Buying your Yacht and Sailing it too

When your IRA owns a yacht you may not use it (see 10/19 post). However, there is a way to own a vessel with retirement funds and use it.

The Yacht Adventure

The boat pictured above is the sailing vessel Mango, the first rollover business startup (ROBS) in the US Virgin Islands. Mango belongs to Time of Your Life Adventures. The corporation owners, Kelly and Dianne, live aboard, and offer Mango for charter. They also happen to know all of the best snorkeling places in the USVI and BVI. Why do they get to use the vessel purchased with their retirement funds? It’s like they can have their cake and eat it, too.

The Structure

Rather than buying Mango directly with their IRA, I showed them how to create a US corporation, have that corporation sponsor a 401K plan for the benefit of all of its employees that allows the plan to hold qualified employer securities, transfer retirement funds into an account opened in the name of the plan, move funds from the plan account to the corporation as a stock purchase, corporation purchases the vessel. Voila!

The corporation must be an operating company, meaning produce business income, file a corporate tax return, follow generally accepted corporate accounting principles. See this article for the complete picture of a proper ROBS startup structure. The bottom line is, you have options. You can purchase the vessel (or real estate, or other assets) as a passive investment directly with your IRA, or as an active investment through a ROBS structure.

What are you waiting for?

If you have transferable retirement assets and an idea worth pursuing, why not live your own dream rather than someone else’s dream? Maybe its a bed and breakfast, a campground, an island, a restaurant, that franchise idea that keeps you up at night. No guarantees, just an opportunity. Now is a good time to find out how to make it happen. Inviting me to your grand opening is welcome. I might even show up! Just as Dianne and Kelly.

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