Self-Directed IRAs: Building Retirement Wealth Through Alternative Investing

243 Pages·2015·1.73 MB·English

by  Richard Desich Sr

Self-Directed IRAs: Building Retirement Wealth Through Alternative Investing
Richard Desich, Sr.
Foreword and Introduction by:
John Bowens,
Equity University National Education Specialist
Copyright © 2015 Equity University
All rights reserved.
ISBN-13: 978-0692346532 (Equity University)
Editor-in-chief: Keith Blazek
Table of Contents
Disclaimer
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Foreword: From Humble Beginnings, an Industry Leader Emerges
Introduction: A Retirement Reality
Chapter 1: Who Is This Book For?
Chapter 2: The ROI Beyond the ROI – Self-Directed IRAs Impacting Lives
Across America
Chapter 3: The Upside to Alternative Investments
Chapter 4: Understanding IRAs – Types of Accounts
Chapter 5: How Self-Directed Accounts Can Offer Diversity with the Most
Power
Chapter 6: Toolbox of Options – What Makes Sense for You?
Chapter 7: It’s Time to Start Self-Directed Investing! Understanding the Process
Chapter 8: Investing in Rehab Properties
Chapter 9: Investing in Rental Properties
Chapter 10: Investing in Foreclosures
Chapter 11: Investing in Commercial Real Estate
Chapter 12: Investing in Tax Liens
Chapter 13: Investing in Raw Land
Chapter 14: Investing in Notes, Mortgages and Deeds of Trust
Chapter 15: Investing in Probate
Chapter 16: Investing in Real Estate Options
Chapter 17: Investing in Precious Metals
Chapter 18: Investing in Private Equity, LLCs and REITs
Chapter 19: Not Enough Money Yet? – How to Get Started Anyway
Chapter 20: What You Need to Know – Rules, Regulations and Prohibited
Transactions
Chapter 21: Importance of Due Diligence and Your Support Team
Chapter 22: Check Before You Invest – Identifying and Preventing Fraud and
Scams
Chapter 23: It’s Time to Cash In! – Taking Distributions
Chapter 24: Building and Keeping Wealth for Generations to Come
Chapter 25: Getting Started – Selecting a Custodian
Chapter 26: Time to Take Control of Your Financial Future
Contact Us for More Information
About the Author
Available Resources
Footnotes/References
Disclaimer
This material is presented with the understanding that neither Equity Trust
Company nor Equity University (jointly referred to as “Equity”), its
representatives, officers, and affiliates provide planning, investing, tax, or legal
advice.
Questions relevant to your specific tax, investment, accounting, legal, estate or
planning needs should be addressed to practicing members of those professions
only after fully disclosing all relevant and material facts regarding your specific
situation. Equity does not endorse any speaker, presenter or any printed
materials belonging to any third party and provided herein.
The information, ideas, and suggestions contained herein have been developed
from sources, including publications and research, that are considered and
believed to be reliable, but cannot be guaranteed insofar as they apply to any
particular taxpayer or individual desiring to establish an asset protection, estate
planning, investment, retirement, education or tax plan. We strongly recommend
that you engage the assistance of a competent, qualified professional before
implementing any ideas presented in the material.
Equity and its representatives specifically disclaim any liability, loss, or risk,
personal or otherwise, incurred as a direct or indirect consequence of the use or
application of any of the techniques or contents presented in this material.
Equity, its affiliates, representatives, or officers do not provide any legal or tax
advice. We provide education on topics related to Self-Directed Retirement
Accounts, and recommend that you work with a financial professional to
determine whether an investment product, plan, or idea is right for you.
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Foreword: From Humble Beginnings,
an Industry Leader Emerges
by John Bowens, Equity University National Education Specialist

