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The stock market is crashing. Government bailouts are rampant. The political climate is uncertain. Credit has all but disappeared for ready buyers if you can even find one. Yet, your dreams of retirement remain. What can you do? There is an answer that you may have overlooked. By understanding the power of an ESOP you could be well on your way to your retirement in the next 90 days.

An ESOP (Employee Stock Ownership Plan) is a tax-advantaged vehicle that enables you to sell your business to your employees. This program was established by Congress in 1974 and today there are about 12,000 ESOP owned companies. Many business owners have either never heard of an ESOP or have a misunderstanding of how it works. Here are some common misconceptions along with solutions to your dilemma.

My employees can’t afford to buy my company and they are not “ownership material.” In reality, an ESOP doesn’t cost your employees anything. The ESOP is created which buys your stock. Your employees are beneficiaries of the ESOP. The ESOP distributes stock to your employees’ ESOP accounts each year based on their percentage of the overall payroll. The employees continue to perform their regular duties and answer to management as they currently do. They do not have general voting power or control of how the company is managed. An employee’s ESOP account is like a free retirement account that they earn by loyal service to the company. When they retire or leave after becoming vested they take the value of their account with them. Many companies with “blue-collar” employees are ESOP-owned.

I want to retire in the next few years. Who is going to run the company? The beauty of an ESOP is that you can “have your cake and eat it too”. An ESOP allows you to create a definite exit strategy while letting you remain in the control of the company for as long as you like. As Trustee of the ESOT you continue to run the company as you do right now and you continue to draw a salary. You are still the boss even though you don’t own the company. Your goal will be to work yourself out of a job so you can begin your retirement. That is accomplished by either grooming one of your senior employees to take your place or by hiring a qualified replacement as a manager. That can happen within months if you’re anxious to leave or you can stage the transition over several years. The bottom line is that it is always your choice.

Who is the buyer? That’s the great thing about selling to an ESOP. You don’t need a buyer. The ESOP is the entity that is created to buy your stock. You can create your exit strategy today by enlisting the help of Dynasty Capital Advisors. They specialize in setting up an ESOP and they take care of all the details.

Where does the money come from? Now we’re getting down to the real purpose of this article. Typically, specialized ESOP lenders would fund the entire transaction and you would get a big check at closing. One downside was that a portion of that check was pledged back to the lender to help secure the loan. One of the main benefits of an ESOP is that you can take that cash and reinvest it in stocks and bonds and defer the capital gains tax on your sale indefinitely. But, who wants to put their money in the stock market these days? And, since credit has tightened so much in the last year, it’s very difficult to find lenders who will fund 100% of the transaction. Financing is still available for a portion of the transaction depending on the collateral position of the company, but in most cases it’s more attractive for you to be the banker yourself and avoid all the red tape that goes along with dealing with banks these days. This structure allows you to collect the interest income rather than paying it to the banks.

Why should I finance the sale of my own company? Typically, if you were dealing with a third party buyer, it would not make much sense at all. It would be like loaning several million dollars to someone you don’t know and also giving up control of your company. But, with an ESOP, you still control the company, and by remaining in control you can assure that you get paid in a timely manner. You can structure the loan terms however you want, and if the company should have a bad month you have the ability as the lender to delay or defer a payment rather than risk a default on a bank loan. The biggest question to ask yourself is “What would I be doing with the money if I got cash?” If you are truly selling to retire you are likely going to put it somewhere safe to generate retirement income. You could put it in the bank and maybe get 5% interest, but banks aren’t doing so well these days as we have seen in the news, and the FDIC only insures accounts up to $100,000. By leaving your money invested in the company that you have spent a lifetime building, you know that as long as you are in control it is secured by something of value. And, by properly structuring your finance package to include trustee compensation, stock options, and other perks, your rate of return can exceed 30% rather than 5% at the bank.

How long does it take to set all this up? As the banker, you would avoid a great deal of time and expense by not dealing with an outside bank. Dynasty Capital Advisors will analyze your company, prepare a Feasibility Study for the ESOP, prepare all plan documents, coordinate outside professionals such as an independent valuation expert and the Trust attorney, and close the sale to the ESOP in less than 90 days.

