With a self directed IRA, you'll get true freedom and control of your retirement account. A self-directed individual retirement account allows you to invest your IRA in real estate, notes, limited partnerships, private placements and more. You control the future of your retirement funds. Find out about the amazing tax advantages of a self-directed IRA!
Self-Direction Defined - "Self-directed" simply means that you, as an individual, have complete control over selecting and directing your own IRA or 401(k) investments. This control requires a specific type of account, and it opens the door to many nontraditional types of IRA or 401(k) investment.
Types of Investments - The great benefit of a self-directed retirement account is that it permits investment in real estate, limited liability companies and partnerships (LLCs and LLPs), and many other attractive nontraditional investments while deferring taxes on the gains. In the case of a self-directed Roth IRA or Roth 401(k), the gains are tax-free. In addition to real estate, LLCs, and LLPs, your account may invest in: Secured and Unsecured Notes , Trust Deeds and Mortgages , Partnerships and Joint Ventures, and Private Stock.
Retirement Accounts - An Individual Retirement Arrangement (IRA) is a personal retirement savings plan available to anyone who receives taxable compensation during the year. For IRA contribution purposes, compensation includes wages, salaries, fees, tips, bonuses, commissions, taxable alimony, and separate maintenance payments. Husbands and wives may each have an IRA, even if one person is not employed. There are several different kinds of IRAs to meet specific individuals' needs: Traditional IRA, Roth IRA, SEP IRA, and Simple IRA.
Additional types of plans and accounts that can qualify include Health Savings Accounts, Educational Savings Accounts and Individual 401k Accounts.
Prohibited Transactions in a Self-Directed IRA - Self-directed IRA accounts provide a great deal of freedom, flexibility, and choice of potential investments. Yet, they are also governed by a set of rules that self-directed investors must be aware of and follow.
Prohibited transactions - Some types of self-directed transactions violate the basic intent of your IRA, and subject your account to risks and penalties. In discussing this, we define a 'transaction" as the means of moving funds into your retirement account and using the funds in the account for your self-directed investments. These transactions include contributions, purchases, sales, and distributions.
Your retirement plan is intended to benefit you when you retire, and not before. Transactions that can be interpreted as providing immediate financial gain to self-directed account holders are not allowed. This type of transaction is otherwise known as "self-dealing." For example, IRA holders may not: Borrow money from their IRA , Sell, exchange or lease property to their IRA, Receive unreasonable compensation for managing property in their IRA, Use their IRA as security for a loan, Transfer plan income or assets to disqualified persons, Lend money to disqualified persons, Extend credit on their IRA to disqualified persons, Furnish goods, services, or facilities to disqualified persons or Allow fiduciaries to obtain or use the plan's income or assets for their own interest.
For IRAs or 401(k)s, a disqualified person is: The IRA holder and his or her spouse , The IRA holder's ancestors, lineal descendants, and their spouses, Investment advisors and managers, Any corporation, partnership, trust, or estate in which the IRA holder has a 50 percent or greater interest, or Anyone providing services to the IRA, such as the trustee or custodian.
This is just a brief overview of Self Directed Retirement Plans. If you live in Southwest Florida and would like to open a Self-Directed IRA account or just get more information, contact The Entrust Group at 239-333-1031 or go to our website here.
