The Self-Directed IRA: The Hidden Truth


TruthA Self-directed IRA (Individual Retirement Account) is a special kind of IRA that allows the owner to make the investments for the plan. The IRS requires that an experienced trustee or custodian holds and manages the assets of the IRA on behalf of the owner. The trustee will maintain the assets and records pertaining to them. They will also file all the IRS required reports and issue statements to the client. They also make sure the client understands all of the regulations that pertain to prohibited transactions and take care of all of the admit duties for the owner of the self-directed IRA.

 

Custodian rules

The trustee/custodian will offer a selection of asset types that are standard for IRA’s that the owner can choose to invest in. This will include such investments as mutual funds, stocks and bonds. The custodian will also permit the owner to make other kinds of investments. There is a large range of allowable investments, but the IRS places limits on the types of possessions that may be invested in and on what kinds of transactions that can be carried out.

 

Investment Real Estate

One type of investment that self-directed IRA owners are making use of is investment real estate. The IRA can take out loans for investment property of a wide variety of types. They can acquire rental homes as well as businesses that produce an income. The business can’t be one in which the owner of the account personally runs and the loans for investment properties must be of the Non-Recourse type of loan. What that means is if for some reason the loan defaults the only thing that can be taken is the property that is the sole collateral for the loan. The lender cannot be able to come after the IRA itself or the owner of the self-directed IRA.

 

Rental Properties

One thing that can be done is to buy a home that you want to live in after retiring and rent it out as a rental property until you start taking disbursement from the IRA. This allows you to buy a home at today’s prices and being able to defer any profits from the rental income received above the expenses. This is a great piece of long term planning for a home you will want to live in after your retire. The fact that your self-directed IRA owns the house as an investment property means if you change your mind on where you want to live later on, you can either retain the property as an income producing property or sell it.

 

Consult First

As usual you will want to consult with your tax accountant before setting up a self-directed IRA and when you are planning to make certain types of investment choices within that IRA. This is the best way to insure that you will be making the best choices for you and your self-directed IRA. The sooner you get the advice and get your self-directed IRA set up, the more time you will have to make the investment decisions that will grow your IRA to provide you with the best retirement.

(Clinton Douglas IV is a real estate investor who writes self directed IRA secrets on his blog. Read more here >> http://absolutewholesellers.vasrue.com)

Written by Jon the Saver

This post was written by yours truly, Jon Elder. My mission is to help you succeed in your personal finance life. Join me on the journey to financial freedom! You can subscribe through RSS FEED or EMAIL updates. You can also find me on TWITTER
and FACEBOOK
. Happy investing 🙂

Jon the Saver

This post was written by yours truly, Jon Elder. My mission is to help you succeed in your personal finance life. Join me on the journey to financial freedom! You can subscribe through RSS FEED or EMAIL updates. You can also find me on TWITTER and FACEBOOK . Happy investing 🙂

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