Do you have access to charities, churches, or other 501(c)3 organizations? What if you could show them a way to jump start their charity? Some organizations have taken this concept and turned it into a marketing mechanism, but the principles and fundamentals behind the concept can still be used.

What if you could show a charity a to tap into their donors IRA assets NOW – and allow the donors to retain a fixed income back to their IRA?

How do we do this? The answer is Financial Arbitrage through a Self-Directed IRA.

Self-Directed IRA’s are permitted to makes loans to outside entities including charities. In turn, the charity repays interest on the loan annually with a balloon principal payment at death. The transaction is then collateralized by SPIAs and Life Insurance for the Loan.

Based on financial arbitrage, an excess surplus is created to benefit the Charity IMMEDIATELY!

Client: Mary Smith is 75/F

Mary Smith has $500k IRA – Client rolls over $100k to Self-Directed IRA

Self-Directed IRA invests in a note to a charity for $100k. At Long Term AFR of 4.3% – the debt service is $4300 annually. Life insurance annual premium is – $3264 annually.

Using a financial arbitrage of life insurance and SPIAs – the result is:

Of the 100k loan principal you take $33,521 + $44,128 and put into a SPIA. The $33,521 is for the insurance service payment, and the $44,128 is for the debt service payment back to the Self-Directed IRA.

Of the $100k – $77,649 is allocated to a SPIA to fund the debt service and life insurance premium. Leave’s the charity with an immediate charitable contribution of $22,351.

The client also has invested into an asset that is guaranteeing 4.3% to the IRA.

WIN-WIN-WIN Scenario

For any questions, please contact your BIP Brokerage Manager!