Jaime Raskulinecz, CEO of Next Generation Trust Company is Named to Investment News Hot List of 2023 of Wealth Professional All-Stars

Next Generation was also a finalist for the prestigious NJBiz 2023 Best Business of the Year, and Raskulinecz was recently quoted in an article about self-made women millionaires for Nasdaq’s GOBankingRates

ROSELAND, NJ, December 20, 2023 /24-7PressRelease/ — Jaime Raskulinecz, founder and CEO of Next Generation Trust Company and Next Generation Services has been named to the Hot List of 2023 by Investment News. The December issue of the publication lists its top 100 wealth professionals, citing them as individuals who are redefining the financial services industry and their community. These are changemakers who, according to the Investment News, have helped shape the wealth industry over the past 12 months. The Hot List Special Report begins on page 16.

“I am honored to be recognized as someone working to innovate the financial services field in the area of wealth building and retirement,” said Raskulinecz. “I am proud of the work we’ve done for nearly 20 years on behalf of investors who prefer to self-direct their retirement investments and build more diversified portfolios through alternative assets.”

This recognition is on the heels of Next Generation being named a finalist for the prestigious NJBiz 2023 Best Business of the Year by New Jersey’s leading statewide business journal. Additionally, Raskulinecz, who founded Next Generation after many years in the property management business, is quoted in an article in Nasdaq’s GOBankingRates titled, “I’m a Female Self-Made Millionaire: 3 Best Investments For Women To Build Wealth Fast.” In it, she shares how she built her wealth through real estate investments and as a business owner, which ultimately led to her starting her firm that specializes in administration and asset custody for self-directed retirement plans. Real estate is the most popular asset class in these plans.

Her full bio and information about self-directed IRAs and the alternative assets allowed in self-directed retirement plans are at www.NextGenerationTrust.com.

About Next Generation Trust Company

Founded on the philosophy that every person should have control over their retirement plans, Next Generation educates consumers and professionals about self-directed retirement plans and nontraditional investments, a strategy at one time reserved only for the very wealthy. Next Generation Services provides comprehensive account administration and transaction support, and its sister company, Next Generation Trust Company, acts as custodian for all accounts. The neutral third-party professionals at Next Generation expertly guide clients and their trusted advisors as part of their white glove, personalized service for a seamless transaction experience from start to finish. For more information, visit www.NextGenerationTrust.com, or contact Next Generation at 888.857.8058 or NewAccounts@NextGenerationTrust.com.

About self-directed IRAs

Self-directed IRAs allow investors to include investments in many alternative assets—such as real estate, precious metals, private equity funding, and royalties—within their tax-advantaged plans. Account owners may self-direct Traditional and Roth IRAs, SEP and SIMPLE IRAS, education savings accounts, and health savings accounts. Self-directed solo(k) plans are another option for business owners. Self-directed retirement plans are offered by specialty custodians, as most traditional broker-dealers and financial institutions don’t allow non-publicly traded investments.

# # #

Jaime Raskulinecz, CEO of Next Generation Trust Company, Explains Why Participants Should Roll Over a 401(k) into a New IRA After Leaving an Employer

In a Recently Published Article, Raskulinecz Shares Statistics on Inactive 401(k)s Due to Job Attrition, Details Differences Between Direct and Indirect Rollovers and Provides Information about Self-Directed IRAs for Asset Rollovers

ROSELAND, NJ, December 12, 2023 /24-7PressRelease/ — According to the Investment Company Institute’s 401(k) Center, 401(k) plans held $6.3 trillion in assets as of September 30, 2022. The assets were in more than 625,000 plans on behalf of approximately 60 million active participants and millions of former employees and retirees. However, Jaime Raskulinecz, CEO of Next Generation Trust Company, noted that there are also many inactive 401(k) plans employees have left behind after leaving their jobs. And that means leaving a lot of retirement money with a former employer.

In a recent article, she shared some compelling statistics, including those from a 2023 analysis by Capitalize. That analysis estimates there are 29.2 million left-behind or forgotten 401(k) accounts holding approximately $1.65 trillion in assets. This figure is up from 24.3 million accounts and $1.35 trillion in assets in May 2021 and represents 25% of all 401(k) plan assets.