Will I get my price? A sale to an ESOP is always at fair market value as established by an independent valuation. This means that you will receive the highest price possible that can be supported by factual data. You don’t have to deal with buyers who will try to beat you down on your price. Dynasty Capital will provide you with a valuation that will come within 5% of the final price for your review at no cost.

How can I find out if this is right for me? Dynasty Capital Advisors will prepare a Pre-Feasibility Study at no cost for you to determine whether an ESOP is right for your company. You will receive a free stock valuation to help you decide if the money is right. You will also receive an Investment Analysis that will show the benefits of financing the transaction. There is no obligation for you to explore the benefits of an ESOP transaction.

Selling your business doesn’t have to be an uncertainty that is dictated by a weak economy or the woes of Wall Street. By using an ESOP as your exit strategy, you can control everything from the buyer to the banker by eliminating both of them. And, you protect your employees at the same time while leaving your company in the hands of the people that have helped build it. This is a process that leaves you in complete control of every decision. Now you can design your retirement on your own terms without having to haggle over the price or play the games so typical in a business sale. Call Dynasty Capital Advisors today and find out how quickly you could be experiencing retirement freedom. For more information about how an ESOP could be the solution to your exit strategy, call Myron Goodrum, Vice President of Dynasty Capital Advisors at 603-785-4331 or email at mgoodrum@dynastycapital.com.

IRA investing in real estate is becoming increasingly popular. There is no way to cover all of tax ins and outs of IRA real estate investing in a single article of this length, but I can tax least give you some of the highlights.

If you’ve heard or read the success stories, you may be “chomping at the bit”, but IRA investing in real estate is not without risks. So, you need to get some education first. Experienced investors have programs that can help. Of course, advice like that is not free, but if it helps you find good deals and avoid the common mistakes, then it is well worth the cost.

In order to begin IRA real estate investing, you need a self directed account and an account custodian. You should choose someone reliable, with years of experience. They can’t suggest specific deals or anything like that, but they can provide you with some of the education that you need. For example, the better custodians provide education about prohibited transactions, prohibited investment types and the rules about self-dealing. If you make a mistake, your account could lose its tax free status. Once you have selected an account custodian, you need to decide how to fund the account. If you currently have a traditional account, you should be able to “roll it over”, without penalty, although the bank or brokerage that you are currently using may charge a fee.

This is the best time to consider IRA investing in real estate, because you may have a large amount of un-invested cash. If you can find a few good deals, you can make big profits quickly. Or, if you want a consistent flow of income into the account, you may want to consider a rental property. There are many options to choose from when it comes to IRA real estate investing. You can buy houses, apartment buildings, raw land, mobile homes, and office buildings or simply finance other people’s homes. But, there are some things that you must avoid.

You cannot sell your own home to your account. You cannot use the account to buy property that you plan to live in at some point in the future. Your sons and daughters cannot rent apartments in buildings that owned by the account. Your parents could not have an office in a building held within the account.

The list of prohibited transactions is relative long, but not complicated, once you think about it. IRA investing in real estate or any other vehicle is designed to benefit your future, not your present day wealth. So, if you benefit from an investment, either directly or indirectly, your account could lose its tax free status.

One of the primary taxes that experienced investors suggest IRA real estate investing is because of the tax advantages. If you sell a property for a profit, there are no capital gains taxes. If the account makes rental income from a property that was purchased with cash from the account, there is no income tax.

So, experienced investors sometimes save as much as 25% by using their retirement accounts. That’s only a few of the advantages of IRA investing in real estate. It’s probably just enough to make you curious.

W. Conley is an advocate of IRA investing in Real Estate as a means of diversifying your portfolio, while maximizing returns. He has successfully invested in Real Estate and has seen fantastic returns on his investments, all of which was done using a proven system. You can read more about the benefits of IRA investing by going to http://smart-ira-investing.com

Okay…so you might be wondering…can you rollover 401K into self directed IRA? Yes, you can!

