Some Basic Facts About the Self Directed IRA

Posted @ 8:47 pm - Filed under 401(k)'s & IRA's, Buying Income Property, RE investment strategies, Retirement

Consider this the first of many, (Lord only knows how many) posts on Self Directed IRAs/401Ks — along with acquisition of real estate using them as a tax deferred vehicle. Geez, just reread that sentence, and it sounded like one of the talkin’ heads on CNBC’s many financial shows. Anywho, let’s get started.

Let’s start with the answers to a buncha basic questions.

Just what is a Self Directed IRA?

In a nutshell it means you’re in charge of what investments will be made. But there’s a caveat. Not all are created equally. Some say you’re in charge yet limit what’s on your investment menu. Pick your ‘custodian’ carefully, as there are many ways a high quality custodian can be worth their weight in gold. More on custodians later.

In what can a Self Directed IRA invest?

The answer is kinda backasswards. What’s OK is delineated by what’s NOT allowed — Life insurance contracts — Capital stock in S Corps — Collectables. The rest of the investment menu is wide open with the proper custodian.

Are Seps and 401K’s also allowed do act in this manner if Self Directed?

The short answer is, you bet they are. They can pretty much do what IRAs can.

Note: If you’re 59½ or older you can convert your 401K (called a rollover) to a self directed IRA. That’s a smart move for most, not all. Also, if you’ve left a company, your 401k there can be rolled to a self directed IRA. Again, recommended for most, but not all.

Can I buy real estate with my IRA?

That’s a trick question, as you wouldn’t be readin’ this stuff here if ya couldn’t.
That goes for your Roth IRA and your Sep too. Just sayin’…

Last question for today — How long has this been possible?

Surprisingly, buying real estate with these plans has been possible since they were first created, over 30 years ago. Most people haven’t been aware. Heck, I only found out about it back in the late ’80’s. Just finding out yourself? Better now than never, right?

Call me with your questions. 619 889-7100 will get you to me. Also, try this to find out about retirement planning in today’s world. Have a good one.

This entry was posted on Tuesday, October 13th, 2009 at 8:47 pm and is filed under 401(k)'s & IRA's, Buying Income Property, RE investment strategies, Retirement. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.