Guidant Financial Group Blog

When many investors think of a self-directed IRA, they believe that it only gives them the opportunity to invest in stocks, bonds, and mutual funds of their own choosing. While it is true that you can invest in these vehicles, a self-directed IRA offers more options. Other investment options include real estate IRA’s, personal business investment, franchise opportunities, partnerships, private equity, and tax liens.

Most banks and brokerage firms neglect to tell you about these other investments due to their vested interest in selling you stocks and bonds. For example, if you decide to invest in your own small business, these firms do not earn any revenue. Guidant believes that you should be aware of all options for investing your retirement funds. After all, it’s your money. Contact a Guidant representative today and find out how a self-directed IRA can assist you with small business financing.
Use Retirement Funds for Small Business Investing
Whether you need start-up funds for a small business, franchise financing, or just want to diversify your retirement holdings, a self-directed IRA can provide you with the flexibility to make your own choices.

The job market has “tanked” and even if you land a position, the wages are not what they once were. Many individuals have taken the opportunity to strike out on their own and follow their dreams of owning their own business. They’ve had enough of the broken promises of job security and are taking control of their destiny on their own terms. And they are financing their small business by utilizing self-directed IRA’s, 401k, and other retirement funds without early withdrawal penalties or taxes.
The Guidant 401(k) Plan for Small Business Investing

The Guidant 401(k) Plan for small business financing allows you to invest your retirement funds in your own enterprise. A brief overview of the process is as follows:
• Guidant will assist you in setting up a C-Corp business organization for your new business or franchise.
• We will guide you through the process of setting up a 401(k) for your new business.
• Your retirement funds will be rolled over into the new Guidant 401(k) plan.
• The new 401(k) plan then purchases shares of the new corporation…namely, your new business.
• This small business funding option provides working capital from your retirement plan without taxes, penalties, or debt.

The Guidant 401(k) Plan for small business financing allows you to start your own business and, at the same time, control your retirement fund growth. If you’ve always wanted to start your own business but financing stopped you, the Guidant 401(k) Plan offers an ideal solution. Contact Guidant today for a free consultation on how to realize your dreams of business ownership.

Millions have lost their jobs and competition for employment is becoming intense. According to the U.S. Commerce Department, wages and salaries dropped 4.7% in the previous 12 months ending in June 2009. With so many out of work, the competition for jobs is causing wages to fall. This does not bode well for the job seeker. Is it time to finally take the plunge and start that business you’ve always dreamt about? If you find yourself out of a job while the economy sorts itself out, you may want to consider determining your own destiny and purchase a franchise opportunity.

One of Guidant’s specialties is in arranging alternative franchise financing options. In fact, Guidant believes you already have the money to invest in a franchise. It just takes a little ingenuity and creativity (traits that are critical to business success) to arrange franchise financing that provides the best opportunity for success.

How to Choose a Franchise

The International Franchise Association, of which Guidant is a member in good standing, reports that there are in excess of 1,200 franchise brands in the United States. That’s a lot of due diligence to consider. So, how does one sort through these opportunities and choose a franchise that fits their needs?

• Choose a franchise that interests you. What are your interests, goals, and hobbies? Don’t just focus on your current interests. Is there an activity or hobby you previously enjoyed that you haven’t thought about in years? Get creative and brainstorm ideas.
• Consider the amount you can invest. This may eliminate higher-priced franchises if you are unable to obtain business financing. We should note here that you may be able to invest your retirement funds into a franchise opportunity. A Guidant representative will walk you through the process. According to the ERISA (Employee Retirement Income Security Act) of 1974, potential franchise owners can finance their own business from their retirement funds with no taxes, penalties, or debt. Intrigued?
• Perform due diligence before signing a franchise agreement. Enlist the services of a CPA and attorney before making an investment in a franchise. It’s just good business practice.

A Creative Franchise Financing Option

We understand the hardships associated with obtaining franchise financing in the current economic climate. That’s why we focus on coming up with solutions that allow our clients to obtain the capital they require for business ownership. And for most of our clients, the money is obtainable from their 401k or other retirement funds. We can show you how to investing these savings into a franchise without incurring early-withdrawal taxes and penaltiesYou’ll be able to control your livelihood, the success of your franchise, and the growth of your retirement fund. That’s destiny.

