Wednesday, September 30, 2009

Fully Self-Directed Retirement Accounts

As I mentioned earlier, Americans currently have $14 trillion in their 401(k)s and IRAs (Retirement Fund = RF). These are investments that could be directed towards a green, local and sustainable economy although 97 percent of these investments are currently invested in Wall Street.

In a fully Self-Directed RF, the beneficiary can direct the trustee to purchase almost any investment that wouldn't be disallowed by the prohibited transaction rules. These rules generally disallow investments involving personal use, self-dealing, related-party transactions and investments in collectibles, life insurance, antiques, works of art, etc.

RFs are essentially trusts, established for a beneficiary and held by a trustee. Most RFs are held by trustees that limit investment options to a narrow menu of choices. These may be called "Self-Directed" RFs because the beneficiary "directs" the investment, but options are limited by the trustee to predetermined menu of investments.

It is however possible to create RF trusts with trustees who allow investments in alternative assets like real estate, private lending, VC investments, private placements, precious metals, LLCs, international holdings, etc. These trusts are fully self-directed. Just like any RF, the investments are held by a trustee for the beneficiary in the RFs name.

Let's say you wanted to invest in a LEED-certified commercial infill project in your neighborhood to provide positive cash flow and capital appreciation. There are numerous advantages making that investment inside the walls of your RF including tax deferred or tax-free earnings (including any gain on sale), bankruptcy creditor protection, and pretax deductions on your contributions.

A trustee of a traditional, Roth, SEP, or SIMPLE IRA can allow these types of investments although most don't. Employer provided plans like pension and profit sharing can also be placed with a trustee who allows these types of investments though it may be necessary to amend the plan documents.

I'll come back to this discussion because it provides great opportunity to fund the green revolution and it is too complex to handle in a single blog post. Feel free to contact me at my office if you need immediate information.

Tuesday, September 29, 2009


Just a quick reminder that this weekend, October 2nd-4th, Portland will host EcoNvergence, a northwest regional gathering on the economic and ecological crisis/opportunity. All the events will be hosted at the First Unitarian Church (12th & SW Salmon).

Speakers include keynotes by Noam Chomsky on Friday night and Derrick Jensen on Saturday night. Both of these are a few of my favorite thinkers and writers. Both provide deep and thoughtful analysis and solutions that get to the root of our problems.

Thursday night at 7:00pm is the world premier of the the movie Plunder, by award-winning producer Danny Schechter. This movie is free of charge so I hope to see you there.

Saturday, September 26, 2009

Funding the Green Revolution

I believe in Main Street and am philosophically opposed to Wall Street and what it has become. The financial sector’s purpose should be the reduction of risk and the efficient allocation of capital. Wall Street has failed at both tasks.

Finance is a means to an end, but the financiers of capitalism have turned finance into a profit center that essentially skims more and more out of the Main Street economy and into the pockets of a few. They often add no value yet have manipulated the game for their benefit. Those folks care about money and money only. Don’t expect them to understand the green revolution. I personally don’t believe a publicly-traded company can be sustainable anymore than a rock can fly.

Everywhere you turn, you see rules created by corporate lobbyist and their politicians that protect Wall Street to the detriment of Main Street.

As a result of the rules, Americans have $14 trillion invested in IRAs and 401(k)s with 97 percent (97%!) invested in Wall Street’s stocks, bonds, CDs and money market funds. Just 3 percent of individual retirement funds are invested in alternative assets like real estate, private lending, VC investments, private placements, precious metals, LLCs, international holdings, etc.

How many of us green minded folks would like to defund Wall Street and refund Main Street using our retirement funds? I certainly would and this isn’t an all or nothing proposition. But many people have six figure retirement accounts with their money invested in the very companies who are destroying the planet. Does that make any sense?

In my next post I will disclose an approach we could use to help fund the Green Revolution.

Sunday, September 20, 2009


Wow, it has been a busy month since my last post. I apologize and am going to try to be more frequent. I was doing a pretty good job and then came August and now September. Vacations, lots of work, great weather …. I think you get the idea. It is also hard for me to get back into the rhythm once I stop. This is going to be a short post just to get the blogging juices flowing again.

Last week I got the opportunity to hear Paul Hawken speak in Portland at the Sustainable Industries Economic Forum. I’ll share with you a few things I picked up and/or found interesting.

First, did you know the U.S. Green Building Council is now the largest environmental NGO in the world? What an accomplishment for an organization just 16 years old. Hawkens asked the question, “Where are the other U.S. Green _____ councils?” This got me to thinking about the need for a U.S. Green CPA Council. We need leadership from every profession and CPAs could play an important role. Accounting is nothing more than storytelling with numbers and the story we’ve been telling has been woefully misleading.

Being in Portland, Paul also mentioned the green energy boom both here and around the country. How we are transforming our cities to be places where one can get almost everything they need without driving a car. One point I wrote down that seems super important is the fact that the future lied in a radical reduction on the demand side of the equation. We can’t achieve sustainability without addressing the demand side and this requires transformational social and policy change.

Mayor Sam Adams spoke briefly and addressed the city’s commitment to sustainability. Portland has committed to a 90 percent reduction (from 1990 levels) in CO2 by 2050. 90 percent! Thank you Mayor Adams. What is your city doing?

Dave Williams, CEO of ShoreBank Pacific, also spoke at the Forum. He mentioned how the top 4 banks control 60 percent of total deposits if you include the largest 25 banks. These giant banks control 40 percent of all deposits. Would the banking disaster have occurred were there a law to limit the scope and size of any bank to say 2.5% of total deposits? Because of the corporate domination of our political system, nothing has changed since the big meltdown. In fact, things have actually gotten worse and more concentrated.

It feels good to write again. I won’t take so long between posts. Now go out and change the world!