Published Quarterly for the Self-Directed Investor
DIVERSIFIED INVESTMENTS. EXPERTISE. SERVICE. VALUE.
FROM OUR PRESIDENT TO OUR VALUED CUSTOMERS
JANUARY 2007
VOL. 8 ISSUE 1
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ntering the New Year, all of us at Trust Administrative Services (TRUST) are taking time to reflect on how lucky we are to live and work where we do. We especially want to thank you for placing your faith and trust in our ability to provide for your retirement needs. We want you to know that we remain committed to offering you the best retirement services available anywhere. We enter 2007 with our newly improved website and newsletter. We believe that you will be pleased with the new enhancements and more user-friendly features of the site, such as access to self-directed IRA information, links to recent articles and publications and online subscription to our Perspectives newsletter. During 2006, TRUST was mentioned in numerous articles in major publications, including American Banker, Forbes, Fortune, US Banker, USA Today, and The Wall Street Journal. You can access these articles on our new website at www.trustlynk.com. In addition, as a result of our extensive expertise in understanding IRAs that invest in real estate and de novo banks, we were asked to contribute to several books, including Private Mortgage Investing by Teri B. Clark and Matthew S. Tabacchi, and Retire Rich with Your Self-Directed IRA by Nora Peterson. Throughout the year we have been making significant regulatory changes to our forms in order to further protect the safety and security of company and client financial information. We appreciate your patience during this process. At the same time, we have made 20 new staff additions in the areas of compliance and customer service, bringing the total at year-end to 50. As always, we welcome your comments and suggestions as to any further enhancements you feel might be beneficial. We wish you the very best for the coming New Year.
TECHNOLOGY UPDATE Visit our NEW Website . . . . . 2 NEW Customer Service Enhancements . . . . . . . . . . . . 2 Reminders to Real Estate Investors . . . . . . . . . . . . . . . . . . 2 2007 Holiday Schedule. . . . . . . 2 Important Information About Required Minimum Distributions . . . . . . . . . . . . . . . 3 2006 Contribution Limits and Deadline Reminders . . . . . . 4 How to Make Your 2006 Contribution . . . . . . . . . . . . . . . 4
Any tax or legal information in this newsletter is merely a summary of our understanding and interpretation of some of the current laws and regulations and is not exhaustive. Clients should consult their legal or tax counsel for advice and information concerning their particular circumstances before implementing any investment, tax or estate strategy. Trust Administration Services (TRUST) is a division of First Regional Bank.
James Wagner, President
www.trustlynk.com
TECHNOLOGY UPDATE
VISIT OUR NEW TRUST WEBSITE AT WWW.TRUSTLYNK.COM
Effective January 2007, Trust Administration Services’ newly redesigned website will offer visitors and customers a wealth of information and how-tos for the self-directed IRA investor. The more user-friendly TRUST website offers features that allow you to: • Access your existing account 24/7 • Open a new account • Download documents and forms • Take advantage of customized retirement services • Learn more about real estate and other nontraditional retirement investments • Access pertinent articles and publications • Subscribe to our Perspectives newsletter • And much more In addition, thanks to our new On-line Customer Service Center, customers can now login and access their accounts more easily than ever – from virtually anywhere on the site.
Important Reminders for Real Estate Investors:
• If you hold a promissory note in your self-directed IRA, TRUST requires that you retain a servicing agent for the note. • If you hold a piece of real estate in your IRA, we require you to retain a property manager for the property in question. Normally this information would have been provided in the original investment documentation. We are currently in the process of reviewing investor files to ensure that these requirements have been met.
CUSTOMER SERVICE
NEW! CUSTOMER SERVICE ENHANCEMENTS
s your Self-Directed Retirement Plan Administrator, it’s our job to provide investors like you with the diversified investment choices, service and value you need to make the most of your investments. For that reason, we recently installed a state-ofINVESTOR the-art tracking system designed to:
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• Improve communications between customers and TRUST representatives • Facilitate faster, more efficient resolution of customer issues or requests • Assign tracking numbers so that any of our customer service representatives can easily access the complete details and history of any customer request or transaction – from initiation to final resolution • Minimize unnecessary penalties or fees by tracking critical dates or deadlines
2007 HOLIDAY SCHEDULE
Our corporate offices and Customer Service Center will be closed for the following holidays in 2007. Clients will still be able to access their accounts online @ www.trustlynk.com. Should you need to contact us during this time, please leave a voice message at 800-455-9472 or email your Customer Service Representative. We promise to respond by the next business day.
