an appraisal that is done on the holdings of the project, or something extraordinary happens, the value is simply what you paid for it, and that does not change. I'd like to make clear that
Jake Marchini: If, for anything, for anything, if we don't get a fair market valuation update from our clients, then we continue to report the value of their assets as we currently have it. So, if you don't submit a fair market valuation update to us.
Jake Marchini: then you won't be penalized by us. We will still make a report, but we will make that report using the last value that we recorded, which, if you possibly can, update us as to, you know, some
Jake Marchini: relevant value, either increased or decreased from what we currently have, you should do so, so that the value that we report is accurate.
Jake Marchini: for that.
Jake Marchini: Alright, and then Reginald Grady also asks, can I hold two different Roth IRAs as I am still working for the federal government, and they have a savings plan I am enrolled in? They're offering transfer to Roth IRA. What do I do? So that last… that last part
Jake Marchini: what do I do, or what should I do? I cannot answer that. That is a question for your tax advisor or CPA to discuss with Reginald. However, I can tell you that, yes, you can have two different Roth IRAs. You can have as many Roth IRAs as you want.
Jake Marchini: Either with the same company, or with different companies. So if you wanted to, you could open 2 Roth IRAs, or 5 or 20 here at the Entrust Group.
Jake Marchini: Having multiple Roth IRAs doesn't really
Jake Marchini: net you any benefit that I am aware of.
Jake Marchini: So most people don't. I think the only…
Jake Marchini: The only sort of use case that I'm aware of that I've seen here at the Entrust Group for having multiple different IRAs of the same type is so that you can name your
Jake Marchini: a different beneficiary for each of those IRAs, so it's an estate planning tool. But yeah, you can do it.
Jake Marchini: You can definitely have more than one Roth IRA.
Jake Marchini: An attendee asks, can you execute both a rollover and a Roth conversion in a 12-month period? And yes, you absolutely can. A Roth conversion is a different sort of transaction from a rollover.
Jake Marchini: So you can make both a rollover from one IRA to another IRA, and also a Roth conversion. That is absolutely allowed.
Jake Marchini: And what is the process to convert an existing IRA with Entrust to a Roth IRA? It's an… that is an administrative process. It's fairly simple. It involves you, one, if you have a traditional IRA here at the Entrust Group.
Jake Marchini: you have to open a Roth IRA to receive money or investments from your traditional IRA. So you'll establish a new account with a new account number, and then it's simply a matter of filling out a Roth conversion request, which is very simple if you're only converting cash
Jake Marchini: There's no additional paperwork or documentation required for a Roth conversion of cash, you just fill out the Roth conversion form and tell us how much cash is going from Account A to Account B.
Jake Marchini: for conversion of investments, so for conversion of equity in LLCs or private ventures, or for conversion of properties, there's additional paperwork involved. You have to provide us with the new updated subscription agreements, promissory notes.
Jake Marchini: Deeds, things of that nature, to show that now the… the recorded and official holder as… as…
Jake Marchini: acknowledged by all parties that are relevant for this new investment is the Roth IRA with the correct account number, rather than the traditional IRA. But at the heart of the matter, it's simply a matter of opening a Roth IRA to receive the investments and submitting the correct paperwork to make that happen.
Jake Marchini: Alright, and Maureen Costello asks, can you explain a checkbook LLC and what to watch out for? I can, and that is a very good question, especially in the context of, disqualified parties and prohibited transactions.
Jake Marchini: So, a checkbook LLC is a tool that some of our clients use to smooth over
Jake Marchini: some of the administrative burdens of having an investment in an IRA, especially our real estate investors. So if you don't use an LLC for your purchases in your IRA, and you want to make an investment in
Jake Marchini: a piece of real estate. You would fill out the paperwork that is necessary for my coworkers in our real estate department.
Jake Marchini: to send cash from your IRA to escrow to purchase a property in the name of your IRA, in the name of the Entrust Group for benefit of John Smith, IRA number 12345.