The dismal economy has left many individuals without jobs due to layoffs, downsizing, right-sizing or whatever they are calling it these days. Even the companies that are hiring have the advantage of choosing from a wide range of qualified candidates resulting in lower wages and salaries. Economists project that by the year 2010, one of every 10 workers in the U.S. will be without a job. Unemployment is at nearly 10 percent of the workforce. With these limited options, many individuals are leaving the uncertainty of the job market and striking out on their own as an entrepreneur.

According to 2006 Nobel Prize winner in economics, Edmund Phelps, it may take up to 15 years for families to recover to their pre-recession wealth. I don’t know about your situation; however, many individuals just don’t have that kind of time on their side. And the job losses keep rolling in each month. Economists are speculating that job losses for July 2009 will send another 328,000 workers to the unemployment lines. That will bring the total job losses to 6.8 million from December 2007 to the present.

There’s Good News with the Guidant 401(k) Plan

If you’ve always lamented “if I could do things over again, I’d become an entrepreneur” then this may be the ideal time to realize your dreams. At Guidant, we specialize in helping new entrepreneurs obtain small business capital to get them started on the right foot. With the Guidant 401(k) Plan, we can assist you in funding your new business without having to make loan payments every month. You can even draw a reasonable salary from the enterprise with the savings.

The Guidant 401(k) Plan allows entrepreneurs to access their 401(k), self-directed IRA, or other retirement holdings and invest it in their own business. We want to stress that this is an investment and not a withdrawal. There are no early-withdrawal taxes or penalties due; it’s simply a self-directed retirement plan that invests in the shares of your new company.

Entrepreneurs are a special breed of businessmen. They have confidence in themselves and their abilities. Problems are just little bumps along the road and they are confident of overcoming any challenge. Entrepreneurs don’t sit around waiting for the economy to recover; they take action to boost their personal economy. They become part of the economic solution and not wallow in the problems. If this sounds like you then becoming an entrepreneur has likely always been your dream.

Let a Guidant representative walk you through your small business financing options for becoming an entrepreneur. The Guidant 401(k) Plan for small business investing is an ideal option for aspiring entrepreneurs. Leave the job market behind and embark on a new path of owning your own business.

SBA loans are difficult to obtain in the first place. Combine this with the fact that once you do secure your SBA loan you will need to provide at least 20% cash down and it is no wonder that many prospective small business owners don’t even consider SBA loans as a viable financing option.

What many entrepreneurs do not know, however, is that the Guidant 401(k) Small Business Investment Program can be used to provide the down payment for your SBA loan from your existing IRA or 401(k) accounts, tax and penalty free.

This program is different from a loan against your 401(k) plan or a private note against the assets in your retirement plan. The Guidant 401(k) enables you to directly invest your retirement funds into your own business – as an equity partner. Just as it can buy stock in publicly traded companies, your IRA or 401(k) can invest into your privately held business (when done correctly!).

What many people don’t realize is that the cash they need to inject as the initial down payment for their SBA loan may already be in their possession. In fact, many SBA lenders and SBA sponsored programs recommend that people consider the Guidant 401(k) to secure the required cash investment to proceed with an SBA loan. This can be a much better alternative to taking a distribution and paying the early withdrawal penalties and taxes. Unfortunately thousands of people, who don’t know they have a potentially better option, take the distribution and pay upwards of 40% to the government! It’s simply not necessary.

Guidant has worked with numerous SBA approved lenders and SBA sponsored programs, like SCORE, to provide entrepreneurs with an alternative to mortgaging properties and cashing out retirement plans at a severe penalty to meet the down payment requirement.

Do you have money in a traditional IRA or 401(k)? Are you hoping to secure an SBA loan, but are unsure about where your good faith cash is going to come from? Or, are you hoping to obtain a larger SBA loan, but only have enough liquid capital to meet part of the cash requirement?

Call us. You may already have the money you need – you just don’t know how to access it yet.

