Dear IRA/401k Rollover holder,

Many investors today are questioning the integrity and fairness of many of our publicly traded companies. Outright fraud, like Enron and WorldCom; to questionable accounting practices, like Arthur Anderson; loss of shareholder value, due to tens of millions in executive stock options; to special top management loans that are never repaid question the validity of giving them our money to work with.

Warren Buffet, recognized as one of the richest and most successful investor of our time, was quoted in a 2002 article in Outstanding Investor Digest. “I think stock are a decent way to make 6 to 7 percent per year over the next 15 to 20 years” Based on Buffet’s statement, ask yourself this are stocks and mutual funds the right place for all your retirement money at this time?

Many investors are looking at an old reliable favorite investment--- real estate. Think about it. Wouldn’t it be nice to have a family vacation home or condo to enjoy with their children and grandchildren now and in the future? Or consider a rental or commercial property to supplement their retirement income. What about vacation rentals?

According the Investment Company Institute Research “there are approximately two trillion dollars invested in IRA’S.” Baby boomers and other wealthy people own a large portion of this money. Some people have large estates, therefore have other assets to live on, and they will end up passing their IRA’S to their family members down the road. These people have not discovered their family could pay as much as 68 cents on each dollar they inherit. This taxation is in two forms, estate taxes and income taxes.

Many IRA/401k rollover holders have not been told and therefore do not know how to use their IRA/401k rollover monies to purchase real estate. The IRA real estate purchase can be done in two very different ways.

The first way is for the real estate to be owned by the IRA. This requires moving your IRA/ 401k rollover to a self directed IRA custodian that allows real estate. The custodian will hold title to the real estate. Since the real estate is inside the IRA, the real estate comes under the restrictive IRA rules and law. All proceeds must go back into the IRA. You cannot use your IRA to purchase your own residence, condo or any property in which you or your family live or work. In addition, if the real estate is a rental property the custodian will require the investor to appoint a property manager. Also, the IRA/ 401k rollover owner must comply with minimum and mandatory distributions, non-compliance penalties, transferability and/or taxes. Most people are not aware, that when distributions are taken from an IRA, the distributions can be taxed at the owner’s highest marginal income tax rate.  What effect could Alan Greenspan's statement in his report to the Congress have on taxes "as a nation,we have already made promises to coming generations of retirees that we will unable to fulfill"?

The second way real estate can be purchased is outside an IRA and owned outright. The IRA/401k rollover funds buy the real estate purchase and the owner can now take advantage of advantage of a full range of the financial and economic benefits real estate offers. Occupancy is now possible. Capital gains tax treatment, depreciation, additional write-offs, rental income flexibility, a stepped-up income tax basis and the personal residence exclusion become possibilities. Leverage is now a financial option for the real estate investor. The IRA/401k rollover can completely or partially fund a real estate purchase. You can even share ownership with others. You can buy a condo, land, a second home,, an office building, a rental property, a ranch etc. If you are leasing a building, you could purchase your own office and recover your lease payments.

Both methods of using your IRA/401k rollover to purchase real estate have been around for many years. You now have an alternative to stocks, mutual funds, bonds and certificates of deposit.

Have you ever thought of retiring in your IRA country home? Now you can.

Sincerely,

Nick Herak