Jake Marchini: Which will be the party that goes on the deed and title and all the relevant documents.
Jake Marchini: Thereafter, the management of that property Excuse me.
Jake Marchini: the management of that property would be handled through your Entrust Group IRA, so any income from the property, or any, expenses related to the property from your
Jake Marchini: would have to be paid by the IRA. And doing that, both putting money back into your IRA from the investment, and
Jake Marchini: you know, paying expenses involves paperwork. You have to send the bills to us to, to pay with your IRA money, and tell us to send that money out, which takes time. There are transaction fees.
Jake Marchini: Things of that nature.
Jake Marchini: And so many, many investors who are invested in real estate assets, you know, real estate investments frequently need quick action. There's not a lot of time. It makes things administratively unfeasible sometimes for our clients to
Jake Marchini: have to wait for that sort of thing to happen, and it can become just inconvenient to pay transaction fees. So, using an LLC, by having your IRA become usually the single member of an LLC, of which you are the manager.
Jake Marchini: allows money to go from your IRA to the bank account of that LLC, and allows you to use that LLC as a tool to make and manage investments using
Jake Marchini: money provided by the IRA, which is the member of the LLC. So at the conclusion of that sort of transaction, you have a property that is owned by an LLC, and your IRA is the sole member of that LLC and extends its tax
Jake Marchini: protection over the LLC and everything that it owns and controls.
Jake Marchini: And so that LLC can be used to both collect income into its bank account from the investment, as well as to pay expenses related to that
Jake Marchini: Asset with the money it generates, the investment generates.
Jake Marchini: Now, the pitfalls of that, is that by
Jake Marchini: having money go from your IRA to the LLC, you are removing that money and the administration of that property from the eyes of the entrust group or your custodian, which means it's much easier for you to make transactions. Like, if you weren't aware of disqualified parties, if you weren't aware of the fact that
Jake Marchini: Your spouse or your child is a disqualified party, and you set up a…
Jake Marchini: a checkbook LLC, and you bought a property, and then you had your child living in that property, the Entrust Group would have no way of knowing that. You wouldn't need to report anything to us. You're taking on the responsibility for not doing prohibited transactions yourself by
Jake Marchini: putting money from your IRA into a checkbook LLC. So…
Jake Marchini: you know, you… if you're using a checkbook LLC, you really want to be aware of what
Jake Marchini: is allowed and is not allowed, and make sure that you talk any actions over with your CPA or tax advisor before proceeding.
Jake Marchini: Okay, moving on to the next question. Can we roll over a regular IRA into a Roth IRA? Yes, absolutely. By regular, I assume you mean traditional. But yeah, you can convert regular IRAs into Roth IRAs by the, methods that I described earlier with that previous question.
Jake Marchini: employer allows me to roll over 401K after-tax $72,000 this year to a Roth IRA. Is this a separate limit from $7,500 Roth IRA limit? It is! It is! So,
Jake Marchini: contributions to your IRA are…
Jake Marchini: not the same thing as rollovers from previous… from other retirement accounts. So you can, contribute to your… to your Roth IRA, and then you can roll over however much you want. So you can contribute to your Roth IRA and contribute to your,
Jake Marchini: to your…
Jake Marchini: 401K, and then you can roll over, as long as your employer allows you to move money out of your 401 , if that plan allows for that, not every plan does.
Jake Marchini: But you can roll over money from a 401K to an IRA in any quantity at any time. I'd like to just tie that… take a moment to tie that back to my earlier cautioning about
Jake Marchini: rollovers is that that is specifically about rollovers from one IRA to another IRA. Rollovers between
Jake Marchini: 401Ks and IRAs, or 403Bs, 457s, etc. to IRAs are not limited. They are not subject to that once-per-year
Jake Marchini: rollover rule that IRA to IRA rollovers are. So yes, you can… you are not limited in how much you can roll over from a 401 to an IRA that is separate from the contribution limits.
