cash producing assets
I know: cash, stocks, bonds, insurance policies, income-producing real estate, commodities and currencies can be placed into a ROTH template. Here is my question: If I have the knowledge and skill to create income-producing assets, from scratch, that earn money from day one and continue to do so without any further attention from me, is the account number where the money flows into all the info I would need to place with a fiduciary agent, so they could administer any future withdrawals?
Permalink Submitted by Alan Spross on Mon, 2012-06-18 21:07
No, you would have to locate an approved IRA custodian under IRS Regulations. There are some large self directed IRA custodians such as Pensco and Guidant that can provide advice with respect to avoiding prohibited transactions and acquiring the assets. You cannot place life insurance in an IRA. New contributions to the Roth IRA must always be in cash, ie you contribute either cash for regular contributions or you roll over existing assets from other Roth IRAs or TIRAs in a Roth conversion. Then you can purchase the other assets with funds in your Roth IRA, ie from the Roth cash or the Roth cash generated from selling other Roth assets.
With respect to other alternate assets, you cannot provide any services to your IRA property. For example, if you have rental property in the IRA you cannot do any work on the property yourself and all repairs and taxes must come from the IRA funds, not your own funds. The IRA custodian is also responsible to report the year end value of your IRA to you and the IRS on Form 5498 or equivalent statement each year. For some assets, establishing that value is a problem and possibly would require a formal appraisal from time to time.