Social Security ....The monthly Check...yes or no

[Josh]

You can’t use a self directed IRA for any self dealing. Transactions must be at arm’s length.

Real estate has consistently outperformed the stock market (which is a sign of income inequality and investment becoming inaccessible to the middle class).

[mrbilliam]

You see early church writings talking about care for the poor and retired. It’s not that they were given great food, but they were given enough for their needs. Most of the writings seem to encourage the same quality for themselves.
If we spent less money on our food quality, I mean more simple things like soup or porridge… easy to say, harder to do.

Quite the sales pitch you have there.

Give up your right as an American to earn a lifetime pension and financial security. And in exchange we will make sure you get porridge and will at least be able to eat as well as a Medieval peasant.

Yep. Now we only have TWO HUNDRED TRILLION in unfunded liabilities that will just be printed away. Porridge, will be a luxury. I'd much rather escape the failed system and work with brothers and sisters to prop of the lives of the elderly.

[Ken]

You can’t use a self directed IRA for any self dealing. Transactions must be at arm’s length.

Real estate has consistently outperformed the stock market (which is a sign of income inequality and investment becoming inaccessible to the middle class).

Anyone can invest in all the real estate or farmland that they want. You just can't do it as part of a tax-sheltered IRA if you are living in or utilizing the real estate yourself. And there are very good reasons for that restriction since it prevents things like abusive transfer pricing and tax evasion schemes.

You don't like stocks? Don't invest in stocks. There are plenty of other ways that you can invest IRA money. And if you don't like the minimal restrictions places on investing from within an IRA, don't use an IRA. Just pay the taxes on the money and you can do whatever you want with it.

[Josh]

Many plain Anabaptists would feel if they’re going to own land, they should be using it, not buying it as part of some elaborate tax avoidance scheme.

[Ken]

Many plain Anabaptists would feel if they’re going to own land, they should be using it, not buying it as part of some elaborate tax avoidance scheme.

This thread isn't about farming. It is about saving for retirement and providing for people in retirement with Social Security or alternatives to social security. Most retirees are by definition, no longer working. And many elderly Anabaptists like single or widowed women were never active farmers to begin with. And many men also are not farmers.

If an Anabaptist group objects to Social Security then they need to find an alternative way to provide an income stream for their elderly couples and widows who are NOT actively farming. Any sort of group or individual retirement savings accounts will accomplish that. There are nearly infinite ways that one can save and invest money for the future. IRAs and Roth IRAs are simply one type of savings account in which the government give you a tax break as an incentive to save.

If a conservative Anabaptist group objecting to Social Security decides to save for retirement using means then they have various IRA options available to them should they choose to use them as a part of their strategy. No one is forced to contribute to an IRA. But if they do decide to use IRAs to minimize taxes then they have a wide choice of investment options within IRAs including stocks, bonds, and yes, investing in farmland or other forms of real estate should they wish to do so.

The reasons WHY you can't use an IRA to invest in your own farm or own real estate are to prevent people from using IRAs as tax-avoidance schemes. That is why the investments need to be arms-length. Otherwise, people could structure their farm into separate entities, one part owned by the IRA, and the other part owned by the farmer. And then simply avoid all taxes by pushing all profits into the part of the farm owned by the IRA and all the losses onto the part of the farm owned by the farmer outright.

For example, I have a cousin in PA who inherited the family dairy farm and who also owns a farm that his wife inherited that is next door. I think technically they are still buying both farms from their fathers. If they were to use an IRA to purchase one of those two farms then they could move equipment, livestock, and other assets and liabilities around (on paper) to make the farm owned by the IRA into the profitable one (on paper) and the farm owned outright into a money losing enterprise (on paper). Thus shifting all of their farm profits into the IRA which is tax-exempt and avoiding any taxes on their farming business.

That is why IRA investments need to be arms length. To prevent those sorts of tax-avoidance schemes.

[Josh]

All IRAs are tax avoidance schemes. (Tax avoidance is legal.)

[Ken]

All IRAs are tax avoidance schemes. (Tax avoidance is legal.)

You don't avoid taxes with an IRA. You just defer them until retirement and pay them when you withdraw the money. Taxes still get paid. That is why IRAs have required minimum distributions (RMDs) based on age. That way the government gets some of the taxes back that were deferred.

Roth IRAs work the opposite. You pay the taxes in advance when you invest and then withdraw the money tax free in retirement.

The only accounts that truly avoid taxes at both ends are health savings accounts (HSAs). You can invest in those tax free and then withdraw tax free as well (for medical expenses) which is better than any kind of IRA.

[ken_sylvania]

All IRAs are tax avoidance schemes. (Tax avoidance is legal.)

You don't avoid taxes with an IRA. You just defer them until retirement and pay them when you withdraw the money. Taxes still get paid. That is why IRAs have required minimum distributions (RMDs) based on age. That way the government gets some of the taxes back that were deferred.

Roth IRAs work the opposite. You pay the taxes in advance when you invest and then withdraw the money tax free in retirement.

The only accounts that truly avoid taxes at both ends are health savings accounts (HSAs). You can invest in those tax free and then withdraw tax free as well (for medical expenses) which is better than any kind of IRA.

When do you pay tax on the investment income generated by a Roth IRA?

[Ken]

All IRAs are tax avoidance schemes. (Tax avoidance is legal.)

You don't avoid taxes with an IRA. You just defer them until retirement and pay them when you withdraw the money. Taxes still get paid. That is why IRAs have required minimum distributions (RMDs) based on age. That way the government gets some of the taxes back that were deferred.

Roth IRAs work the opposite. You pay the taxes in advance when you invest and then withdraw the money tax free in retirement.

The only accounts that truly avoid taxes at both ends are health savings accounts (HSAs). You can invest in those tax free and then withdraw tax free as well (for medical expenses) which is better than any kind of IRA.

When do you pay tax on the investment income generated by a Roth IRA?

Yeah, that's tax free if you have any investment income. Some investments lose money. That's what makes a Roth better than an ordinary investment account. But the money you put into the Roth has already had taxes paid on it. The government already got its money up front. So it's not really any different from if you bought a car with the money or spent it on vacations. The government is trying to convince people to save some money for retirement instead of blowing it on fancy cars and vacations. So they do give you that incentive.

But if someone is in say the 30% tax bracket and invests $7,000 in a Roth they will have already paid $3,000 worth of taxes on that money before even putting a dime into the Roth.

[Josh]

Generally, someone in a 30% tax bracket isn’t eligible to contribute to a Roth at all.