Domains in a Roth IRA?

accent · 07-01-2009, 03:36 PM

Roth IRAs shield profit from investments from taxes, permanently, so it would seem the best plan would be to place those investments with the greatest potential in a Roth. That would (hopefully) be domains. I am surprised that there appear to be no threads on NP discussing placing domains in a Roth IRA. My quick research looks like it would be possible to set up a corporation within the IRA and buy, sell and develop domains tax exempt.

People outside the USA are no doubt mystified at what I am talking about - I doubt any of this applies to you.

Has anyone looked into setting up a domain Roth IRA?

zoogo · 07-01-2009, 03:39 PM

s there a similar thing in Canada?

jacques · 07-01-2009, 08:06 PM

Roth IRA: I have been dealing in this area for many years and the "type" of investment in a Roth IRA is surprisingly flexible. If the legal structure of the Roth is solid, I see no reason whatsoever that a domain portfolio could not qualify as eligible for a Roth plan.

Note: My opinion only- consult a financial professional.

TaxDoc · 07-01-2009, 09:07 PM

Hi,

I'm a tax attorney/CPA and a retirement plan specialist. To cut to the chase, there is no legal problem (i.e. tax law problem) in doing what you are suggesting. However, it has to be done in the right way, and a C Corporation would be the best entity to own the domains and then the shares of the Corp. would be owned by the IRA.
????: NamePros.com http://www.namepros.com/domain-name-discussion/593716-domains-in-a-roth-ira.html

Historically there has always been one big impediment to such nontraditional investments: finding an IRA trustee to handle investments in closely held corporation. Traditional trustees like banks won't do it because your not buying their products.

However, there are a handful of IRA trustees in the US who will do these kinds of investments (including real estate) and who will make sure all the technical tax rules are followed.

Can't give you any names off the top but if you'd like to PM me I could give you some information.

Leo Vidal
Millersville, MD CPA / The Tax Doctor

PS - I've not mentioned the word "Roth" because it doesn't matter what type of IRA it is; the investment rules are the same.

dnpimping.com · 07-01-2009, 09:10 PM

Originally Posted by TaxDoc

Hi,

I'm a tax attorney/CPA and a retirement plan specialist. To cut to the chase, there is no legal problem (i.e. tax law problem) in doing what you are suggesting. However, it has to be done in the right way, and a C Corporation would be the best entity to own the domains and then the shares of the Corp. would be owned by the IRA.

Historically there has always been one big impediment to such nontraditional investments: finding an IRA trustee to handle investments in closely held corporation. Traditional trustees like banks won't do it because your not buying their products.
????: NamePros.com http://www.namepros.com/showthread.php?t=593716

However, there are a handful of IRA trustees in the US who will do these kinds of investments (including real estate) and who will make sure all the technical tax rules are followed.

Can't give you any names off the top but if you'd like to PM me I could give you some information.

Leo Vidal
Millersville, MD CPA / The Tax Doctor

PS - I've not mentioned the word "Roth" because it doesn't matter what type of IRA it is; the investment rules are the same.

Thanks for that information doc, definitely sounds like a great way to protect profits.

accent · 07-01-2009, 11:00 PM

Thanks, this looks like a really interesting idea. The potential profits from domains are off the charts, the initial investment is not very large. I favor Roth because, while the initial costs are from after tax funds, the profits are never taxable, unless you withdraw them before retirement.

Is it true that you would have to fill the account with new purchases - domains already owned are not eligible?

What is involved in setting this up, beyond finding a trustee (costs, rules, restrictions, pitfalls)?

Here is a business idea for a clever CPA - set up IRAs for domainers.

zoogo · 07-02-2009, 02:55 AM

Originally Posted by accentnepal

Thanks, this looks like a really interesting idea. The potential profits from domains are off the charts, the initial investment is not very large. I favor Roth because, while the initial costs are from after tax funds, the profits are never taxable, unless you withdraw them before retirement.
????: NamePros.com http://www.namepros.com/showthread.php?t=593716

Is it true that you would have to fill the account with new purchases - domains already owned are not eligible?

What is involved in setting this up, beyond finding a trustee (costs, rules, restrictions, pitfalls)?

Here is a business idea for a clever CPA - set up IRAs for domainers.