“Many people don’t realize they can take their funds with them, as it were, by rolling over the assets from their old 401(k) into a new IRA,” said Raskulinecz. “And for individuals who wish to invest in alternative assets, they can roll the funds over into a self-directed IRA.”

Leave the job, take the 401(k) assets

Raskulinecz, whose firm is an administrator and asset custodian for self-directed retirement plans, reminded account holders that when they go to another employer or decide to retire, there is no reason to leave their old plan behind and let it go inactive. Rather, they can:
• merge the funds with the 401(k) at the new job if one is offered.
• cash out the old 401(k) if the money is needed immediately.
• roll over the funds into a new IRA—including a self-directed IRA which allows account owners to include a broad array of alternative assets in the plan.

The rollover may be direct or indirect.

“It is always best to talk to your tax advisor or wealth manager before deciding which option is best for you,” she recommended.

Rollovers into new IRAs

In a direct rollover, the funds are moved directly from the existing retirement account into a new IRA. The account owner initiates the transaction by notifying the previous financial institution and completing the required paperwork to roll over the funds to the new custodian.

In an indirect rollover, the funds are distributed first to the participant, who then has 60 days from the date of that 401(k) distribution to deposit the money into the new IRA. An indirect rollover may trigger required tax withholding by the plan administrator at the former workplace.

If the person wants to roll the funds into a self-directed IRA, this must be done with a firm that specializes in these accounts. The account can be a self-directed Traditional IRA, Roth IRA, or SEP IRA for the self-employed. Self-directed investors are those who are comfortable making their own investment decisions and conducting due diligence on the alternative assets they wish to include in their portfolio.

“People may not realize they’ll end up paying administrative fees and penalties for an inactive account. They also risk losing their retirement savings as a ‘missing participant’ if the former employer is unable to find them due to outdated contact information,” said Raskulinecz.

In her article, she also provides information on what to do before initiating a rollover and how to find a lost plan. More statistics and information about abandoned 401(k)s and why rollovers are important to maintaining and building one’s retirement savings are at https://bit.ly/41a6IHO.

For more information about self-directed IRAs and the alternative assets allowed in those plans, visit www.NextGenerationTrust.com.

About Next Generation Trust Company

Founded on the philosophy that every person should have control over their retirement plans, Next Generation educates consumers and professionals about self-directed retirement plans and nontraditional investments, a strategy at one time reserved only for the very wealthy. Next Generation Services provides comprehensive account administration and transaction support, and its sister company, Next Generation Trust Company, acts as custodian for all accounts. The neutral third-party professionals at Next Generation expertly guide clients and their trusted advisors as part of their white glove, personalized service for a seamless transaction experience from start to finish. For more information, visit www.NextGenerationTrust.com, or contact Next Generation at 888.857.8058 or NewAccounts@NextGenerationTrust.com.

About self-directed IRAs

Self-directed IRAs allow investors to include investments in many alternative assets—such as real estate, precious metals, private equity funding, and royalties—within their tax-advantaged plans. Account owners may self-direct Traditional and Roth IRAs, SEP and SIMPLE IRAS, education savings accounts, and health savings accounts. Self-directed solo(k) plans are another option for business owners. Self-directed retirement plans are offered by specialty custodians, as most traditional broker-dealers and financial institutions don’t allow non-publicly traded investments.

# # #

Self-directed Retirement Plans For Business Owners and the Self-Employed

Business owners and self-employed taxpayers have several options in terms of retirement plans. And best of all, they can self-direct these plans if they wish to include alternative assets to build retirement wealth. Here’s a look at what’s available outside of qualified defined contribution or defined benefit plans for small-business owners and the self-employed.

Retirement plans for small-business owners

• SIMPLE IRA – the “SIMPLE” stands for savings incentive match plan for employees. This plan is for small businesses with under 100 employees as well as the self-employed (with certain restrictions). It is a good option for employers who don’t yet offer a qualified retirement plan at work but want to help employees save for retirement. Only businesses that do not have any other retirement plan may establish a SIMPLE IRA.