Equity Trust Company is a leading custodian of self-directed retirement accounts
with over 130,000 clients in all 50 states and $12 billion of retirement plan assets
under administration. Despite its successful growth over the last four decades,
Equity Trust Company came from humble beginnings and is still a family-
owned-and-operated Company.
Richard Desich, Sr., the Founder and Chairman of the Board, grew up two
blocks away from a steel mill in Lorain, Ohio. The value of hard work and
education was instilled in him from an early age. After serving four years in the
United States Armed Forces, Mr. Desich attended night classes until he
graduated from college.
After putting himself through school he quickly rose through the ranks and
become one of the top financial advisors at a brokerage company. Mr. Desich
experienced stock market volatility firsthand and yearned for another solution.
Just like you, he would not accept the status quo and was searching for a way to
diversify his portfolio.
He had been exposed to real estate as a youth because his grandparents (who
raised him) operated a small rental unit on their property and he remembered the
steady residual income they received from the unit. With his mind racing with
ideas and opportunity he asked himself, “Why couldn’t I invest in real estate like
I invest in stocks and bonds?”
At this point in 1974, Mr. Desich had already established his own brokerage firm
called Mid-Ohio Securities. He knew he was on to something – but investing in
real estate with your IRA…was this even legal?
He wanted to take advantage of the power of compounding interest within a tax-
advantaged retirement account, but was still skeptical. It sounded good on paper
but, like you, he wasn’t sure if it was real.
Since IRAs were fairly new at this time, Mr. Desich sought out one of the top
ERISA attorneys in the country. (An ERISA attorney is someone who
specializes in the tax laws as it relates to retirement investing.)
He took a leap of faith and spent thousands of dollars to learn that the Internal
Revenue Code in fact permits non-traditional investments in an IRA.
He saw how powerful this strategy could (and would) become, but like many of
you, still had his doubts. He was skeptical. Why had he never heard of this? Why
wasn’t anyone doing it? Even his trusted CPA hadn’t heard of the concept.
In his research Mr. Desich learned that most brokerage firms didn’t offer
alternative investing options (within or outside an IRA). He learned that the
banks didn’t offer it either.
So now it made sense. He understood that it was legal and possible, but he
needed to know what he was allowed to invest in with his IRA.
His ERISA attorney told him that a self-directed IRA is no different than any
other IRA with another financial company. The only difference is that you can
choose the types of investments that are suitable for you. He was able to choose
to diversify his portfolio into assets such as real estate, precious metals, tax liens,
and all types of other options rather than relying on only the stocks, mutual
funds, and other traditional assets offered by most custodians.
As he continued to research, his ERISA attorney told him that he would need a
custodian to invest with a self-directed IRA.
He eventually found one that was a bank trust department and was shocked at
the price they were going to charge. How could he grow his retirement savings
and build wealth with such a high cost?
Well as I’m sure you’re learning, Mr. Desich wasn’t about to let something like
cost hold him back from an opportunity he believed in. He decided to take the
bull by the horns and petitioned the IRS until he was able to turn his brokerage
company into its very own passive custodian!
Finally after years of research, hard work, and hundreds of thousands of dollars
in attorney and research fees, he knew he could move forward with his idea. In
1983 he received IRS approval for Mid-Ohio Securities to become a passive
custodian for self-directed IRAs.
This approval was necessary to facilitate self-directed investments, including the
Company’s very first one – an investment in a local pharmacy in Lorain, Ohio.
In 1984 Mr. Desich and a group of 22 investors purchased the Ohio drug store.
Each investor put in $6,000, and over the next 19 years the investors each made
nearly $200,000 through the triple-net-lease investment. The returns far-
outpaced what they were currently receiving with their traditional investments
and, soon after, other clients approached him to help them learn how to diversify
into alternative assets as well. From that moment, an industry leader was born.
Mr. Desich has a passion for education and has made it his mission, and the
Company’s mission, to educate investors around the country about the power of
self-directed IRAs. Mr. Desich had the foresight to see the tremendous potential
in the self-directed IRA market and has fought to better educate investors so they
have the opportunity to tap into this potential as well. Mr. Desich believed
everyone should be able to take advantage of these investments, not just the
wealthy.
By 1996 his Company was servicing investors in all 50 states. In 2003, Equity
Trust Company was created and obtained a trust charter from the South Dakota
Division of Banking. Equity Trust Company purchased the IRA assets from
Mid-Ohio Securities, Inc., allowing Mid-Ohio to continue as a brokerage firm,
with Equity Trust serving as a passive custodian.
He traveled the country on speaking engagements and founded Retirement
Education Group in 2001, now d.b.a. Equity University, to help accomplish this
mission.