Self-Directed IRAs can potentially provide solutions for an IRA investor to solve some of the problems they face in retirement or as they are approaching retirement. The real key is allowing you to invest in what you want, when you want, how you want, and where you want.
A Self-Directed IRA is a Standard IRA that is administered by a Custodian that allows complete flexibility under Internal Revenue Service rules in regards to your IRA investments. All IRAs are governed primarily by Internal Revenue Code Section 408 and secondarily by other various code sections.
Characteristics of a Typical Self-Directed IRA
- Account is established with a Self-Directed IRA Custodian.
- Potential for IRA growth.
- Opportunity to feel more comfortable investing in what investors are familiar with.
- Opportunity for a diversified investment menu.
- Proprietary investment products and platforms are not mandatory.
- Not limited to traditional investments.
- Premature distribution, with income taxes or penalties, not necessary to invest in preferred assets.
- Certain assets can create Unrelated Business taxable Income and associated tax.
- Tax-deferred asset growth continues until distribution.
- Opportunity to reposition current assets to take advantage of current financial markets.
- IRA funds can be invested to help balance out investment losses outside their IRA and/or retirement plan.
- Additional fees will be levied.
- IRA assets can be invested to potentially meet financial goals such as increasing net income.
- Create a truly "diversified portfolio" with assets not correlated to traditional investments.
- The diversified investment menu may include, but is not limited to:
- Real Estate Investment Trusts (REITs) – both public and private
- Private Placement investments & Direct investments:
- Real estate
- Oil & gas
- Leasing
- Mortgages, notes, & deeds of trust
- Tax liens and tax deeds
- Loans and notes
- Equipment leasing
- Delaware Statutory Trusts (DST)
- Businesses and franchises
- Private and publicly listed stock
- Limited Liability Companies (LLCs)
- Limited Partnerships (LPs)
- Individually owned or jointly owned real estate
- Foreclosures
- Short sales
- Residential
- Single family
- Multi-family
- Commercial
- Raw Land
- Developed
- Undeveloped – raw land
- Options on real estate
Self-Directed IRAs can potentially provide solutions for an IRA investor to solve some of the problems they face in retirement or as they are approaching retirement. The real key is allowing you to invest in what you want, when you want, how you want, and where you want. According to Jason Helquist, MA, LL.M, and Chief Compliance Officer of Provident Group, a Self-Directed IRA Custodian located in Las Vegas Nevada:
"An additional potential characteristic of a Self-Directed IRA, and all other IRAs, is that for federal purposes, IRA assets of an IRA owner who files Chapter 7 bankruptcy might be protected in bankruptcy. The current rules, established in 2005, can protect IRA values up to $1 million. Rollover IRAs may benefit from an unlimited protection amount. Individual states may treat each bankruptcy and situation differently. If you plan to file bankruptcy, or find yourself in the middle of filing bankruptcy, it is vitally important that you consult with tax, legal, and financial professionals who are very knowledgeable in the treatment of IRAs in bankruptcy proceedings for both federal and state purposes." |
