- What is Self-Directed IRA
- What is Self-Directed 401k
• Spouses – if they participate in the sponsoring company, they can participate as well, increasing the pool of investment dollars.
• Participants can transfer previous traditional IRAs (including SEP and Simple) and 401(k)s into the new plan.
• Contributions, nearly 10 times the level of IRA’s. Plan participants can contribute up to $55,000 (age 50 and above) and $50,000 (under age 50).There are no income limitations as there are with IRAs.
• Investments – you can invest in real estate, precious metal, tax liens, promissory notes, private placements and virtually anything else.
• Leverage – usingnon recourse loans, you can leverage your real estate investments and if done properly – tax free.
• Roth Contributions – Personal contributions can be designated asRoth, because there aren’t any income limitations, this allows for high income earners to enter the Roth arena.
• Loans – Plan participants can borrow up to $50,000 each. There is no qualifying. The monies can be used for anything you wish, cars, trips, education. When you pay back the loan, your plan is earning the interest. We provide the loan documentation and guidance.
• Tax Free Transfer of assets to your beneficiaries is possible, not with an IRA.
- Selection of the proper self-directed IRA custodian – this alone can save you thousands of dollars a year.
- Creation of the LLC for the IRA – not creating the LLC properly can cause the IRA to be fully distributed.
- Specialized Operating Agreement – creating the LLC is just the beginning. You have to know the proper rules to operate the LLC.
- Ongoing advice – LLCs are inexpensive entities, what you are really paying for is access to professionals who understand the ins and outs of the tax code in regards to IRAs. This is important as one fine or penalty can be 200K in fines alone.
- Checkbook control. Ever lost a deal because you couldn’t gain access to your money fast enough? That’s not going to happen again with your IRA LLC.
- Access to investment providers – A major part of our job is seeking out and finding alternative investment concepts that no one from wall street is going to share with you. Working with us means that you are in the “loop”.
- Asset Protection – What is the purpose of building up a large nest egg if the viper down the street can just slither in and take it all away from you in one frivolous lawsuit? With the LLC you have an additional layer of asset protection.
- Updated information – the tax codes are constantly changing. In the last year there have been a number of fines and penalties, to the tune of hundreds of thousands of dollars, added to the code to penalize those who are unaware. Our role is to make sure you are educated.
Can I invest my Self-Directed 401(k) in Real Estate?
Absolutely. Although less than 3% of retirement accounts are invested in non-traditional investments (anything other than Dow & Nasdaq stocks, bonds, CDs, etc), and less than 2% are invested in Real Estate, that is changing. More and more individuals are becoming more and more frustrated with the options offered by their current custodians. Individuals are exploring investments that they can see and touch and that have some tangible value such as Real Estate. They have seen the outstanding returns that investors have historically received in Real Estate and want to move all or part of their retirement money into various Real Estate investments.
Within the broad category or Real Estate there are many options for investment:
• Residential Rentals
• Commercial Properties
• Mobile Homes
• Raw Land
• Real Estate in Foreign Countries
• Trust Deeds / Mortgages, and Mortgage Pools
A truly Self-Directed 401(k) plan easily allows you invest in real estate. Because your plan has a checking account, you simply write a check to the title company, etc., and title the real estate in the name of the plan.
*How to purchase Real estate with Self-directed IRA
The Self Directed Retirement Plans LLC is the way to get checkbook control over your IRA. A self-directed IRA account isn’t enough. You will still need to get permission and have someone else sign off on all investments you want to make. If you are ready to be in control of your IRA, you need the Self Directed Retirement Plans LLC.
Can my Self Directed Retirement Plans LLC make loans to a Real Estate developer?
Yes. Your IRA can loan money to a Real Estate developer to finance the purchase of property or the development of the property. Developers often look for private financing so it is a great way to get your IRA involved in Real Estate Development. And because developers often pay an above market interest rate, the loan can be a great investment for your IRA.