Jake Marchini: How easy is it to roll over a TSP to a Roth IRA? That is going to be a question mainly for your thrift savings plan administrator, Mr. Hunter Hill. So…
Jake Marchini: a rollover from a TSP or any type of account to an IRA,
Jake Marchini: is administratively the same in all cases from the IRA's point of view. You alert the IRA custodian that you intend to roll over a certain amount of cash from this other plan, and for the interest group, you fill out a very short and easy form called a rollover certification, basically saying that this much money coming from this other account
Jake Marchini: will be sent to the Entrust group. When you get it.
Jake Marchini: put it into my IRA as a rollover, but…
Jake Marchini: for employer-sponsored plans, like TSPs, thrift-saving plans, 401Ks, etc, the act of getting that money out of that account to the IRA is different and depends on the specific plan and who's…
Jake Marchini: running it. So that's a question. How easy is it going to be to get money out of your TSP to an IRA? Is it going to be a question that primarily has to be answered by your TSP administrator.
Jake Marchini: Alright, well, here's a question. Can you address how to make a backdoor Roth contribution, especially if you are a high-income individual?
Jake Marchini: Now, backdoor Roth contributions refers to the fact that,
Jake Marchini: as was asked earlier, contributions are separate from rollovers and conversions, right? You can both make a conversion or a rollover in the same year, as well as making contributions. And you can also always contribute to a traditional IRA
Jake Marchini: Even if you don't… if you're out of that tax range by which you are, making
Jake Marchini: which you are not able to write off your contributions to your traditional IRA,
Jake Marchini: you can still make them, you just don't get to write that amount off of your taxable income for the year. A backdoor Roth contribution is basically for somebody who, makes
Jake Marchini: too much money to contribute directly to a Roth IRA, they can just contribute to a traditional IRA, and then make a Roth conversion to put that money from their traditional IRA into their Roth IRA.
Jake Marchini: which is a… Which is a loophole, that currently is still completely legal.
Jake Marchini: And here's… here's a very good administrative question from Mirjana Simunsa, that is, is a conversion from Trad IRA to Roth IRA possible to do as a transfer in the same investment company, since it will trigger
Jake Marchini: the tax.
Jake Marchini: Hum.
Jake Marchini: That was not actually the question that I thought it was after reading the first sentence. But is a conversion from a traditional IRA to a Roth IRA possible to do as a transfer in the same investment company?
Jake Marchini: Okay, I think what this question is asking is, is it possible to convert an investment rather than converting cash? And yes, that is possible. So if you've already made an investment in a traditional IRA, if you use your traditional IRA to invest in
Jake Marchini: you know, Investments R Us LLC, to the tune of $50,000, and you want to convert
Jake Marchini: that investment, that value of $50,000 investment to your Roth IRA after the fact, yes, you can convert the investment itself rather than the cash.
Jake Marchini: But that does mean having to update the paperwork, like the subscription agreement or operating agreement, whatever the relevant documents are that
Jake Marchini: should name your traditional IRA as the investor and holder of that investment need to be updated so that it says your Roth IRA instead, so that there's no confusion as to which account owns these investments.
Jake Marchini: On either the side of the Entrust group, or you, the client, or the investment company. Everybody needs to have updated paperwork to show,
Jake Marchini: Who owns, and which account owns that.
Jake Marchini: investment.
Jake Marchini: Alright, how to calculate the RMD if you have many IRA accounts. Now, that's a question with some nuance. Okay, so…
Jake Marchini: If you have many different IRAs, each IRA custodian will be able to tell you
Jake Marchini: how much your IRA RMD is.
Jake Marchini: for their IRA account. So each IRA custodian should be able to tell you what your RMD is for that IRA. However, this allows me to segue into the fact that
Jake Marchini: the amount of your RMD, if you have more than one IRA, you know, either 2 or 3 or 5, 10 different traditional IRAs, the amount of your RMD total is an aggregate, and you don't have to take your RMD from…
Jake Marchini: an individual account, you just have to make sure that you take out the correct amount from
Jake Marchini: all of your traditional IRAs so that you can be taxed on that amount. So,
Jake Marchini: So to answer the question directly, if you have more than one IRA, then look at the
Jake Marchini: total value of each IRA as recorded on December 31st of the previous year, and then plug that total value, the sum value of all of your IRAs into a, you know, there are many calculators, you just
Jake Marchini: Google RMD calculator, you'll be asked to put in, I think, the relevant information is your year… total year-end value.
