Successfully buying businesses with IRA money requires the securing of account facilitators who know exactly what they’re doing
David Nilssen, CEO, Guidant Financial Group
A growing number of people are discovering the joys of utilizing IRA money to purchase businesses and franchises. Consequently, more companies are springing up to meet the account-structuring needs of those seeking to take advantage of this “self-directed IRA” funding option. These companies can run the gamut from the sublime to the ridiculous, so it’s crucial that consumers know what to look for when choosing a retirement account facilitator.
When structured correctly, money in your IRA account can be accessed before retirement to buy a franchise/business without incurring early distribution penalties. Setting up a structure for these types of transactions is a complex process involving rollovers, creations of corporations and/or new accounts within IRS and Department of Labor guidelines, and appropriately submitting numerous documents to various agencies.
Ensuring that the structure is created correctly and that all compliance measures are adhered to is critical. If it’s done wrong – or if it’s created for a transaction that doesn’t meet government guidelines – it could result in the incurring of significant penalties or the dissolving of the tax-free status of your retirement account. Not only could you lose the opportunity to purchase the business or franchise of your dreams, but you could be penalized as much as 100 percent of your retirement funds.
Although you can find numerous companies on the Internet offering to facilitate the structuring of these unique accounts, beware: all facilitators are not created equal. Some of these companies cut corners that leave clients open to later IRS repercussions. Others are tiny one- or two-person operations lacking the infrastructure to provide professional service or, based on the handful of accounts they have set up, they lack adequate experience to provide reliable guidance. So who can you trust? Thankfully, there are some professional and respected companies you can rely on with confidence. But even among these, costs for services can vary widely.
To help keep you and your hard-earned retirement money safe, here are some of the characteristics you should look for in selecting an account facilitator:
Professional Expertise. Look for companies staffed with a wide variety of professionals who can look at your unique situation from all angles. Check to see whether the company is affiliated with other respected organizations, is well-known in the industry, and completes hundreds or, better yet, thousands of these plans each year.
Reputation. Even though this is a relatively new industry, you do want to see that the facilitator has been in business for at least a few years and has built a reputation for itself. Nothing can replace the value of real-life experience. You want to be confident that all the early trial-and-error took place long ago and that the current service is reliable and error free. You don’t want to be the guinea pig for a brand new company. It would be wise to invest some time in checking out what companies are in the news and what type of recognition they have been receiving.
Communications. Does the company make you blindly submit your information to them without providing the ability to talk with them directly? While online submissions are fine, be wary of sites that don’t even give you a phone number where you can contact them. Also, are their representatives always available to answer your questions? A good rule of thumb is: the easier it is to communicate with the facilitator, the more secure you can feel about what is happening behind closed doors.
Success. Is the company growing or is it struggling to keep its head above water? Will it still be in business next year? The best companies to deal with are those that have a large and growing clientele. Don’t be afraid to ask how many similar accounts the company has structured or how many clients they’ve served. Bolder is better when it comes to questioning those who will be facilitating your financial future.
Conservative Approach. Hearing “yes” is not always in your best interest. There are companies out there that will, out of ignorance or greed, set up structures that enable you to purchase businesses that are not permitted or advised under the IRS or Department of Labor laws. Choosing a facilitator that will keep you away from any business deals that are even remotely questionable is a safer route to take. Look for facilitators who encourage you to run your potential transactions past counsel. Better yet, look for a company that includes this step as part of their facilitation package.
Customer Service. So what constitutes topnotch customer service? Look for characteristics such as: Proactive Communication (the company reps keep you regularly informed of where you are in the process, and they speak a down-to-earth language you understand, not some trade lingo that makes little sense in the real world); and Ongoing Support (you can rely on the company to answer your questions and “hold your hand” if necessary after they’re set up your account).
Turnaround. A company should be able to set up the account within 20-25 days. Yet some companies promise five days or less . . . which makes you question what corners they’re cutting, since some states require as much as eight days to process documents. You need to be clear about your time constraints, and you should expect a clear and honest time estimate in return. And then you should be able to rely on that estimate.
Competitive Prices. Is the company clear about the costs up front? And do you know exactly what services you are purchasing? Some companies will charge separately for each step of the process, while others will charge for the “package.” Package deals can provide the better bargain, as they includes features that other programs will expect you to pay for separately and which can add substantially to your costs (such as an IRS authorization letter or time with outside counsel).
One of the best steps you can take is doing a thorough study of the companies wanting your business. Shop around! Most account facilitators have websites you can peruse and most offer free consultations. This may sound simplistic, but write your questions down beforehand and keep them in front of you. It’s far too easy to lose your train of thought in the midst of a detailed – and sometimes confusing – sales presentation.
Finally, never lose sight of the fact that you’re dealing with your money, your business/franchise purchase and your success or failure. Go with a company that ensures that your money never leaves your authority, and that you remain the one who defines your future.
David Nilssen is the Chief Executive Officer (CEO) of Guidant Financial Group, Inc., the nation's leading retirement account facilitator. Using customized and conforming structures, Guidant helps investors use their retirement funds (i.e. - IRA or 401k) to purchase non-traditional investments such as a business. With the help and expertise Guidant offers, investors nationwide are able, not only to control their individual investments by redirecting those funds into higher yielding assets, but also keep their investments safe from penalties and tax consequences.