Many people are considering this option, because there is so much more you can do with a self-directed account. You can invest tax all of the traditional vehicles, but more importantly you can also tap a largely untouched market…real estate!

Real estate, in particular the housing market, is really the way to go right now. Sure, prices are down taxes but all of us know that very soon, they’ll start to rise again. If you don’t act quickly, you could…no…you WILL miss out on the opportunity of a lifetime!

The best time to invest in houses is right after you rollover 401k into self directed IRA, because that’s when you have the most “cash” on hand. If you don’t have enough cash, you can consider forming a group with other investors and basically create your own bank.

You can buy a house, fix it up and flip it quickly for a short-term gain. Or, you can hold on to it for a while. Maybe, lease it out on a 2 year lease-purchase agreement. Even if you make no improvements on the property, the value will almost surely go up in a couple of years.

If you find the right deals, you may even have instant equity. Many houses are being sold at below market value, because sellers are motivated. People who want to avoid foreclosure and protect their credit are really motivated sellers.

If you rollover 401k into self directed IRA holdings, you may be able to grow that fund faster than you ever dreamed possible. I’ve seen it happen before. One of my good friends began with $20,000.00. He now has over a million saved for his future and it was all because of the “down” real estate market.

Of course, you always want to diversify. Never invest too heavily in one market or the other, but many financial advisors suggest that you make the least profitable investments, with your personal funds. Put the most profitable ones in your retirement account, because of the tax savings.

As you may know, real estate investors that use their own funds pay capital gains taxes, as high as 35% of their profits. Within an approved retirement account, there are no capital gains taxes.

Depending on the type of account you have, your distributions may be taxed as regular income. But, distributions from a Roth account are never taxed. Currently, you can rollover 401k into self directed IRA of the Roth type, as long as you make less than $100,000.00 per year.

You would pay income taxes on the converted amount this year, but once you retire and begin to take distributions, there are no taxes. As long as the account has been open for at least five years and you are at least 59 ½, withdrawals are free from taxes.

Wouldn’t that be nice? If you make the right investments now, you could be a millionaire by the time you retire and you could live like one without ever paying any more income taxes. Get as much tax mistakes as you can before you rollover 401k into self directed IRA and start securing your future.

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Joe Fazchas is a Real Estate investor as well as owner and founder of http://www.iLOCAdvantage.com – a company that partners with private individuals and lending corporations nationwide for the sole purpose of financing and/or rehabbing investment properties. All of which is done using a proven “turn-key” Real Estate system…The ILOC IRA.

The ILOC IRA was created in 2004 by national Real Estate speaker, author, and investor, Adam King. To learn more on how you can obtain among the highest rates of return on your IRA, 401(K), CD, or other source of private money, simply click and visit: http://www.iLOCAdvantage.com

The IRA rollover rules are relatively simple, but people have gotten into trouble and paid stiff penalties when they were unaware of the laws. Courts will always rule in favor of the IRS, since individuals can easily learn about allowable IRA rollovers. 

In one case, an account holder was required to pay $26,000 in taxes, interest and penalties, all because he was unaware of one simple rule. Here’s what you need to know in order to avoid a similar mistake.
 
IRA Rollover Rules for Depositing Funds
 
IRA rollovers must be re-deposited with a new custodian in 60 days or less. Technically, a roll-over is a transaction in which you are directly involved as a sort of “middle man”. You contact your current custodian and ask them to issue a check made payable to you.
 
This transaction will be reported to the IRS. If you receive the check and deposit the funds with a new custodian in 60 days or less, you will pay no taxes or penalties. The new custodian will provide you with a form to be included with your yearly tax documents.
 
IRA rollovers of this type are only allowed once per year. That’s what the individual above failed to realize. He tried to make two IRA rollovers in the same year and paid heavily for his mistake. Had he known about the law, he could have “transferred” the funds and avoided the penalty.
 
IRA Rollover Rules for Transferring Funds
 
You can transfer funds from one custodian to another without penalty. The transactions are not reported to the IRS, so no additional paperwork is necessary at tax time. 
 