Jake Marchini: your age, your birthday, and then the birthdate of your spouse beneficiary, if applicable, and that will give you a number that you have to hit by withdrawing from any of your IRA accounts. So if you have, say, an investment with us here at the Entrust Group in a traditional IRA,
Jake Marchini: And it's illiquid. You don't have any cash to take out of your IRA with us. But say you have another traditional IRA at Vanguard or Fidelity that has a lot of liquidity.
Jake Marchini: You can take the total value of your RMD for both your Entrust and your Fidelity IRA from just the Fidelity IRA that has a lot of liquidity. As long as the total amount that you take out of your pre-tax IRAs is correct.
Jake Marchini: Then that is a… you know, that is fine in the eyes of Uncle Sam. As long as you distribute the correct amount and he gets to charge you the correct amount of taxes, which accounts that amount comes out of is irrelevant.
Jake Marchini: Can I make contributions to my Roth IRA if my earnings are all from investment and not employment? Now.
Jake Marchini: My understanding of that, Mr. Jeff Ho, is that you have to have earned income. That is the appropriate term there, for being eligible to contribute to
Jake Marchini: your… to a Roth IRA or a traditional IRA. You have to have earned income, and I do not know the…
Jake Marchini: I cannot quote to you the exact definition of earned income and if that includes investment income, but my feeling, based on context and on previous experience, is that no. If all of your earnings comes from
Jake Marchini: your investments, and you don't… it probably isn't earned income, but perhaps check in with your tax advisor to clarify that definition, or send me an email after this presentation is over, so that I can clarify that for you.
Jake Marchini: After doing some research.
Jake Marchini: Alright, I'm 73 years old, so then you do have an RMD.
Jake Marchini: Fantastic. Not really a question, though, but we'll… but you do have an RMD if you are 73 years old this year.
Jake Marchini: Question about transfers.
Jake Marchini: I had a question about transfers. I recently took a loan from my IRA. May I transfer funds from another IRA to pay off a loan taken from the first IRA? Now, that's…
Jake Marchini: That is a question that you should
Jake Marchini: take to a tax advisor or CPA, because you are not
Jake Marchini: you are not allowed to take a loan from an IRA. I assume you mean a… perhaps you meant you took a loan from a 401 , which is something that you can do, but you cannot loan yourself money from an IRA. That falls under disqualified
Jake Marchini: parties, because you are a disqualified party to your IRA. You cannot buy from, sell to, or loan to yourself
Jake Marchini: from your IRA. So that is… so if you took a loan and you structured it as a loan with, you know, your IRA loaning money via promissory note to you, that is not acceptable, and you'll want to address that with your tax advisor or CPA.
Jake Marchini: So that's a bit of a moot question there.
Jake Marchini: Do I need to pay an admin fee on my cash position within my self-directed Roth IRA? If you are… if you have this self-directed Roth IRA,
Jake Marchini: if you have a self-directed Roth IRA with the Entrust Group, then no. The Entrust Group does not bill our clients based on the cash value in their IRA. We calculate our fees based only on the investment value, so if you bring in
Jake Marchini: $100,000 for an investment, and you only actually invest $95,000, and there's an extra $5,000 sitting in there for
Jake Marchini: payment of fees and other… just having liquid cash on hand. We only bill you for that $95,000 of investment, we don't bill you for that additional $5,000, but that's an Entrust group
Jake Marchini: Policy, rather than a…
Jake Marchini: you know, an industry-wide policy for IRAs. If this is not with the Entrust Group, then you will want to ask the custodian of your IRA.
