1. Living the Dream - Live “New Laws and Procedures When Self Directing my Retirement Plan – What are the Possibilities?” August 19, 2009 E-Seminar / Conference Call Hosts: Mark Kohler, CPA, Attorney At Law Mat Sorensen, Attorney At Law Special Guest: Curtis DeYoung, CEO, American Pension Services, Inc. www.kkolawyers.com Telephone 435.586.9366 Facsimie 435.586.9491 © KKO Lawyers, LLP 2009 www.kohlereyrecpas.com Telephone 435.865.5866 Facsimie 435.586.9491 © Koher & Eyre CPAs, LLC 2009 www.numberwonaccountants.com Telephone 435.865.7820 Facsimile 435.586.7702 © NumberWon Accountants, LLC 2009

2. The Retirement Plan Owner The Retirement Plan Owner Plan decision maker Plan decision maker Plan service provider Plan service provider Spouse, parents, children & their spouses Spouse, parents, children & their spouses Corporation, Partnership, Trust, or Estate where 50% or more is owned by a prohibited party Corporation, Partnership, Trust, or Estate where 50% or more is owned by a prohibited party Prohibited Transactions Cannot Buy From or Sell To…

3. Make it profitable… Wiggle Room The IRS allows your retirement plan to sell to and buy from brothers, sisters, aunts, uncles, cousins, nieces, nephews, and step relatives. The IRS allows your retirement plan to sell to and buy from brothers, sisters, aunts, uncles, cousins, nieces, nephews, and step relatives. IRS Ruling 2004-8: In a Roth IRA, brother and sister are considered a Prohibited Party, so you cannot sell to or buy from them in your Roth IRA. IRS Ruling 2004-8: In a Roth IRA, brother and sister are considered a Prohibited Party, so you cannot sell to or buy from them in your Roth IRA.

4. Rules are specific to real estate Real Estate is the “Key” Must be a Real Estate Operating Company if the Retirement Plan and IRA Owner own more than 25% of the LLC/LP (See 29 CFR Section 2510.3-101) Must be a Real Estate Operating Company if the Retirement Plan and IRA Owner own more than 25% of the LLC/LP (See 29 CFR Section 2510.3-101) If not Real Estate or you want to take a salary for managing the company, you, your SDRPs and Prohibited Parties Cannot own 50% or more of the company If not Real Estate or you want to take a salary for managing the company, you, your SDRPs and Prohibited Parties Cannot own 50% or more of the company

5. The Right Structure for You Option 1 Tax Qualified Plan $$ Self Directed Retirement Plan $$ Raw Land $$ LOAN Secured by Real Estate - No Debt - No LLC/LP - No Partners - Direct Investment in name of IRA Make it profitable… For Illustration Purposes Only. May not be reproduced without the Express written permission of KKO Lawyers ©. Create or Transfer

6. Option 2 Rental Property (Income Producing) Non-Recourse Loan Mortgage Company - Non-Recourse Debt - No Personal Guarantee - No Sweat Equity - No LLC/LP - No Partners - Direct Investment in name of IRA The Right Structure for You Make it profitable … Tax Qualified Plan $$ Self Directed Retirement Plan $$ For Illustration Purposes Only. May not be reproduced without the Express written permission of KKO Lawyers ©. Create or Transfer

7. Self Directed Retirement Plan $$ Option 3 - Non-Recourse Debt - Single Member LLC - No Personal Guarantee - No Sweat Equity - No Partners - Direct Investment in name of IRA Single Member LLC The Right Structure for You Make it profitable… Raw Land $$ LOAN Secured by Real Estate Tax Qualified Plan $$ For Illustration Purposes Only. May not be reproduced without the Express written permission of KKO Lawyers ©. Create or Transfer Real Estate Operating Company

8. Self Directed Retirement Plan $$ Single Member LLC Option 4 Rental Property (Income Producing) Non-Recourse Loan - Non-Recourse Debt - Single Member LLC - No Personal Guarantee - No Sweat Equity - No Partners - Direct Investment in name of IRA The Right Structure for You Make it profitable… For Illustration Purposes Only. May not be reproduced without the Express written permission of KKO Lawyers ©. Create or Transfer Real Estate Operating Company Tax Qualified Plan $$ Mortgage Company

9. Self Directed Retirement Plan $$ Multi Member LLC Option 5 Could add a Non-Recourse Loan Real Estate Operating Company Mortgage Company Self Directed Retirement Plan $$ Self Directed Retirement Plan $$ Invest multiple retirement accounts. These can be your accounts or others that are partnered to allow for a larger source of capital.

10. Option 6 50% IRA Owner 40-45% Guarantor Rental Properties 3 rd Party Owner 5-10% - Recourse Debt - YES - Partners -YES - LLC/LP- Yes For Illustration Purposes Only. May not be reproduced without the Express written permission of KKO Lawyers ©. Create or Transfer Real Estate Operating Company The Right Structure for You Make it profitable… Self Directed Retirement Plan $$ Tax Qualified Plan $$ Limited Liability Co.. Mortgage Company

11. Specially designed Self Directed 401(k) Tax Qualified Plan $$ Create or Transfer C-Corp Operational Business. (e.g. franchise, small business) Retirement Plan Owner Salary$$ Disadvantages 1.C-Corp tax game. 2.Retirement Plan has control of most stock. 3.Doesn’t work well for investments. OPTION 7: Operational Business Ownership with Retirement Plan Funds Ownership with Retirement Plan FundsBenefits 1. Retirement funds go into C-Corp which can purchase an existing business or franchise and retirement plan owner can receive a salary.

12. Self-Directed IRA Issues Prohibited Transactions 1.Transactions with Prohibited parties 2.Use of Property 3.Compensation of IRA owner Unrelated Business Taxable Income (“UBTI”) 1.Rents, interest, dividends and capital gains are exempt. 2.Watch out for development activities and non-real estate activities.

13. Self-Directed IRA Issues (continued) Unrelated Debt Financed Income (“UDFI”) 1. Tax is paid on the portion of gains attributable to the debt on the property Administration Duties 1. Annual report/valuation to Custodian 2. Bookkeeping and tax return