Typically, the new custodian sends a request that you have signed to your previous custodian. You are not the middle man in this transaction, since the check is written to the new custodian for your retirement account. 
 
You can make as many transfers as you want in a year’s time and while the brokerage or bank may charge a fee for the transaction, you won’t pay taxes.
 
IRA Rollover Rules for Traditional to Roth Transfers
 
The law is a little different when it comes to IRA rollovers that involve a transfer from a traditional to a Roth account. Currently, only taxpayers with a modified adjusted gross income of $100,000 or less that are not married and filing separately can convert traditional accounts to a Roth type.
 
In 2010, the restriction will be lifted and anyone may convert from traditional to a Roth, at least temporarily. If the contributions that you made to the traditional account were pre-tax or tax deductible, the transfer will be taxed as regular income for that year. 
 
But, when you begin taking withdrawals, you pay no taxes. That’s why some people are looking forward to making the conversion.
 
If you are considering changing custodians, consider a self-directed account. They are more flexible, allowing you to invest in things like real estate, as well as the more conventional stocks and bonds.
 
IRS Publication 590 covers the complete IRA rollover rules, but what you have learned here covers the basics. 

W. Conley is an advocate of IRA investing in Real Estate as a means of diversifying your portfolio, while maximizing returns. He has successfully invested in Real Estate and has seen fantastic returns on his investments, all of which was done using a proven system. You can read more about the benefits of IRA investing by going to http://smart-ira-investing.com

To answer this question, let’s look at where people typically have money when they retire.

Briefly : Where Shouldn’t I Put My Money

There are lots of bad ways to invest your money. We won’t go into that in detail here, but I will provide you with a short list that has hurt a lot of people. The worst culprits are companies that sale life insurance and annuities; don’t buy these. Life insurance is not medical insurance. The next worst investments are savings accounts with banks, bank brokerages, middle class brokerages (like Primerica), and small cap stocks.

Rule #1

Most people, when they retire, have most of their net worth tied up in their own home. So, the first, and most important way to invest your money is to buy your own home. If you already have a home, buy a rental property. It is realistic that most people can own several houses free and clear through a lifetime of disciplined effort.

Rule #2

When people retire, their next most important source of money is either a 401k, 403b, IRAs, and even annuities (which aren’t that great). The bottom line is to put at least 10% of your gross salary into a 401k, 403b, or IRA. Look at the taxes because it is not always in your best interest to max out the 401k. Sometimes it is better to have a combination of IRA and 401k.

Rule #3

Get some good health insurance. Better yet, stay healthy. Health care costs are ridiculously high. Most people spend an enormous chunk of their savings, in retirement, on health care. An operation can set you back a hundred thousand dollars, or more. Many people who are pretty well off become destitute from medical problems. In some cases, Medicare will force you to sell your home and give them the money or you can’t receive treatment.

My grandma was a first grade teacher her entire life. In retirement, she broke her hip. The medical costs were around 100k. The insurance didn’t cover many of the costs. She was denied treatment because the insurance (Medicaid) said her recovery time was taking too long. The moral of the story is to have some supplementary insurance.

Rule #4

Open an account with a discount brokerage firm (like www.vanguard.com). They have brokers that will help you with financial products. Some of these discount brokerages are available 24 hours a day. They do not give recommendations, but can explain the products quite well. The fees there will be much less than full service brokers. It is here you will get access to retirement calculators, investment research, IRAs, mutual funds, and lot of other things. If you are new to investing, you can learn a lot just by reading the articles on one of these sites.

Rule #5 : 90% Rule

If you own your own home and put 10% of your gross income into your retirement account we have found that 90% of people will have enough money to make ends meet. The biggest unknown factor, in this case, are medical bills. Medical problems leave more people destitute than any other.

For further information, on money strategies please visit Money Strategies

Well, actually, while we might believe it is at times, most likely it is not. But with all the rash of problems that Wall Street has realized in the last 12 months, one does definitely wonder. And, since there are plenty of articles devoted to the woes of Wall Street, this one will not do that but, rather, take a higher road of education on what options are available to individuals who wish to protect, nurture and grow their retirement accounts.