Jake Marchini: So if I make a 60-day rollover with distribution, say, on September 1st, and deposit back into the IRA within 60 days, when does the 365-day rule start?
Jake Marchini: end for another 60-day rollover. So that is the date on which you make the rollover. So the date of the distribution is not really relevant, but the date that you put that money back into your IRA or into another IRA as a rollover is the relevant date. So if you take that distribution, say, on September 1st.
Jake Marchini: and then you make a rollover of that money back into your IRA on October 1st. You cannot make any further rollovers until October 1st of the following year.
Jake Marchini: so we… so, anonymous attendee asked, so you do not require companies to send an FMV for private equity asset. We do not require that. To address an earlier conversation, we do not
Jake Marchini: you know.
Jake Marchini: hound our clients' companies or their investments for their… for updates as to our clients' investments. The onus for providing us information about updated values for our clients is entirely on the clients themselves. But again, we don't… we do not, penalize our clients for failing to provide us with fair market valuations.
Jake Marchini: We simply…
Jake Marchini: give the valuation that we have for our clients' assets, and it behooves our client to send us their FMV updates so that the amount that we report is as accurate as possible for tax purposes.
Jake Marchini: Okay, James Poulos Jr. asks, regarding UBIT, what is the purpose of a Roth IRA? If it is to grow and generate tax-free income, why would real estate gains and rental income not be considered related? Okay, so that's more a question of the definition of UBIT, Unrelated Business Income Tax, or UBI, or UBTI, rather, unrelated business tax
Jake Marchini: flexible income.
Jake Marchini: So, the issue is the frequency, James. If I might actually just pull up my notes from my slide here…
Jake Marchini: You know, the text of…
Jake Marchini: UBIT, okay, IRS defines UBTI as income from a trade or business regularly carried on. So the issue is the regularity, and again, that's… that's sort of a nebulous term that is… it's difficult for the Entrust group to define, until our clients run into it.
Jake Marchini: And that's really a question for your CPA or tax advisor to find out how many transactions in a year, what regularly carried on is.
Jake Marchini: For purposes of UBIT, but, you know, one transaction per year, if you buy and then sell a house.
Jake Marchini: during, using your IRA, that is, you know, treated as acceptable investment income, but if you do it too many times, it's considered
Jake Marchini: operating a business within your IRA, and that's where we start running into that regularly carried on…
Jake Marchini: type of… of situation. So…
Jake Marchini: I hope that is at least helpful and can guide you in your conversation with your CPA or tax advisor to get more clarity on that.
Jake Marchini: Can the checkbook LLC conduct or trade business, e.g. my law practice is in the LLC, which is held by my IRA? No.
Jake Marchini: Absolutely not.
Jake Marchini: So that runs afoul of both, you know.
Jake Marchini: you know, prohibited transactions and disqualified parties. That's allowing you to access your IRA funds to be able to invest in your own business practice.
Jake Marchini: And it also probably runs into UBTI, which is, you know, Unrelated Business Income Tax. Your IRA is not intended for you to be able to use tax-advantaged funds to operate a business.
Jake Marchini: It is, to be used for
Jake Marchini: making investments and for, you know, saving money for retirement, not to operate a business. So you cannot use your checkbook LLC, which is part of your IRA, to conduct a business that you are running personally.
Jake Marchini: Can I easily send cash from my Entrust self-directed Roth to my other Roth at Charles Schwab? What is the process? I tried to test it online, couldn't figure it out. Okay, so that is the… that goes back to my, conversation about
Jake Marchini: rollovers versus transfers. So a transfer, to recap, is typically initiated by the receiving party. So you would speak to Schwab, tell them that you have an IRA at the Entrust Group, and you want to move money from that IRA to your Schwab IRA.
Jake Marchini: they will give you transfer paperwork that you fill out for them, and then they send us a request for money. So if you're looking on the Entrust group.
Jake Marchini: side of things, for moving money between one Roth IRA and another, to send money out to Schwab, you're… you're barking up the wrong tree. When you move money between two IRA accounts of the same type, either Roth to Roth or traditional to traditional.
