Self Directed IRAs

Did you know that you can invest in real estate, mortgages, leases, and other asset backed investments inside your retirement plan?  

Since 1975 self-directed plans have been available, although relatively few IRA holders have taken the time to understand their options and take advantage of such plans.

There are three things you should know when you self-direct your retirement plan:

• Which retirement plans are best – Traditional IRA, Roth IRA, SEP, Simple or Individual(k)
• What types of investments you want to make within the plan
• Understand the IRS rules of self-dealing and prohibited transactions

The IRS rules regarding prohibited transactions are not too complex, yet one should consult a tax advisor for specific advice.  Transactions are prohibited between you and your immediate family (except siblings), employers (in a qualified plan), certain partners, fiduciaries and other categories spelled out in the IRS code.  IRA owners may not borrow money from their Self Directed IRA, sell property to it, receive unreasonable compensation for managing it, or use as security for a loan.  There are also several named categories, such a collectables which also may not be held by your Self Directed IRA.

The opportunities outside these prohibited transactions are significant.  You may buy, sell or exchange investment property.  You can partner with friends, relatives and business associates to purchase property, then lease it to anyone that is not a disqualified person.  You can roll property from one plan to another – or even take property from your plan as a distribution.

Some individuals have formed investment groups, combining IRA and non-IRA funds to purchase and hold property, rehab and turn properties or simply lend out the funds in the form of notes and mortgages. 

In addition to these, a Self Directed IRA may also invest in partnerships, LLCs, private stock offerings, loans (both secured and unsecured), tax lien certificates, purchase options, joint ventures and other investments.

So if you are confident in your abilities to make your own investment decisions, have the desire to reduce or eliminate the tax consequences on your gains, and have the resources to invest – self-direction may prove to be a wise choice.

Source:  Glen Mather, NuView IRA

 

Self Directed IRAs require a special self directed administration company.  D2 Capital Management uses the services of NuView IRA for those clients who desire to self direct their Individual Retirement Accounts.  D2 Capital Management may receive compensation for this.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.