IRS Budget Increase

Jun 6, 2023
Est. Read Time: 2 minutes

Self Directed IRAs and Solo 401ks are excellent vehicles for alternative investments. Who will be the administrator is the next decision to make.

The Right Type of Plan

The choice can be difficult:

  • Self Administered IRA or Solo 401(k) (sometimes called a Checkbook IRA)
  • Fully Administered IRA or Solo 401(k) (the structure IRA Club recommends)

Remember, you can transfer to a Fully Administrated IRA or Solo 401(k) to IRA Club and let a professional do the administrative work. This allows you, the account owner, to spend your time and energy focusing on identifying the best investment opportunities. Most importantly, this also greatly improves the IRS compliance of the IRA or 401(k) account.


Self Administered Issues

Self Administered IRA or 401(k) holders face two main points of concern:

  • IRS Compliance
    • Self Administered account owners typically do not read the IRS bulletins and keep up-to-date on the latest IRS rules. You might have some questions. For example:
      • What are the IRS requirements if I want to make a loan to myself from my 401(k)?
      • What are the IRS requirements if I want to pay back that loan?
      • How do make a loan without IRS violations?
      • What are the IRS Requirements if I do not pay back the loan?
      • My account purchased real estate. What are the required docs?
      • What are the regulations for paying and managing earnest money?
    • The problem faced by many Self Administered plan is that even a simple error can trigger a penalty of 15-30 % of the value of the assets.
  • Secondly, look at all the wasted time that could have been better spent on identifying investment opportunities.


IRS Budget Increase

Recently, the IRS has announced another reason for people to run, not walk, to a Fully Administrated plan. For 2021, the IRS has requested an increase in its budget of over half a billion dollars. A large portion of funds will be directed to increase audits. In other words, Self Administered accounts will be looked at like never before.


Ready to convert to a fully administrated IRA or Solo 401(k)? Call us at (312)795-0988


IRA Club offers no investments, products, or planning services. Therefore, please consult your attorney, tax professional, financial planner, and any other qualified person before making any investments.


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