It is literally amazing and not so amazing that most individuals (estimated at 98% percent of individuals) do not realize that they are empowered to self-direct their own retirement accounts. Surprising in the sense that this option has been available to them since 1975 and very few know about it. Not surprising in that certain professionals in the financial world feel that it is not in THEIR financial interests to inform people that this option exists.

Now, yes, there are exceptions to individuals not being allowed to do self-direct — chiefly, that individuals cannot, as a general rule, self-direct retirement accounts from employer plans where they are currently employed.

What is a self-directed IRA or 401K? Well, let’s use simple terms. It is merely the opportunity to invest your retirement account assets into practically anything you feel is a good investment. Now, as with all taxes in life, there are certain investments (i.e., life insurance contracts, collectibles defined under IRS Code) that are not tax There are additional restrictions placed so that people do not enter into self-dealing, prohibited transactions and investing with disqualified individuals.

BUT, here is the simple truth: If you could direct your own retirement assets into a plethora of investment opportunities, wouldn’t you at least want to consider this? Also, if your retirement account was established in such a way where you could have the best of both worlds in one account — the ability to invest in both “traditional” (e.g., stocks, bonds, mutuals funds) and “non-traditional” (e.g., real estate, hard money loans) assets — wouldn’t this be the cat’s meow (technical term there folks!). Not only is this possible, but it is totally legal; provided, of course, that all IRS and Department of Labor regulations are met and adhered to.

A great quote from Tama McAleese, CFP in Get Rich Slow, notes The Million(s) Dollar Mistake that most individuals can make. McAleese states, “As a result (of others controlling your money), you’ve been lulled into a sense of security, believing someone else is standing guard over your hard-earned money and, thus, guaranteeing your financial future.”

As a simple real-life example of this, an individual that I am quite familiar with had an IRA that held a value of approximately $150,000 12 months ago. Currently, his account value is a little over $53,000! Now, to be sure, self-directing your retirement account assets does not in any way ensure that you will make money or experience greater results, but it puts the power back with the individual who actually CARES about how their retirement account is performing — the power to research their own investment opportunities and invest in what they believe to be in their short and long-term financial interests.

An amazing statistic from the Investment Company Institute and Internal Revenue Service Statistics of Income Division found that at the end of the 2004 year, there was in excess of $3.475 trillion of retirement plan assets. Of this money, 83%…..that’s right, 83% of those funds were invested in stocks and mutual funds. Less than 1% was invested in real estate….even though much of the self-made wealth in this country was as a result of investing in and owning real estate. Think about it. Also, of that “paltry” $3.475 trillion dollars in retirement plan assets invested into stocks and mutual funds, do you think that commissions were paid to brokers….whether an individual achieved gains or lost money? You know the answer to that.

Oh, you might be thinking that the aforementioned statistic goes back to the end of the 2004 year and things have drastically changed as of September 2008?! Well consider this statistic as noted by a July 1, 2008 article in the USA Today which stated that in 2008, the market has lost 2.1 trillion dollars in value, $1.4 trillion in the month of June, alone.

Finally, if anyone believes that the “average” retiree is retiring with financial dignity, consider an important statistic as first published in the November 27, 2005 edition of the Christian Science Monitor. This article identified that the median income of individuals 65 and over was just $15,199. And, unfortunately, a large portion of this income came from social security.

Let’s face it…..Hope is not a Strategy! If you are an individual who has done well with the traditional offerings of stocks and mutual funds, congratulations! But, for those of you who haven’t and are looking for options and further diversification strategies to the “traditional” world of investing outside of these asset classes, consider self-direction. It may be more lucrative and you won’t be relying on someone else to control YOUR MONEY.

John R. Park is President of PGI SelfDirected (http://www.pgiselfdirected.com) and co-founding Partner of Fulcrum Investment Network (http://www.fulcruminvestmentnetwork.com)