SELF DIRECTED IRA’S ADVANTAGES
February 5, 2022 - Douglas Myser
Self directed IRA's advantages. Tax advantaged retirement accounts, such as IRA's are one of several options to save for retirement. When you establish a traditional IRA with a bank, investment house, or trust company, you are ordinarily limited to a narrow range of investment options, such as CD's, publicly traded stocks, bonds, mutual funds, and ETF's. Due to fiduciary concerns, the IRA custodian will not permit you to invest in alternative investments such as real estate, precious metals, or cryptocurrency. Self directed IRA's advantages.
If however, you establish a self directed IRA, you are not limited to these restrictions. Investment options include, but are not limited to the following, Real Estate, Private Businesses, Trust Deeds and mortgages, Tax Liens, Precious metals, Private Offerings, LLC's and Limited Partnerships, REIT's, Livestock, Oil and Gas interests, Franchises, Hedge Funds, Cryptocurrencies, and Promissory notes. Aside from the vast array of investment options, a self directed IRA is the same as a traditional IRA and subject to the same rules. The income the investments in your IRA earn is not taxed until you take distributions before age 59 and a half are subject to a 10 percent penalty unless an exception applies. You can also have a self directed Roth IRA for which IRS distributions are tax free after five years.
To establish a self directed , first open an account with a custodian that offers self directed investments. You can also acquire checkbook control over your self directed IRA by forming a LLC to own all the IRA investments. You can also acquire checkbook control over your self directed IRA by forming the LLC and becoming a owner of the LLC. But you must avoid self dealing and other prohibited transactions, or your self directed IRA could lose its tax advantaged status. Making sure you follow all the rules regarding a self directed IRA is imperative if you go this route, otherwise you could lose your tax advantaged status.
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