A SIMPLE IRA is a Traditional IRA in that the money grows tax deferred. The business owner sets up an IRA account for each eligible employee. In addition to each participant making contributions (which is discretionary), the employer is required to contribute to each account, either as a match to participants’ contributions (up to 3% of employee compensation) or as a fixed 2% of each eligible employee’s pay. Employees can roll over funds from an existing Traditional IRA to their SIMPLE IRA account.

For those who are self-employed or for any participant in a small-business plan, it offers higher savings potential in a tax-advantaged account than a regular IRA. The contribution limits for SIMPLE IRAs in 2024 will be $16,000 for participants under age 50 and $19,500 for those 50 and older.

• Employee contributions made through payroll deductions must be done within 30 days of the last day of the month in which the funds would have been paid to the employee.
• Employer contributions must be made by the federal income tax return deadline; this includes extensions.

People who participate in a SIMPLE IRA have complete control over their accounts. By self-directing the investments within one’s account, employees can diversify and build up the value of their portfolios.

Participating in a SIMPLE IRA does not exclude people from being part of another employer-sponsored plan, so employees with more than one job can be in your SIMPLE IRA and contribute additional funds to another plan (up to a total of $23,000 next year).

Setting up a SIMPLE IRA is relatively easy. Next Generation’s SIMPLE IRA starter kit has step-by-step instructions for business owners and participants to follow.

• SEP IRA – this is a simplified employee pension (SEP) plan. It offers more flexibility than a SIMPLE IRA in that businesses of any size, including the self-employed, can establish a SEP.

A SEP IRA is also a Traditional IRA set up for each eligible employee. But unlike the SIMPLE IRA, only the employer contributes to the plan.

• Employers can contribute up to 25% of each participating employee’s pay with a ceiling of $69,000. For the self-employed, this figure is a 25% deduction from net self-employed income.
• The contributions are tax-deductible, which makes these plans attractive to small-business owners.
• However, any contributions you make on behalf of eligible employees (as deemed eligible by the IRS) must be an equal percentage of compensation to what you as the business owner contribute to your account.
• Employer contributions must be made by the federal income tax return deadline, including extensions.

Because all contributions fall solely on the business owner, SEP IRAs are generally a good option for business owners with few employees or for self-employed individuals funding only their own retirement account. All participants are always 100% vested in the money in their account.

If you’re considering setting up a SEP IRA for yourself and/or your employees, we recommend you discuss this option with your trusted financial advisor or CPA, and compare the benefits and features to those of a SIMPLE IRA. The IRS offers guidance as well. We also invite you to review our SEP IRA starter kit and contact our team for assistance or answers to your questions.

• Solo(k) – this is a one-participant 401(k) plan for solopreneurs/business owners who do not have any employees but want the benefits of a qualified workplace retirement plan. The solo(k) can cover both the business owner and spouse. To open a solo(k) you must have an employer identification number (EIN).

The contribution limit in 2024 will be $69,000 (like the SEP IRA)—but the owner can also do a catch-up of $7,500 for those 50 or above. However, as the single participant, you are both the business owner/employer and the employee when it comes to contributions.

• As the employee, you may contribute up to $23,000 or 100% of your compensation, whichever is less (in 2024) plus the catch-up amount of $7500 if you are 50 or older.
• As the employer, you are allowed to make an additional profit-sharing contribution of up to 25% of your compensation or net self-employment income. That calculation is your net profit minus half your self-employment tax and the plan contributions you made for yourself.

With the Traditional 401(k), contributions reduce your income in the year they are made, and distributions are taxed as ordinary income. In a Roth solo 401(k), there are no initial tax breaks (money is taxed going in) but distributions are tax-free. As always, we recommend you consult with your financial planner and tax professional to determine which retirement plan is best for your business and financial circumstances.

As with many retirement plans we administer, we offer a solo(k) starter kit with step-by-step instructions to establish and fund your account.

Self-directed SIMPLE IRAs, SEP IRAs, and solo(k)s

As a business owner, you’re already accustomed to being the top decision maker at work. With a self-directed SIMPLE IRA, SEP IRA, or solo(k) plan, you’ll be the one making all your own investment decisions . . . and take advantage of alternative assets you already know and. Doing so enables you to contribute more to your account compared to a regular IRA—and you can create a more diverse retirement portfolio by including a broad array of nontraditional investments.