Jake Marchini: To do a transfer, you speak with the receiving party and do a pull transaction, rather than a push transaction.
Jake Marchini: Maureen Costello asks, can cash in the Entrust account earn interest?
Jake Marchini: my real estate LLC pays quarterly distributions that will accumulate over time. No. So, specifically for the Entrust group, any cash that you have in your IRA does not earn interest. As I mentioned before, we do not bill our clients for undirected cash in their account. It does not add to their billable fees.
Jake Marchini: But we also do not have access to
Jake Marchini: the, you know, sort of short-term investments, like money markets, or CDs, or things like that for our clients that a more conventional brokerage-type account would. So, if you are looking to get interest earned on cash in your account, you are probably going to have to look into either having a
Jake Marchini: And LL… you can actually
Jake Marchini: have within your self-directed IRA checkbook LLC, you can open, like, a sub-account for that LLC at a brokerage firm, so that you can keep your cash with us under our custodianship, but have sort of a sub-account for your LLC at a brokerage firm
Jake Marchini: that you can use to put in things that can earn interest, because it does… if you just have it in your IRA with us, it is not earning you interest. You do not get paid for… for having cash in the Entrust Group account.
Jake Marchini: Okay, James Whitby asks, tax ramifications for the move from a traditional to SDIRA. So that actually is something that I… a conversation that I have with, you know, new clients frequently. James Whitby, James Whitby clarifies his question in the next…
Jake Marchini: james Whitby clarifies his question here in the…
Jake Marchini: Next question where he asks… he clarifies a Roth IRA, not an SDIRA. So the tax ramifications to move from a traditional IRA to a Roth is that the amount, or the value.
Jake Marchini: that gets put from your pre-tax traditional account into a post-tax Roth account is that that amount, whatever it is, becomes taxable to you in the year that the transaction happened. So if you move
Jake Marchini: $100,000 from your traditional IRA to your Roth IRA in 2026, you will have to file your taxes for 2026 as though you earned $100,000 of additional income and deal with whatever tax bracket that puts you in.
Jake Marchini: Now, another attendee asked, does passive income count towards the maximum adjusted gross income limits, the MAGI?
Jake Marchini: I do not know the answer to that question confidently. Now, as mentioned before, the… what counts for being able to contribute to an IRA is earned income, so if you don't have any earned income.
Jake Marchini: Then you can't contribute.
Jake Marchini: towards an IRA, but I don't know if investment, you know, passive income counts as earned income, but my
Jake Marchini: feeling is not. So, by extension.
Jake Marchini: Perhaps, if that is accurate, then it seems like passive investment income wouldn't count towards MAGI, but I'm afraid I do not know that you will want to clarify that with your CPA or tax advisor, or send me this question afterwards so I can do a little bit of research and get back to you.
Jake Marchini: Okay, if using an IRA as a pass-through to a backdoor Roth, does Entrust charge two minimum fees, even though one account is only active one day a year? That's a very good administrative question, and the
Jake Marchini: answer will require a little bit of nuance here, but essentially, no. So if you open a traditional IRA and a Roth IRA, and the only purpose of the traditional IRA
Jake Marchini: And the only purpose of the traditional IRA is to be open, to receive money, and then immediately send it on to the Roth.
Jake Marchini: We will charge you for opening two accounts, so you'll pay two account establishment fees. But as mentioned previously, we don't bill our clients for, cash in their IRA.
Jake Marchini: But we do require that a client keep at least some money in their IRA. Usually, the minimum amount of cash in an IRA to keep it open and valid with no other investments is $250. So…
Jake Marchini: if you are planning to continuously contribute money to a traditional IRA, and then pass that on to a Roth IRA, what I would suggest you do is pay the establishment fees for two accounts, traditional and Roth, contribute
Jake Marchini: you know, as much as you can to the traditional, and then send that amount minus $250 from the traditional to the Roth, so that that traditional IRA stays open in perpetuity with
Jake Marchini: a small cash balance of $250 in it, and you will not pay us for having that traditional IRA open with that small cash balance, for as long as it just has
Jake Marchini: cash in it, so as long as you don't make any investments with the traditional IRA, and you just keep that little bit of cash in it, it will stay open in perpetuity, free of charge, and you can use it as a pass-through to contribute to, and then move on to your Roth account.