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We are interested in knowing how we‘re doing and welcome your input. Call us at 800-455-9472 or drop us an e-mail to retire@trustlynk.com to give us your questions or comments. New Year’s Day Monday, January 1 Martin Luther King, Jr. Day Monday, January 15 Presidents’ Day Monday, February 19 Good Friday (after12:00 noon PST) Friday, April 16 Memorial Day Monday, May 28 Independence Day Wednesday, July 4 Labor Day Monday, September 3 Columbus Day Monday, October 8 Thanksgiving Day Thursday, November 22 Christmas Day Tuesday, December 25
70 1/2: A NUMBER TO REMEMBER TO AVOID UNNECESSARY IRS PENALTIES CUSTOMER Important Information About Required Minimum Distributions (RMDs)
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f you’ve reached age 70 1/2 in 2006 without having to touch your hard-earned tax-deferred nest egg, that’s good news. The not-sogood news is, IRS regulations require that you start taking minimum distributions annually, starting now! The fact is, if you reached age 70 1/2 in 2006 and you want to avoid an IRS penalty, you must make your first RMD by April 1, 2007. These RMDs apply to: • Traditional IRAs • Simplified Employee Pension (SEP) IRAs • Employer-sponsored 401(k) and other qualified plans* • SIMPLE IRAs To meet RMD requirements, you can take distribution from a single account or any combination of accounts held at TRUST or elsewhere.
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INVESTOR
IMPORTANT In order to meet RMD requirements – and avoid possiALERT ble IRS penalties – it‘s important that you contact your tax advisor before the end of the tax year in which you reach age 70 1/2.
What if I don’t need the money? If you don’t need the money, or would simply rather not pay taxes on any withdrawals right now, it’s still not a good idea to ignore the RMD requirements. Here’s why: • Failure to make the required minimum distribution triggers an excess accumulation tax equal to 50% of that required minimum. So if you’re a taxpayer in the 25% income tax bracket, that’s twice as much as you would have paid by simply meeting the RMD requirements. How do I figure my RMD? The IRS determines required minimum distributions (RMDs), using a number of factors: Marital status, age and life expectancy (yours, as well as that of your spouse). The following chart shows how to figure RMDs for singles or for married account holders with spouses less than ten years younger.
*Note: If you are working and do not own more than 5% of the company, you can delay taking your first RMD until April 1 following the year you retire. If you own more than 5% of the company, you must take an RMD for the year in which you turn 70 1/2 and each year thereafter. Unlike IRAs, you must take your calculated RMD amount from each qualified plan separately, you cannot combine them.
“In the past two years, about 100 banks – eager to raise start-up capital quickly and open their doors sooner – have urged consumers to invest in their stocks through IRAs, says Jim Wagner, President of Trust Administration Services.” USA Today
Trust Administration Services contact information: MAILING ADDRESS P.O. Box 85410 San Diego, CA 92186-5410 STREET ADDRESS 5950 La Place Court, Suite 160 Carlsbad, CA 92008 TOLL-FREE: 800-455-9472 760-602-3180 Fax: 760-603-0887 Email: retire@trustlynk.com www.trustlynk.com
REQUIRED MINIMUM IRA DISTRIBUTIONS
To calculate the year’s minimum distribution amount, take the age of the retiree and find the corresponding distribution period. Then divide the value of the IRA by the distribution period to find the required minimum distribution.
This table also can be used to determine the minimum distributions required from qualified company retirement plans, such as 401(k)s and profit-sharing plans. Roth IRAs are not affected by the new rules, because these accounts do not have required minimum distribution amounts.
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SERVICE
CONTRIBUTION LIMITS AND DEADLINES FOR TAX YEAR 2006
INVESTOR
s a self-directed IRA investor, it’s your responsibility to make certain that your annual contributions are made on time ALERT and without exceeding the maximum allowable limit. So it’s important that you pay special attention to these critical contribution limits and deadline dates in order to avoid possible IRS penalties. For complete information on IRA contribution limits for 2006, consult your tax advisor. Or visit the IRS website at http://www.irs.gov.
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2006
Type of Plan Traditional or Roth IRA
2006 IRA CONTRIBUTION LIMITS
Maximum Contribution Contribution Deadline April 15 of the following year (for 2006 contributions must be postmarked by April 16, 2007). Remarks If you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA may be reduced. Consult your tax advisor. Age 49 and below: $4,000 OR total annual taxable compensation (whichever is less)
Age 50 and above: $5,000 OR total annual taxable compensation (whichever is less) Simplified Employee Pensions (SEPs) 25% of compensation OR $44,000 (whichever is less) Tax filing deadline plus extensions Maximum compensation on which contributions can be based is $220,00 for the 2006 plan year. Maximum compensation on which contributions can be based is $220,00 for the 2006 plan year. Maximum compensation on which contributions can be based is $2200,00 for the 2006 plan year.
Qualified Defined Benefit Plan
100% of participant’s average compensation for 3 highest consecutive calendar years OR $175,000 (whichever is less) 100% of compensation OR $44,000 (whichever is less)
Tax filing deadline plus extensions
Qualified Defined Contribution Plan
Tax filing deadline plus extensions
How to Make Your 2006 Self-Directed IRA Contribution
”Self-directed IRAs aren‘t new,“ points out Paul Maxwell, Chief Operating Officer of Trust Administrative Services. ”Alternative investments have always been permitted [in IRAs] under the IRS code,“ he says. CFO Magazine • Log on to our website at www.trustlynk.com • Click on Documents and Forms to download a copy of Deposit Coupon Instructions • Complete the coupon and mail it with your contribution check to: Trust Administration Services P.O. Box 85410 San Diego, CA 92186-5410 Be sure to indicate on the check itself the tax year for which you are making a contribution.
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