Menu Close

IRA Financial Group Blog

Roth IRA Conversions, IRA Fees and more | Client Q&A

AdMail Podcast
3 Minute Read

Last Updated on May 10, 2021

In this week’s episode, IRA Financial’s Adam Bergman Esq. answers questions about converting a Roth IRA, Checkbook IRA fees and seller financing with a Self-Directed IRA.




Question 1 from Lenny S: I have a Roth IRA – can I convert to an after-tax IRA?

Many clients, including Lenny here, are getting confused between an after-tax IRA and a Roth IRA. There is really no benefit to the after-tax plan. This is essentially a traditional IRA, without the benefits of the plan. The plan is funded with after-tax money, however, the earnings from your investments will be treated as taxable income when you withdraw them.

A Roth IRA, is funded with after-tax money, however, all qualified distributions from the plan are tax free. Once you reach age 59 1/2 and any Roth IRA has been open for at least five years, you won’t pay tax on those distributions. The only time an after-tax IRA makes sense is if you cannot directly contribute to a Roth because you earn too much money. You can then fund a traditional plan, and immediately convert those to a Roth. Once you convert to a Roth, you can no longer undo that conversion.

Question 2 from YouTube: I read through your entire website and what is not clear is when one needs to pay you $1,000 to set up a Checkbook Roth IRA to buy cryptos and when that is not necessary?

The major difference in the cost of setting up an IRA is what type you choose: custodian controlled or checkbook control. Because you need to set up an LLC to get full checkbook control of your IRA, there is an additional cost. That set-up fee is $999. However, if you don’t need an LLC, you pay a flat $300 fee to set up a custodian controlled IRA.

When you invest in cryptos with IRA Financial, you do not need an LLC. This assumes you use Gemini Exchange for your trading needs. Because of our partnership with Gemini, you can open your trading account in the name of the Roth IRA. There’s no need for an LLC and no expensive third-party brokers to deal with. We feel it’s the best option for those wanting to invest in cryptos with retirement funds!

Question 3 from Twitter: Can you please confirm that I can use seller financing to buy real estate in a Self-Directed IRA?

When you use a Self-Directed IRA to invest in real estate, you must keep in mind the prohibited transaction rules. So long as the seller is not a disqualified person, you can do a real estate deal with him or her. A disqualified person is generally you (the IRA owner), your spouse, or a lineal ascendant or descendant of yours, their spouses or any entities they control.

There are two things to keep in mind. The loan must be non-recourse. This means that that the financier can only go after the property and not any other assets of the owner. Secondly, be aware of the impact of the UBTI tax. The debt-financed portion of a property will be subject to taxes, even when held inside an IRA.

AdMail – Keep it Coming

We hope you enjoyed the latest episode of AdMail. Mr. Bergman will continue to respond to questions each week so long there is a demand for them! If you have any questions for him, email him at abergman@irafinancial.com.

As with his other podcasts, you can check out AdMail on SoundCloud. Be sure to subscribe to know when the next one pops up! Thanks for listening and have a great day, Self-Directed Nation!

Related Articles