Jake Marchini: Is a traditional IRA obligated to do a transfer if requested by another traditional IRA for the same beneficiary?
Jake Marchini: So… my immediate…
Jake Marchini: gut answer to that question is yes. I have never heard of anybody refusing a transfer as long as the paperwork is in good order. It is entirely just anathema to my understanding that, you know, if
Jake Marchini: if Company A sends a transfer request to Company B to move money from Company B back to Company A,
Jake Marchini: Company B can't just say, no, we're going to keep this money here with us under our custodianship and not send it to you.
Jake Marchini: That… so I don't know the answer to that question, that is… but that has never come up. That is… that is a… that is a question that I have… that I… I don't know the answer to, because… but I don't know the answer to it, because it's never been asked before, and it's never come up in my experience of 10 years, nearly, here at the Entrust Group.
Jake Marchini: And I think that if you were to…
Jake Marchini: to, you know, run into that situation, where a custodian says, we will not make your transfer from your IRA with us to an IRA at somebody else if the paper… and they, you know, don't have a reason for it, if just, you know, if the paperwork's all in good order.
Jake Marchini: Then I seem… I think that would be… probably be grounds for legal action. So, very good question. I do not know the answer for sure, but I strongly think that the answer is, yes, you are obligated to make the transfer
Jake Marchini: If the paperwork for requesting the transfer is in good order. But perhaps check in with that, with your tax advisor to be absolutely sure of that. I will certainly be checking in with my coworkers in the transfers department to see if there is any sort of condition under which
Jake Marchini: You know, we would… Refused to make a transfer as long as the transfer request was in good order.
Jake Marchini: Okay, I am a bit confused about the way to transfer funds to my CS Roth. Can CS send a recurring request, or do they have to do it each quarter as the distributions arrive? Now.
Jake Marchini: for the Entrust group specifically, I don't know if there's any way of doing this, differently at other firms, but I will answer in the context of the Entrust Group, there is no way to make a recurring, outgoing.
Jake Marchini: movement of funds from one IRA to another IRA. Each movement of funds from IRA A to IRA B as a transfer, or as a distribution and rollover.
Jake Marchini: has to have its own distinct paperwork. So…
Jake Marchini: As far as for the Entrust Group's purposes, we have no way of setting up, like, a recurring request to pull money from another company, and I have not seen anybody have a recurring, request to pull money from the Entrust group on a regular basis. So, I believe the answer to your question is.
Jake Marchini: No, they cannot send a recurring request, or they cannot just set that up and let it ride and have a certain amount go from account A to account B at specified times. You have to have paperwork for each individual movement of money from one IRA to another.
Jake Marchini: Okay, James Whitby asks, I do not yet have a Roth IRA, all in traditional IRAs. If I establish a Roth now and move money from my traditional IRAs, paying the tax, do I have to wait 5 years before being able to withdraw from the Roth?
Jake Marchini: And the answer to that is… is yes, James. So, to have…
Jake Marchini: tax-free withdrawals from your Roth IRA, you do have to satisfy something called the 5-year rule.
Jake Marchini: Which, once you've done it for a Roth IRA, a Roth IRA anywhere, you've satisfied it for all Roth IRAs that you might have at a certain point. But if you have never had a Roth IRA
Jake Marchini: anywhere?
Jake Marchini: then… and you're only establishing your Roth IRA now, you would have to wait 5 years from establishment of your first Roth IRA, to be able to withdraw that… the income from those investments tax-free.
Jake Marchini: Alright, James Poulos asks, my Entrust Roth IRA had the same invested assets value for the entire year, only the uninvested cash value has decreased during the year. If Entrust does not charge admin fees on my uninvested cash, why are my admin fees lower each quarter?
