Replies

THEY ARE COMING AT US FROM EVERY ANGLE.
``````````````````
Act Now to Save Your Self-Directed IRA
Congress Is Taking Aim At Self-Directed IRA Plans

Proposed language in the Fiscal Year 2022 Budget Resolution will have a severe negative impact on self-directed IRA investors and the main street opportunities they invest in.

In the aim of curbing abuses that utilize IRA plans as a tax avoidance strategy, harm will be done to many average Americans. Where a paring knife would do the job, a chainsaw is being used instead.

This legislative process is moving quickly. Your prompt action is needed to speak out against these changes and educate members of congress about the harm these proposals will do.
Call, write, email, or fax your
Senators and House Representative today.
Please read on for information on these proposals and
what you can do to help stop them.
What is in the Bill

Two sections of the bill are problematic and should be removed.

Section 138312 will prohibit IRA investments in assets that require an investor be accredited, have a minimum amount of income or assets, have completed a specific level of education, or hold a specific license or credential.

This will apply to most real estate syndications, private placements, crowdfunds, and non-public real estate or debt funds.

Section 138314 will prohibit IRA investments in corporations, partnerships, unincorporated entities like LLCs, or trusts if the IRA account holder personally holds 10% or greater equity interest, or holds the role of officer, director of equivalent.

This will impact some private equity investments and will also apply to the “checkbook IRA” strategy of an IRA owned LLC or trust where the IRA account holder is the manager/trustee.

There are other changes that will limit the ability of high-income individuals to make Roth IRA contributions or perform conversions. There is also a proposal to cap the size of IRA plans at $10M. Those provisions may not make a few people happy but are actually in line with the stated goal of an IRA being a tax-advantaged savings vehicle for the middle class, not a tax avoidance mechanism for the wealthy.
Want to Read the Proposal?

Here is the Ways and Means Committee Summaryhttps://ira123.us8.list-manage.com/track/click?u=37459b8f270e21147b809eec3&id=49a99fccda&e=3c40ad4b49

Here is the full text of the bill https://ira123.us8.list-manage.com/track/click?u=37459b8f270e21147b809eec3&id=b5c97821d7&e=3c40ad4b49

What Happens if this Becomes Law?

Going forward, this will limit investor choice. These new rules run contrary to actions such as the 2012 JOBS act and recent changes made by the SEC to expand the definition of accredited investor – both of which were intended to level the playing field by giving more investors access to high performing and stable assets previously limited only to the well off.

More importantly, there is the potential for a significant impact on existing IRA holders who have made investments that will no longer be allowed. The rules allow a two-year grace period until December 31st, 2023 to exit such investments.

There will be two possible exit strategies:

Distribute the asset from the IRA and potentially pay taxes and/or early distribution penalties if under the age of 59 ½.

Sell investments before that deadline. Most non-traded investments have longer terms than two years and may be illiquid and difficult to sell. Expect that significant discounts may be necessary. Guess who will be ready to scoop up those discounted assets? The very same wealthy people these rules are designed to limit.

Holders of a checkbook IRA program will need to restructure their plan but will not be forced to liquidate assets other than those that require accredited investor status.
What Should I Do?

Firstly, do not panic. This language is not yet law. While the process is moving quickly, there is a long and uncertain path ahead of this legislative package.

Do not sell investments or close your plan.

You may choose to hold off on making new investments into assets that require accredited investor status until there is more certainty.
The most important thing to do – IMMEDIATLEY - is to contact your representatives in congress and educate them on the harm this misguided set of rules will create.
This is true whether you are an investor who will be impacted, an investment provider who accepts IRA money into your deals, or just an investor who believes in the concepts of diversification, choice, and control.
How Do I Contact My Legislators?

Following are links to identify your House Representative and Senators.

Find your Representative

Contacting your Senators

Guidance for communicating with your elected officials is included on the linked pages.

We strongly recommend that you take the time to send a physical letter or call. While email is not as effective, yes, send emails too.
What Should I Say?
Your communications should be clear, respectful, constructive, and short. If you are writing, keep it to 500 words or less.

Here are some great tips from the American Psychological Association on how to craft an effective letter.

Be sure to reference the specific sections of the bill: “Sections 138312 / 138314 of the FY2022 Budget Resolution”. Include this language in your title or subject line. Staffers use the volume of letters on a specific topic to gauge voter concern.

Speak about your own situation and chosen investments, how they are designed to help you secure and grow your retirement savings, and how this set of rules will cause you harm.

Make it personal and real. Show the value your investments create in the community by providing safe housing, supporting innovative new ventures, or whatever the case may be.

We need to show our legislators that normal people benefit from these strategies, not just the ultra-wealthy.

Following are two sample letters you can use to convey your own story.
Sample Letter - Accredited Investment Assethttps://ira123.us8.list-manage.com/track/click?u=37459b8f270e21147b809eec3&id=595880d38d&e=3c40ad4b49

Sample Letter - Checkbook IRA Rental Property https://ira123.us8.list-manage.com/track/click?u=37459b8f270e21147b809eec3&id=3027d8c069&e=3c40ad4b49