What qualifies as "Retirement" ?

acc · 07-02-2009, 11:59 AM

Originally Posted by TaxDoc

Hi,
????: NamePros.com http://www.namepros.com/showthread.php?t=593716

I'm a tax attorney/CPA and a retirement plan specialist. To cut to the chase, there is no legal problem (i.e. tax law problem) in doing what you are suggesting. However, it has to be done in the right way, and a C Corporation would be the best entity to own the domains and then the shares of the Corp. would be owned by the IRA.

Historically there has always been one big impediment to such nontraditional investments: finding an IRA trustee to handle investments in closely held corporation. Traditional trustees like banks won't do it because your not buying their products.

However, there are a handful of IRA trustees in the US who will do these kinds of investments (including real estate) and who will make sure all the technical tax rules are followed.

Can't give you any names off the top but if you'd like to PM me I could give you some information.

Leo Vidal
Millersville, MD CPA / The Tax Doctor

PS - I've not mentioned the word "Roth" because it doesn't matter what type of IRA it is; the investment rules are the same.

Nice to have you here to give us your professional opinion. The point about needing an IRA trustee is very helpful to this discussion.

Is it possible to use an S Corp too? Does a C corp have better standing in this regard than as S corp?
Can there be any other investments held by the corp too or would it be best to have it dedicated to just domain names?

Thank you very much.
.

accent · 07-03-2009, 12:22 AM

Saw "Self Directed IRA" on a Google ad on this page (Google is getting better at "understanding", they formerly would have ads for home canning supplies and fleece jackets), so I looked it up:

Originally Posted by Wikipedia

..... In an effort to reduce fees, paperwork, and processing delays, some self-directed IRA investors choose to employ an IRA LLC structure. In such a structure the accountholder directs his IRA custodian to invest into a limited liability company that he manages himself. The accountholder can then execute transactions on the LLC level without the involvement of the IRA custodian, thus reducing fees and eliminating custodian transactional fees and delays. The profits of the LLC pass through to the IRA with nearly identical tax favorable treatment. This IRA LLC strategy has been legitimized through a tax court case: Swanson v. Commissioner, 106 T.C. 76 (1996). Some refer to this structure as "checkbook control" because the IRA accountholder often has sole signing authority for the LLC and its bank accounts. Similar checkbook control for a self-directed 401(k) plan would not require an LLC because Internal Revenue Code Section 401 does not mandate the use of a custodian. .....

The retirement age is 59 1/2 - withdrawals before then incur a 10% penalty.

tricolorro · 07-03-2009, 03:06 PM

Originally Posted by TaxDoc

Hi,

I'm a tax attorney/CPA and a retirement plan specialist. To cut to the chase, there is no legal problem (i.e. tax law problem) in doing what you are suggesting. However, it has to be done in the right way, and a C Corporation would be the best entity to own the domains and then the shares of the Corp. would be owned by the IRA.

Historically there has always been one big impediment to such nontraditional investments: finding an IRA trustee to handle investments in closely held corporation. Traditional trustees like banks won't do it because your not buying their products.

However, there are a handful of IRA trustees in the US who will do these kinds of investments (including real estate) and who will make sure all the technical tax rules are followed.

Can't give you any names off the top but if you'd like to PM me I could give you some information.

Leo Vidal
Millersville, MD CPA / The Tax Doctor

PS - I've not mentioned the word "Roth" because it doesn't matter what type of IRA it is; the investment rules are the same.

Mr.Vidal,

You are talking about Self-Directed IRAs.

And it certainly makes a BIG difference if you choose a Roth IRA or Regular IRA
for your retirement investment.

A BIG difference.
????: NamePros.com http://www.namepros.com/showthread.php?t=593716

I'm sure you know a regular IRA is funded with pre-tax dollars and then you are taxed
when you start withdrawing your $.

Roth IRAs do not use pre-tax dollars and you are NOT taxed when you
withdraw your $.

Regular IRA- pay taxes

Roth IRA- tax free

Any $ earned in a Roth IRA is tax free forever. Not so with a Regular IRA.

To me that it certainly does matter which form of IRA you choose
for your retirement investment strategy.

blaknite · 07-03-2009, 08:55 PM

Originally Posted by nudu

What qualifies as "Retirement" ?