If you have questions about the types of investments allowed through self-direction, or how Next Generation works as both the full-service administrator and custodian for these plans’ assets, let’s talk! We invite you to schedule a complimentary educational session to find out more, or contact our helpful team at NewAccounts@NextGenerationTrust.com or (888) 857-8058.

Do You Have a 401(k) at a Former Employer? You can roll it over into a self-directed IRA

According to the Investment Company Institute’s 401(k) Center, 401(k) plans held $6.3 trillion in assets as of September 30, 2022. The assets were in more than 625,000 plans on behalf of approximately 60 million active participants and millions of former employees and retirees. 

Further, the savings that were rolled over from 401(k)s and other employer-sponsored retirement plans represented about half of the $11.0 trillion held in individual retirement account (IRA) assets as of September 30, 2022.

However, there are many inactive 401(k) plans that have been left behind when employees left their jobs.

• In an article published by CNBC this past August, about 50.5 million people left their jobs in 2022—a new record high—as part of the continuing Great Resignation.
• Those workers left behind many 401(k) accounts with balances that average $55,400.
• The job-switching across U.S. workplaces drove up the number of forgotten 401(k)s.
• A 2023 analysis by Capitalize estimates there are 29.2 million left-behind or forgotten 401(k) accounts holding approximately $1.65 trillion in assets.
  • This figure is up from 24.3 million and $1.35 trillion in May 2021 and represents 25% of all 401(k) plan assets.

Taxpayers who are leaving their accounts at a former employer are leaving a lot of money on the retirement savings table!

Leave the job, take the 401(k) assets

If you choose to go to another employer or decide to retire, there is no reason to leave your old plan behind and let it go inactive. Think of all the opportunities you’ll miss to rebalance your portfolio or add to your retirement savings. Plus, you’ll pay administrative fees and penalties for an inactive account—and risk losing your retirement savings as a “missing participant” if your former employer is unable to find you due to outdated contact information.

You can merge the funds with the 401(k) at your new job if one is offered; cash out the old 401(k) if you need the money immediately; or roll over the funds into a self-directed IRA and take advantage of the broad array of alternative assets a self-directed retirement plan allows.

What happens with a rollover?

Unlike a transfer (which moves funds between two similar retirement accounts), a rollover moves assets between two different kinds of retirement accounts, such as from a 401(k) or another qualified plan into an IRA.

If you have an old 401(k) and you want to roll over the funds into a new self-directed IRA, you must notify the previous financial institution of your plans and complete the required paperwork to move the funds to the new custodian.

The financial institution that is sending the funds must file IRS Form 1099-R, which tells the IRS money is moving between the two different types of accounts and that there may be a temporary distribution. The institution that is receiving the funds (the IRA custodian) will file Form 5498. You must note the rollover on your tax return.

The same amount of funds must be rolled over from the former to the new account. There are no tax triggers when this is done correctly.

The rollover may be direct or indirect.

• Direct rollover: The funds are moved directly from your existing retirement account (such as the one from your former employer) into a new self-directed IRA. The account owner initiates the transaction by notifying the previous financial institution and completing the required paperwork to roll over the funds to the new custodian of your self-directed IRA.
• Indirect rollover: the funds are distributed to you first and then you have 60 days from the date of that 401(k) distribution to deposit the money into your new self-directed IRA. Doing an indirect rollover could trigger required tax withholding by the plan administrator at your former workplace. You’ll receive a check for the net amount minus the withheld tax.

As always, we recommend you discuss this with a trusted financial advisor to make sure you conduct the rollover in the best way possible for your specific tax scenario.

Lost track of your old plan? Here’s how to find it.

Before you initiate a 401(k) rollover, contact the human resources department of your previous employer or check old account statements to get all the information you need to start the transaction.

If that leads nowhere, search for your lost plan on the National Registry of Unclaimed Retirement Benefits, or search the database available through the National Association of Unclaimed Property Administrators. The U.S. Department of Labor also has an abandoned plan database.