No strangers to media attention, Guidant 401k small business financing client Poffenroth and his business partner first made the news a couple years ago when they started Dry Fly Distillery, the first distillery in (our home) Washington State since prohibition.

For those of you who have called in to Guidant, or who have perused our website for any length of time, you’ve probably come across a term that you are not 100% familiar with.

“IRA Facilitator.”

So, what is an IRA Facilitator? Is this just something that our marketing team came up with to make Guidant sound different; maybe, the financial version of mailman v. mail carrier?

The truth is, an IRA Facilitator is a company that creates IRA/LLC structures, but does not provide custodial services directly. You, as an IRA holder, have the choice of either going directly with a custodian, or going with an IRA Facilitator.

To help you understand the differences between the two, as well as where they overlap, we’ve provided some basic outlines of the three main types IRA providers traditional custodians, self-directed IRA custodians, and IRA Facilitators.

Traditional Custodians

Traditional custodians are the companies that most people are familiar with when they think of IRAs. Companies like Charles Schwab, Fidelity and TD Ameritrade offer custodial services for IRAs, as well as other types of retirement plans.

The main component of a traditional custodian is the brokerage arm. Traditional custodians offer traditional investment options (simple enough, right?). Through a traditional custodian, an IRA holder can typically direct their funds to things like stocks, bonds, mutual funds, money market accounts, etc.

Traditional custodians, 99% percent of the time, only allow for traditional assets. If a client with Charles Schwab were to enquire about purchasing a rental property with their retirement funds, Schwab would most likely not be able to facilitate this investment on their account’s behalf.

The confusing part about traditional custodians is that many of them offer “self-directed IRAs.” Now, don’t get this confused with a self-directed IRA custodial account. When a traditional custodian offers a self-directed IRA, what they are really offering is a traditional custodial account with the option of choosing which traditional assets to invest in. These accounts are still limited to traditional assets and will not allow for investment in assets like real estate or tax liens.

Self-Directed Custodians (aka Non-Traditional Custodians)

Self-directed custodians operate very similarly to traditional custodians in that they are specific institutions that house retirement funds, and provide administrative services for those accounts. The main difference is that self-directed custodians provide the opportunity to choose which non-traditional assets the client would like to invest in. Most self-directed custodians also limit their client’s investment options solely to non-traditional assets, meaning, self-directed custodial clients can only invest in assets like real estate and tax liens. Self-directed custodians are also not able to provide investment options, thus, clients must find opportunities on their own.

For many people, a self-directed custodian is all they need to make their non-traditional investments. Where these accounts can get a bit tricky, though, is in situations where the client is looking to invest a large sum of money in non-traditional assets, is looking to diversify into both traditional and non-traditional assets, or where the client is considering time-sensitive investments.

Why?

Much like a traditional custodian, self-directed custodians are banking institutions. In order to make an investment, clients need to get their money out of the bank. Almost all self-directed custodians will require that for each investment a client intends to make, they must first submit a request, wait for approval, and pay a transaction fee for this exchange of funds. Many investments, such as tax liens and foreclosures, can fall through should an investor need to wait for approval of funds. Additionally, depending on the number of times a client needs to make a transaction (whether that be to purchase a property or to deposit a rent check), those transactional fees can add up.

Furthermore, most self-directed custodians will assess annual fees based upon either a percentage of the total account value (which means, for the client, annual appraisals on properties), or a fixed amount per asset held. For large accounts, or accounts with several assets, these fees can also add up quickly.

IRA Facilitator

Only in the last 10 years have IRA Facilitators been an alternative to both traditional and non-traditional custodial accounts. Guidant, in fact, was the first to offer IRA facilitation services on a national level.

The main idea behind an IRA facilitator is to provide clients with an IRA investment vehicle that allows for the purchase of both non-traditional and traditional assets, and reduces costs.

To do this, a Self-Directed IRA LLC structure needs to be created. By investing the self-directed custodial account into a case-law compliant LLC, IRA-holders are able to direct all their investments through that entity, in lieu of contacting a self-directed custodian for each request of funds.

In the past, to create an IRA/LLC structure, IRA-holders needed to secure their own attorneys or other professionals to provide these services, and they would still be subject to non-traditional custodial fees.

