Here’s Adam Bergman’s latest Forbes.com article about the “C Corp Blocker” strategy to minimize taxes on Self-Directed IRA investments –
One of the major elements of the 2017 Tax Cuts and Jobs Act (the “Act”) was the reduction in the maximum corporate tax rate from 35% to 21%. The corporate tax reduction has been warmly received by corporate America. For retirement account investors looking to invest in a business, the maximum corporate tax rate reduction can also prove to be quite positive.
In general, when it comes to using an IRA or 401(k) plan to make investments, most investments are exempt from federal income tax. This is because Internal Revenue Code (“IRC”) Sections 408 and 512 exempt most passive forms of investment income generated by an IRA or 401(k) plan from taxation. Some examples of exempt types of passive income include: interest from loans, dividends, annuities, royalties, most rentals from real estate, and gains/losses from the sale of real estate.