Open a self-directed IRA with Next Generation

As a full-service administrator and asset custodian for self-directed retirement plans, Next Generation is here to help. You can open a new self-directed IRA and follow the steps in our starter kits to implement a rollover from your old 401(k) into your new plan. You can build a more diverse portfolio with alternative assets you know and understand—and include real estate, precious metals, royalties, private equity funding, commodities, and many more nontraditional investments to grow retirement wealth. We offer a complimentary educational session to review the many options and benefits that self-direction allows, and our team will ensure that your rollover is conducted in accordance with IRS guidelines. Contact us with any questions you have.

Jaime Raskulinecz, CEO of Next Generation Trust Company, Shares the Importance of Using a Custodian that Specializes in Alternative Assets When Executing Certain IRA Rollovers

Article Details How One Celebrity Ended Up With a Costly Deficiency and IRS Penalties Due to Failure to Report IRA Assets’ Fair Market Value and Properly Transfer a Non-Publicly Traded Hedge Fund Partnership

ROSELAND, NJ, November 15, 2023 /24-7PressRelease/ — Even wealthy celebrities who can afford top financial advisement get caught in the IRS’s crosshairs for faulty rollovers and failure to report the fair market value (FMV) of alternative assets within their retirement plans, as detailed in a recent article by Jaime Raskulinecz, CEO of Next Generation Trust Company.

The estate of the late actor James Caan lost its case in tax court in October, in a matter that began in 2015. At issue was an IRA rollover of a partnership interest in a hedge fund. The asset was distributed to another retirement account at a different brokerage house, a transaction that Caan claimed was a nontaxable event. However, the U.S. Tax Court determined that his estate owed nearly $936,000 due to a deficiency and accuracy penalty associated with an incorrect IRA rollover of the alternative asset.

That’s because the hedge fund interest was liquidated eventually a year later, and the cash was ultimately “rolled over” to the new custodian. However, to qualify as a rollover, the exact asset (the hedge fund interest) is what should have been transferred to the successor custodian.

In addition to the incorrect transfer of the non-publicly traded hedge fund, Caan and/or his financial management team had failed to provide the IRA’s fair market value back in 2015, which is required by the IRA of the retirement plan’s trustee or custodian. Because the custodian must file Form 5498 regarding the fair market value of the assets within each client’s IRA, and because Mr. Caan’s team did not provide the required information, the custodial agreement was terminated.

“This is a complicated issue but at its core, the two-prong failures of Mr. Caan’s custodians/brokerage firms and financial team—to report the assets’ fair market value timely and execute a rollover correctly and within the proscribed 60-day time frame—provide a cautionary tale for investors,” said Raskulinecz. “For individuals with self-directed IRAs—which may include a variety of alternative assets such as investments in hedge funds—it is crucial that they work with a custodian that specializes in these types of retirement accounts and the nontraditional investments they allow.”

Raskulinecz added that as an administrator and custodian of self-directed retirement plans, Next Generation sends reminders to all clients to provide the updated FMV on the assets held within their accounts (as of December 31st of the year) so that the firm can file Form 5498 with the IRS. The firm also ensures that IRA rollovers of assets in kind are done correctly, that the successor custodian is aware that it is a non-publicly traded asset to ensure they will accept it, and that the transaction is completed within the proper time frame to avoid IRS penalties.

To read the details about Caan’s case, go to https://bit.ly/49zL4Ay. For more information about self-directed IRAs, visit www.NextGenerationTrust.com.

About Next Generation Trust Company, LLC
Founded on the philosophy that every person should have control over their retirement plans, Next Generation educates consumers and professionals about self-directed retirement plans and nontraditional investments, a strategy at one time reserved only for the very wealthy. Next Generation Services provides comprehensive account administration and transaction support, and its sister company, Next Generation Trust Company, acts as custodian for all accounts. The neutral third-party professionals at Next Generation expertly guide clients and their trusted advisors as part of their white glove, personalized service for a seamless transaction experience from start to finish. For more information, visit www.NextGenerationTrust.com, or contact Next Generation at 888.857.8058 or NewAccounts@NextGenerationTrust.com.

# # #

A Word of Caution for Self-Directed Investors: Use a Custodian That Specializes in Alternative Assets

The late actor James Caan found himself in a tax tangle in 2015 that his estate has been fighting . . . and lost last month. At issue was an IRA rollover that Mr. Caan claimed was a nontaxable event. It wasn’t.