Aside from the standard 59 and 1/2 retirement age I've heard of one other retirement option. I'm not sure if it applies to roth IRA's, but you can retire at any age provided you cash out using "substantially equal payments" leading up to retirement age. In other words if you cashed out at 40 you couldn't take the full balance. You would have to take it in twenty payments once a year or 240 payments once a month.

accent · 07-03-2009, 10:43 PM

Is there anybody here that actually has an IRA with domains in it?

Anybody that has a self-directed IRA of any kind?

07-01-2009, 03:36 PM	THREAD STARTER #1 (permalink)
accent Senior Member Join Date: Apr 2006 Posts: 2,295	Domains in a Roth IRA? Roth IRAs shield profit from investments from taxes, permanently, so it would seem the best plan would be to place those investments with the greatest potential in a Roth. That would (hopefully) be domains. I am surprised that there appear to be no threads on NP discussing placing domains in a Roth IRA. My quick research looks like it would be possible to set up a corporation within the IRA and buy, sell and develop domains tax exempt. People outside the USA are no doubt mystified at what I am talking about - I doubt any of this applies to you. Has anyone looked into setting up a domain Roth IRA? __________________ Domains for sale For List Of Country Code Domains Jewelry of Tibet and Nepal TibetanJewelry.mobi Tibetan Symbols Om Pyramids Ancient Egyptian Secrets Ancient Mystery Eden Shakti

07-01-2009, 03:39 PM	#2 (permalink)
zoogo NamePros Regular Join Date: Feb 2009 Location: Stillness Posts: 536	s there a similar thing in Canada? __________________ Good luck!

07-01-2009, 09:07 PM	#4 (permalink)
TaxDoc First Time Poster! Join Date: Jul 2009 Posts: 1	IRA Investments Hi, I'm a tax attorney/CPA and a retirement plan specialist. To cut to the chase, there is no legal problem (i.e. tax law problem) in doing what you are suggesting. However, it has to be done in the right way, and a C Corporation would be the best entity to own the domains and then the shares of the Corp. would be owned by the IRA. ????: NamePros.com http://www.namepros.com/domain-name-discussion/593716-domains-in-a-roth-ira.html Historically there has always been one big impediment to such nontraditional investments: finding an IRA trustee to handle investments in closely held corporation. Traditional trustees like banks won't do it because your not buying their products. However, there are a handful of IRA trustees in the US who will do these kinds of investments (including real estate) and who will make sure all the technical tax rules are followed. Can't give you any names off the top but if you'd like to PM me I could give you some information. Leo Vidal Millersville, MD CPA / The Tax Doctor PS - I've not mentioned the word "Roth" because it doesn't matter what type of IRA it is; the investment rules are the same.

07-01-2009, 11:00 PM	THREAD STARTER #6 (permalink)
accent Senior Member Join Date: Apr 2006 Posts: 2,295	Thanks, this looks like a really interesting idea. The potential profits from domains are off the charts, the initial investment is not very large. I favor Roth because, while the initial costs are from after tax funds, the profits are never taxable, unless you withdraw them before retirement. Is it true that you would have to fill the account with new purchases - domains already owned are not eligible? What is involved in setting this up, beyond finding a trustee (costs, rules, restrictions, pitfalls)? Here is a business idea for a clever CPA - set up IRAs for domainers. __________________ Domains for sale For List Of Country Code Domains Jewelry of Tibet and Nepal TibetanJewelry.mobi Tibetan Symbols Om Pyramids Ancient Egyptian Secrets Ancient Mystery Eden Shakti

07-03-2009, 10:43 PM	THREAD STARTER #12 (permalink)
accent Senior Member Join Date: Apr 2006 Posts: 2,295	Is there anybody here that actually has an IRA with domains in it? Anybody that has a self-directed IRA of any kind? __________________ Domains for sale For List Of Country Code Domains Jewelry of Tibet and Nepal TibetanJewelry.mobi Tibetan Symbols Om Pyramids Ancient Egyptian Secrets Ancient Mystery Eden Shakti

07-01-2009, 08:06 PM	#3 (permalink)
jacques NamePros Regular Join Date: Dec 2008 Posts: 255	Roth IRA: I have been dealing in this area for many years and the "type" of investment in a Roth IRA is surprisingly flexible. If the legal structure of the Roth is solid, I see no reason whatsoever that a domain portfolio could not qualify as eligible for a Roth plan. Note: My opinion only- consult a financial professional.

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Domains in a Roth IRA?

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