Are there any potential income taxes payable on investments within the Strategic Affluence 401k? This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Potential Income Taxes Yes, potentially, depending on the tax treatment for that certain investment. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

PASSIVE Investments In most cases, your Strategic Affluence 401k will be in passive investments, such as rental properties, precious metals, loan interest, dividends, royalties, options, capital gains/losses, etc... This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

PASSIVE Investments And with passive investments, there are likely no income taxes to be paid. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

ACTIVE Investments With active investments, however, there are IRS rules specific to retirement plans, including the Strategic Affluence 401k, that require that plan to pay a tax on the earnings received from any active business. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Unrelated Business Income Tax (UBIT) This tax is known as the Unrelated Business Income Tax, or UBIT. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Unrelated Business Income Tax (UBIT) Active investments receive their income as business profits, not as passive dividends. And, by definition, any active trade or business is “unrelated” to the function of a retirement plan, so the plan would normally pay this tax with active investments. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Potential Income Taxes For instance, if your Strategic Affluence 401k is engaged solely in “rehabbing” or “flipping” properties, this would likely constitute the running of an active business and the net profits would be subject to income tax. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Potential Income Taxes Or if your Strategic Affluence 401k is a partner in an active business venture, the net profits would be subject to income tax. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Potential Income Taxes As mentioned in the real estate training, there is no hard and fast rule from the IRS on how many “flips” your 401k could engage in prior to being subjected to income tax if the majority of your investments are passive… This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Potential Income Taxes Just be sure to consult with your tax advisor, and keep the flips to a minimum if you want to avoid paying income tax! This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Potential Income Taxes To be clear, some investors realize that certain investments provide such a substantial after-tax return, the trade-offs are still well worth it! This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Potential Income Taxes You just have to run the numbers and determine for yourself if certain opportunities are worth paying the tax on for such substantial growth. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Potential Income Taxes Sometimes, it might just make sense! This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Potential Income Taxes Be sure to keep in mind any potential STATE income tax in your calculations as well to help make this determination. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Debt-Financed Income Tax Lastly, many investors ask about a subset of UBIT known as Debt-Financed Income Tax, so we will quickly address that here… This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Debt-Financed Income Tax This tax pertains to many retirement accounts, such as IRAs. In this case, if the assets are acquired via funding from a loan, the IRA would be required to pay income taxes based on the usage of the borrowed money. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Debt-Financed Income Tax For example, if a Self Directed IRA purchases a $100,000 rental property using $40,000 of its own funds and borrowing $60,000 with a loan, then approximately 60% of the profit would be subject to taxes since 60% of the investment capital came from a loan. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Debt-Financed Income Tax If the property generated $10,000 in annual rent, this means around $6,000 of the rental income would be taxed. (There is more detail in calculating the tax percentages, but let this suffice for now with rounded numbers). This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Debt-Financed Income Tax If a property is debt-financed and therefore becomes subject to income tax, the IRA is then required to file a tax return, report the income and expenses, and pay taxes on the gains. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Debt-Financed Income Tax But the great news is that your Strategic Affluence 401k is classified as a qualified pension plan with the IRS and, if you properly structure your transaction, your Strategic Affluence 401k won’t owe taxes for debt financing when dealing with Real Estate. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at

Debt-Financed Income Tax So you can leverage your real estate and certain other investments within your Strategic Affluence 401k generally without being subject to the “loan tax” – a HUGE exemption that provides significant advantages for this plan over others. This material is copyright © 2013 by SSEN LLC and is used under license by Strategic Affluence LLC. This presentation is not to be construed as legal or professional advice and is subject to terms and conditions posted at