His IRA at one financial institution held a partnership interest in a hedge fund. Those funds were distributed to another retirement account at a different brokerage house. Mr. Caan, who passed away last year, was hit with a deficiency and an accuracy penalty of nearly $936,000 three years later. He and subsequently his estate challenged this, but in October of this year, the U.S. Tax Court determined that his estate owed the money to the IRS.

The matter centered on two issues:

• The failure of Mr. Caan and/or his financial management team to provide the IRA’s FMV, and
• The correct transfer of a non-publicly traded hedge fund.

It is a somewhat complicated issue. Here’s an outline of what happened.

• The custodial agreement between Mr. Caan and the first financial institution stated that it was his responsibility to provide the brokerage with the fund’s year-end fair market value (FMV) every year. He failed to do this for tax year 2015.
• Having not received the FMV information it requested, the brokerage notified him that it had distributed the funds to him pursuant to the relevant terms of the custodial agreement (to remain compliant with U.S. Treasury regulations).
  • This was done as an in-kind distribution with no actual disbursement of funds directly to Mr. Caan.
• The hedge fund interest in the IRA was liquidated almost a year after the financial institution reported the distribution. The funds were eventually transferred into a new IRA elsewhere.
• The estate argued that Mr. Caan transferred the IRA holdings between the two brokerage firms accurately and that there were many challenges associated with the transfer between the two financial institutions.
• The judge ruled that the actor “did not thereafter contribute the [hedge fund holding] in a manner that would qualify as a nontaxable rollover contribution.”
• The IRS declined to grant late rollover relief to Mr. Caan.
• The judge’s decision “determined that (the first brokerage firm) had indeed disbursed the account” and found the IRS rejection to be valid because “the exact asset distributed from the (that) IRA was not the one transferred to the new IRA.”

Even wealthy celebrities who can afford top financial advisement get caught in the IRS’s crosshairs for faulty rollovers and failure to report the fair market value (FMV) of alternative assets within their retirement plans—which is required by the IRS of the retirement plan’s trustee or custodian.

Avoid IRS Problems and High Penalties. Use an IRA Custodian That Specializes in Alternative Assets.

In Mr. Caan’s case, the two-prong failures of his custodians/brokerage firms and financial team provide a cautionary tale for investors. The failure to report the FMV of his IRA’s partnership holdings led the original brokerage firm to issue its distribution notice based on the asset’s last known value, which was from the prior year. Also, because his financial team did not provide the year-end FMV timely, the brokerage firm ended its custodial relationship with him.

Further aggravating the problem, the alternative asset held in the IRA (the hedge fund partnership interest) was not eligible for the transfer through the Automated Customer Account Transfer Service, which is used by brokers to transfer stocks, bonds, cash, unit trusts, mutual funds, options, and other investment products. Instead, the financial advisor directed the fund to liquidate the holdings and transfer the cash proceeds to the new IRA—which did not take place until nearly a year after the distribution notice was sent out. This was far afield of the 60-day rollover period for IRA distributions.

At Next Generation Trust Company, we know the importance of reporting the FMV of the alternative assets within our clients’ self-directed IRAs. As an administrator and custodian of self-directed retirement plans, we are required to file Form 5498 annually; to do so, we send reminders to our clients to provide us with the updated FMV on the assets held within their accounts. Form 5498 reports the fair market value of the IRA as of December 31^st of every year to clients and the IRS. You can read more about FMVs and Form 5498 on our blog.

If you plan to execute an IRA rollover of assets in kind, our team has the industry knowledge to make sure:

1 – that you are doing the rollover correctly,

2 – the successor custodian is aware that it is a non-publicly traded asset to ensure they will accept it, and

3 – that the transaction is completed within the proper time frame to avoid IRS penalties.

As Mr. Caan’s story tells us, if the brokers/custodians understood how to deal with these non-publicly traded assets and his financial team understood the ramifications of not getting the FMV reported—as well as the intricacies of executing an IRA rollover when alternative assets are involved—the prolonged and expensive legal battle could have been avoided.