Jake Marchini: Hmm. I would have to look into your account, Mr. Poulos, and see if…
Jake Marchini: see what type of account you have, and what fee schedule you're invested under, whether you have an old account that might have one of our old grandfathered fee schedules, or whether you are currently under our new current general fee disclosure. I do not have the information available on this call to
Jake Marchini: Look into that question, please send me an email after this,
Jake Marchini: after this… just after this, conversation to follow up on that, though, with your name and account number and all that information. I'll look into that for you.
Jake Marchini: Right, and an anonymous attendee asks, would it make more sense to have two self-directed Roths, one only owning the Checkbook LLC? If I set up a second self-directed Roth with you, can I transfer all of the assets except the Checkbook LLC to the new account?
Jake Marchini: Now, this is… this is difficult for me to answer, because that's a… it's sort of a value question, and that is determined by your financial strategy.
Jake Marchini: But to address… so would it make more sense, or is it better? I can't answer a value question like that.
Jake Marchini: But if I set up a second self-directed Roth with you, can I transfer all of the assets except the checkbook LLC to the new account? Yes, you can do that. You can have two separate accounts, both Roth IRAs.
Jake Marchini: One of which holds a single investment in a checkbook LLC, and the other holds all your other investments. If that is beneficial to you.
Jake Marchini: somehow, then you can… you can do that, but I cannot
Jake Marchini: Give information about whether that is,
Jake Marchini: beneficial to you, that is a question for your CPA or tax advisor.
Jake Marchini: And somebody asked, do you want to talk about how to hold crypto in a Roth? Does it have to be an account in a single-member LLC that is owned by the Roth? And yes, I would be happy to talk about using crypto, and yes, you are correct that,
Jake Marchini: So, when you say, holding crypto, typically that means that you are, you know, buying and selling crypto yourself on some sort of exchange, like Coinbase or any of the others that exist.
Jake Marchini: Now, you can do that through your Entrust Group IRA, but it means that you have to establish checkbook control. If you do not have checkbook control of your account, you cannot use your account to directly invest in crypto. And the way that you use a checkbook LLC to do that
Jake Marchini: is you set up the checkbook LLC with your IRA as the member, and yourself as the manager, as
Jake Marchini: in any other use of the checkbook LLC, put money from your IRA into the LLC's bank account, and then you establish a sub-account in the name of the LLC on Coinbase, or your crypto platform of choice. And so you put money from the LLC bank account into the
Jake Marchini: crypto subaccount, and then buy, sell, and trade crypto as normal, and then the income, if you want to funnel that back to your IRA, comes back from the crypto account to the LLC, and then eventually back into the IRA.
Jake Marchini: The other… the only other way of investing in crypto is to do it sort of indirectly. So you can invest in a joint venture, or a limited partnership, or LLC,
Jake Marchini: for the express purpose of investing in crypto. So if somebody is, you know, pulling together money for the express purpose of investing in crypto from many different clients, or
Jake Marchini: or investors, you can participate in that directly through your IRA, which in practical function, is basically the same as sending money from your IRA to a checkbook LLC to invest in crypto. It's putting money from your IRA into a private equity structure that is then
Jake Marchini: Used to invest in crypto.
Jake Marchini: So that is how one does that. You cannot do it directly with your IRA, you have to put money from your interest group IRA into a private equity structure to then either do it yourself through an LLC, or let some other party do it through a third-party private equity structure.
Jake Marchini: Alright, and I have no more questions here. Doesn't look like there's anything else in the Q&A section.
Jake Marchini: So if you… anybody has any further questions to send to me about the contents of this webinar, this conversation, please do so. My, personal information is up on the screen here. You can send me an email, or give me a call if you wish, though mostly email is the way to get ahold of me.
Jake Marchini: I would be happy to hear from any of you if you have further questions.
Jake Marchini: And I hope that you enjoyed the… and, well, found helpful the information in this conversation. I wish you all a good day.