Since Guidant’s inception, IRA-holders have had the option to work with one company to facilitate the creation of the necessary entity (LLC), create the custodial relationship (as is required by law), and provide ongoing coaching and education for clients (as they are the ones making the investments, not the custodian).

The benefits of working with an IRA Facilitator are that clients can limit their custodial costs (Guidant has negotiated a low, annual fee of $105 for their clients, regardless of account size or number of assets held in the LLC), eliminate the problems associated with time-sensitive investments, and have the option of investing in both traditional and non-traditional assets, simultaneously.

There is a bit of work that needs to be done up-front, however, and IRA Facilitators will typically charge a one-time set-up fee to get things started. Because of this, IRA/LLC structures work best for clients who plan to bring in at least $50K from retirement funds, or who are looking to make many time-sensitive investments.

We hope that this brief overview of the different types of IRA accounts has proved helpful. Not all accounts are best for all investors; so, please, give us a call! One of our Client Coordinators will be happy to discuss your situation with you.

For the first time in more than 30 years, California has announced that it will be re-assessing the property values to account for properties that have experienced deflated values (see California to Use Deflation in Assessing Property Taxes).
We think we can hear the communal sigh of relief even all the way up here in Seattle!

Finally, some good news for California residents and investors! In the last couple years we have had many clients pursue real estate investments in the Golden State, regardless of high LLC taxes, sliding property values and devastating forest fires. In fact, California is one of the top states in which we have clients.

We are always happy to hear that governments and other municipalities are taking into consideration the state of the economy. But, this resonates with us even more. We are proud of our California clients and their boldness to purchase a real estate IRA – it’s time they received a break!

Go boldly, California investors. The tide may be turning!

On December 2, gold hit another all-time high, proving, yet again, that the “next big investment” is always just around the corner.


In Kim Kyoungwha’s article for Bloomberg (see Gold Advances to Record, Gains ‘Like There Is No Tomorrow’), Chief Investment Officer at Swiss Asia Capital Pte Ltd. Jurg Kiener told the wire services, “The main reason is that they continue to print too much money, and people don’t trust governments and banks. We keep buying it every day.”

What does this mean, though?

One of Warren Buffet’s most famous quotes was, “I get fearful when others are greedy. I get greedy when others are fearful.”

It could be argued that this run on gold is the result of Americans and other investors being fearful and cashing out the dollar. Does this mean that the smart, Warren-Buffet-like, thing to do is to get out of gold now?

Who knows!

This is another great reason why we enjoy so much what we do. Guidant’s Self-Directed IRA LLC is the only investment vehicle that allows its clients to instantly move from one investment to another, without the need to notify a custodian or other advisor. Stocks, gold, real estate, you name it! It’s a possibility, and it’s a possibility today!

Follow that investment trend wherever it may take you – either with the masses or against. We’ll provide you with the vehicle for the trip!

The “Forum on Jobs and Ecomonic Growth” scheduled for Thursday December 3 is already receiving criticism from small business owners who feel that these forums are nothing more than propaganda parades for the Obama administration (see Obama Jobs Forum Angers Small Business Groups).


Per the Huffington Post, many small business groups have been voicing their concern over the scheduled forum and its perceived goal of encouraging positive public opinion of the stimulus plan, and not the goal of creating new jobs.

The American Small Business League (ASBL) maintains that to help the economy, President Obama should make good on his promise to redirect government projects to small business and “end the diversion of federal small business contracts to corporate giants," as was said by Obama during his 2008 presidential campaign.

These forums, it appears, are only souring the relationship the current administration has with small business owners. Many groups believe that energy should be spent on creating new policies to encourage small business involvement in government projects.

With billions of dollars still left to be allocated in the stimulus package, it could be argued that a portion of those funds would be well invested in encouraging small business. Especially since small business accounts for a majority of private-sector jobs in America (see SCORE) .

As a company that takes pride in its clients and their entrepreneurial spirit, we are a bit biased. We would like to believe that the government can have the same can-do attitude as so many Americans who go into business for themselves every day. Why not take a chance and shake things up? Why not make an effort to focus more on small business? What could it hurt?

Your thoughts?