Jaime Raskulinecz, CEO of Next Generation Trust Company, Shares Updates on Who Qualifies as an Accredited Investor in Recent Forbes Council Article

Raskulinecz Outlines Congressional Bills and SEC Rulings That Seek to Widen Accredited Investor Pool; Private Equity Funding & Other Alternative Assets Allowed in Self-Directed Retirement Plans Would be Available to More Investors as a Result

ROSELAND, NJ, November 06, 2023 /24-7PressRelease/ — Jaime Raskulinecz, CEO of Next Generation Trust Company, has published an article about potential changes regarding who qualifies as an accredited investor titled “Accredited Investors: Who’s In, Who’s Not.” She is a thought leader on the Forbes Finance Council and provides information and guidance about self-directed retirement plans and related matters.

Historically, accredited investors are relatively high-net-worth individuals who must earn an annual income of at least $200,000 for the previous two years or $300,000 for married couples; and have a net worth, excluding primary residence, of at least $1 million in assets.

“Those criteria did not factor in an individual’s knowledge or understanding of investments or personal finances until certain SEC amendments passed in 2020 broadened the accredited investor definition beyond income to be based on ‘established, clear measures of financial sophistication’ as well,” said Raskulinecz.

Accredited investors and self-directed retirement plans

Accredited investors can make investments in non-registered private equity (in startups and early-stage companies), equity crowdfunding, venture capital, private placements, and hedge funds—all popular asset classes for the self-directed investors Next Generation works with. However, the income and net worth criteria overlook savvy investors who know and understand many types of alternative assets, which individuals may include in their self-directed retirement plans.

Potential expansions of accredited investor definition

As outlined in the article, there are several legislative bills that have been proposed since June 2023 as well as criteria reviews by the SEC, such as:

• The Equal Opportunity for All Investors Act, enabling more people to invest in more complex investment vehicles after passing a special securities test.

• The Accredited Investor Definition Review Act, in which the SEC would review the accredited investor criteria every five years and give regulators the authority to revise the criteria as they see fit.

• The Fair Investment Opportunities for Professional Experts Act would give certified broker-deals, investment advisors, and others with specific licenses or experience accredited investor status.

“Given that self-directed investors are expected to do their research and due diligence about any asset they wish to include in their plan, I look forward to seeing what changes will be implemented to enable more individuals to include equity funding along with the many other types of alternative assets allowed in self-directed IRAs and other plans,” said Raskulinecz.

The Forbes Council article is at https://bit.ly/40nEEAm. For more information about self-direction as a retirement savings strategy, visit www.NextGenerationTrust.com.

About self-directed IRAs

Self-directed IRAs allow investors to include investments in many alternative assets—such as real estate, precious metals, private equity funding, and royalties—within their tax-advantaged plans. Account owners may self-direct Traditional and Roth IRAs, SEP and SIMPLE IRAS, education savings accounts, and health savings accounts. Self-directed solo(k) plans are another option for business owners. Self-directed retirement plans are offered by specialty custodians, as most traditional broker-dealers and financial institutions don’t allow non-publicly traded investments.

About Next Generation Services, LLC

Founded on the philosophy that every person should have control over their retirement plans, Next Generation educates consumers and professionals about self-directed retirement plans and nontraditional investments, a strategy at one time reserved only for the very wealthy. Next Generation Services provides comprehensive account administration and transaction support, and its sister company, Next Generation Trust Company, acts as custodian for all accounts. The neutral third-party professionals at Next Generation expertly guide clients and their trusted advisors as part of their white glove, personalized service for a seamless transaction experience from start to finish. For more information, visit www.NextGenerationTrust.com or contact Next Generation at 888.857.8058 or NewAccounts@NextGenerationTrust.com.

# # #

Private Real Estate Investing Through a Self-Directed IRA

Investment property has long been popular among self-directed investors and the private real estate asset class is gaining popularity among self-directed IRA account owners.

Investing in private real estate funds within your self-directed IRA is a great way to diversify your retirement portfolio and build a long-term investment that earns passive income. Read on to learn more about private real estate investing.

How Do Private Equity Real Estate Funds Work?

One way to think about a private equity real estate (RE) fund is simply a group of people pooling their money to invest in a specific property or multiple properties. Private real estate funds are professionally managed pooled private and public investments in real estate markets. The assets may be multifamily properties, office buildings, warehouses, even student housing and retirement communities. Investing in these alternative assets has the potential for high returns as a source of passive income.