David Nilssen, CEO, Guidant Financial Group
A growing number of people are discovering the joys of utilizing IRA money to purchase businesses and franchises. Consequently, more companies are springing up to meet the account-structuring needs of those seeking to take advantage of this “self-directed IRA” funding option. These companies can run the gamut from the sublime to the ridiculous, so it’s crucial that consumers know what to look for when choosing a retirement account facilitator.
When structured correctly, money in your IRA account can be accessed before retirement to buy a franchise/business without incurring early distribution penalties. Setting up a structure for these types of transactions is a complex process involving rollovers, creations of corporations and/or new accounts within IRS and Department of Labor guidelines, and appropriately submitting numerous documents to various agencies.
Ensuring that the structure is created correctly and that all compliance measures are adhered to is critical. If it’s done wrong – or if it’s created for a transaction that doesn’t meet government guidelines – it could result in the incurring of significant penalties or the dissolving of the tax-free status of your retirement account. Not only could you lose the opportunity to purchase the business or franchise of your dreams, but you could be penalized as much as 100 percent of your retirement funds.
Although you can find numerous companies on the Internet offering to facilitate the structuring of these unique accounts, beware: all facilitators are not created equal. Some of these companies cut corners that leave clients open to later IRS repercussions. Others are tiny one- or two-person operations lacking the infrastructure to provide professional service or, based on the handful of accounts they have set up, they lack adequate experience to provide reliable guidance. So who can you trust? Thankfully, there are some professional and respected companies you can rely on with confidence. But even among these, costs for services can vary widely.
To help keep you and your hard-earned retirement money safe, here are some of the characteristics you should look for in selecting an account facilitator:
Professional Expertise. Look for companies staffed with a wide variety of professionals who can look at your unique situation from all angles. Check to see whether the company is affiliated with other respected organizations, is well-known in the industry, and completes hundreds or, better yet, thousands of these plans each year.
Reputation. Even though this is a relatively new industry, you do want to see that the facilitator has been in business for at least a few years and has built a reputation for itself. Nothing can replace the value of real-life experience. You want to be confident that all the early trial-and-error took place long ago and that the current service is reliable and error free. You don’t want to be the guinea pig for a brand new company. It would be wise to invest some time in checking out what companies are in the news and what type of recognition they have been receiving.
Communications. Does the company make you blindly submit your information to them without providing the ability to talk with them directly? While online submissions are fine, be wary of sites that don’t even give you a phone number where you can contact them. Also, are their representatives always available to answer your questions? A good rule of thumb is: the easier it is to communicate with the facilitator, the more secure you can feel about what is happening behind closed doors.
Success. Is the company growing or is it struggling to keep its head above water? Will it still be in business next year? The best companies to deal with are those that have a large and growing clientele. Don’t be afraid to ask how many similar accounts the company has structured or how many clients they’ve served. Bolder is better when it comes to questioning those who will be facilitating your financial future.
Conservative Approach. Hearing “yes” is not always in your best interest. There are companies out there that will, out of ignorance or greed, set up structures that enable you to purchase businesses that are not permitted or advised under the IRS or Department of Labor laws. Choosing a facilitator that will keep you away from any business deals that are even remotely questionable is a safer route to take. Look for facilitators who encourage you to run your potential transactions past counsel. Better yet, look for a company that includes this step as part of their facilitation package.
Customer Service. So what constitutes topnotch customer service? Look for characteristics such as: Proactive Communication (the company reps keep you regularly informed of where you are in the process, and they speak a down-to-earth language you understand, not some trade lingo that makes little sense in the real world); and Ongoing Support (you can rely on the company to answer your questions and “hold your hand” if necessary after they’re set up your account).
Turnaround. A company should be able to set up the account within 20-25 days. Yet some companies promise five days or less . . . which makes you question what corners they’re cutting, since some states require as much as eight days to process documents. You need to be clear about your time constraints, and you should expect a clear and honest time estimate in return. And then you should be able to rely on that estimate.
Competitive Prices. Is the company clear about the costs up front? And do you know exactly what services you are purchasing? Some companies will charge separately for each step of the process, while others will charge for the “package.” Package deals can provide the better bargain, as they includes features that other programs will expect you to pay for separately and which can add substantially to your costs (such as an IRS authorization letter or time with outside counsel).
One of the best steps you can take is doing a thorough study of the companies wanting your business. Shop around! Most account facilitators have websites you can peruse and most offer free consultations. This may sound simplistic, but write your questions down beforehand and keep them in front of you. It’s far too easy to lose your train of thought in the midst of a detailed – and sometimes confusing – sales presentation.
Finally, never lose sight of the fact that you’re dealing with your money, your business/franchise purchase and your success or failure. Go with a company that ensures that your money never leaves your authority, and that you remain the one who defines your future.
David Nilssen is the Chief Executive Officer (CEO) of Guidant Financial Group, Inc., the nation's leading retirement account facilitator. Using customized and conforming structures, Guidant helps investors use their retirement funds (i.e. - IRA or 401k) to purchase non-traditional investments such as a business. With the help and expertise Guidant offers, investors nationwide are able, not only to control their individual investments by redirecting those funds into higher yielding assets, but also keep their investments safe from penalties and tax consequences.
Labels: Franchise Opportunity
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