As with any nontraditional investment, individuals who wish to invest in private real estate funds through their self-directed IRA should do their due diligence and research the fund and its holdings as well as the investment manager (the sponsor) before sending investment instructions to the self-directed IRA administrator.

Private REITs as Self-Directed Investments

Real estate investment trusts (REITs) also comprise commercial real estate investments and generate revenues through rental incomes from the portfolios’ holdings. There are public and private REITs.

Publicly traded REITs are companies whose shares trade on major stock exchanges like NASDAQ. Anyone can invest in these REITs. They are registered with the SEC and as such, are subject to the same regulatory compliance issues as other publicly traded companies. They are also subject to supply & demand pressures of the market.

Private REITs are not listed on a major exchange and are not subject to most SEC regulatory requirements. Their valuation is based on appraisal of the asset. Since public REITs are not vulnerable to the same market pressures as public RIETs, they offer good portfolio risk protection as well.

Although private REITs are typically available only to accredited and institutional investors, self-directed IRAs can invest in these entities they are not publicly traded assets. Non-traded REITs can be an excellent source of passive income because by law, these entities must distribute at least 90% of their taxable income to shareholders as dividends, giving them the potential to provide a steady income stream (and long-term gains) for investors.

Investing Through Real Estate Crowdfunding Platforms

RE crowdfunding is a way to raise money online from a large pool of investors for real estate acquisitions. Individuals and businesses can use crowdfunding to access capital from a larger group of potential investors through the Internet and social media. Plus, crowdfunding makes opportunities to invest in real estate accessible to more people. The benefits of RE crowdfunding include liquidity and the potential for high returns. 

NOTE: In addition to investing in a private REIT, a private real estate equity fund, or a real estate crowdfunding platform, your self-directed IRA can also partner with another such retirement plan to purchase a specific investment property, with terms worked out between account owners.

If you have questions about how investing in private real estate funds and or real estate crowdfunding works through self-direction, you can schedule a complimentary educational session with one of Next Generation’s team members. As a full-service self-directed IRA administrator and asset custodian, we are committed to client education and helpful experts can explain the ins and outs of self-direction as a retirement wealth-building strategy. Contact us by email at NewAccounts@NextGenerationTrust.com or call us at 888.857-8058 with your questions.

Unlocking the Power of Self-Directed IRAs: A Guide to Choosing Your Own Investments

Do you have a self-directed IRA account? Did you know that with it comes the power to choose your own investments? What does it all mean and what’s the best way to navigate it? Jack Malpass, Business Development Specialist at Next Generation Trust Company, recently had the opportunity to discuss just that on Naked Notes, a podcast by The Note Assistance Program focused on investing in the secondary mortgage market.

A self-directed individual retirement account (SDIRA) is a type of retirement account that allows you to invest in a wider range of assets compared to a conventional IRA, where the account custodian usually limits you to approved asset types. Put in simple terms, an SDIRA empowers you to make investment decisions on your own terms. This allows you to invest in your area of expertise, while diversifying your retirement portfolio and hedging against stock market volatility. SDIRAs are beneficial for investors at any age – if you have qualified retirement income you can set up an account and start earning passive income now.

Some examples of investments that can be held in a self-directed IRA include:

• Turnkey real estate investments such as funds, syndications, and real estate investment trusts (REITs)
• Cryptocurrency
• Private equity
• Precious metals
• Royalties of various kinds
• Peer-to-peer private lending (unsecured or secured loans)
• Private notes

Just like any financial decision, however, self-directed investing through alternative assets requires upfront research and due diligence. Selecting the right SDIRA custodian is critical. A reputable SDIRA firm, like Next Generation Trust Company, can support you in your self-directed investment journey by providing thorough record-keeping, maintaining mandatory reporting, and handling transaction support. With a variety of account options and a dedication to white glove customer service, we can ensure you have the tools and support necessary to control your financial future.

You can learn more about SDIRAs by listening to Jack’s complete interview with Naked Notes here. If you’re interested in exploring the world of self-directed retirement planning, Next Generation Trust Company is here to help. Please contact us today to get started.