Did you know that it was possible to use your IRA retirement funds to invest in investments other than stocks, shares and mutual funds? Did you know that, in fact, any legitimate business investment opportunity may be open to you for investment – real estate, mortgages, tax liens, private notes, structured settlements, riverboats, factoring, oil and gas exploration, golf courses, franchises, bonds, commodities and futures, marinas and limited partnerships?
All of these meet the requirements as IRS-permitted investments which can be made within a qualified retirement account. Once established, the custodian or facilitator should roll the current funds into a self-directed IRA LLC. This is a nontaxable, penalty free and legal business transaction.
You didn’t know?! This isn’t surprising. The majority of Americans and their financial advisors are not aware of the use of self directed IRAs. Or, in the case of financial advisors, if they are, are not willing to provide the required custodial and administrative services for such accounts.
But you shouldn’t let your existing financial advisor’s lack of knowledge on the subject matter prevent you from taking advantage of this method of diversifying your retirement. The stock market has let many investors down over the past few years due to financial scandals and economic and political uncertainty as a result of global terrorism and uncertainty over oil and gas pricing by conveyancing melbourne. Yet other markets and business arenas have prospered plentifully. America is currently undergoing a real estate boom and other money-making areas are demonstrating strong and consistent performance. It would be nonsensical not to benefit from these developments. No one is advising moving all of your funds across to these areas, but the old adage about not putting all your eggs in one basket applies as much to stocks and shares as to any other investment.
Only a small number of financial service firms in the nation have the ability to deal with the challenging research, extensive paperwork and IRA-reporting required to administer non- traditional assets within IRA accounts. But they do exist. The custodians of these accounts are not there to sell you a product, something not always true of more traditional firms. Instead they act as a third party as required by IRS rules to ensure that the year-end IRA statement reflects the state of the LLC.
A self directed IRA Advisor can assist investors in identifying any prohibited transactions which are likely to result in a penalty or taxes or even lead to the IRA being disqualified. If you are going to make investments in the self directed mode it is recommended you don’t make an investment decisions without at least bouncing the strategy off an experience self directed IRA advisor. To go it along could be financial suicide for your IRA and your retirement.
So if you’re current retirement plan is not giving you the returns you expected or allowing you the flexibility to diversify your investments, the self-directed IRA provides you with a legitimate and potentially far more profitable and secure alternative.
However, you should also be aware of the potential pitfalls –
- You must enlist a custodian to legally protect your retirement savings under IRS rules.
- Beware of cookie cutter solutions to setting up the self directed IRA LLC- your IRA LLC must be compliant with IRS rules as they apply to your particular business.
- You don’t have to transfer all your IRA funds in one self directed IRA, you can transfer only part of your existing retirement accounts so that if the investments do fail or the IRA is disqualified due to a prohibitive transaction you haven’t put your whole retirement fund at risk.
- It is a good practice to run any business deal by a knowledgeable advisor – the primiary reason for suffering disqualification or penalties is using an asset for your immediate benefit or that of your family. An experienced self directed IRA advisor can help you stay clear of the potential prohibitive transactions. This could not be anymore true than Rollins vs. The IRS Court Case
- If you set up a business under your IRA, bring in outside investors not only to increase the stake but so that you can draw a salary.
Above all, make sure you pick a qualified self directed advisor who provides support can help you avoid potential pitfalls and IRS penalties. Some so called self directed IRA opportunities are at best are an accident waiting to happen. Always check your financial advisor’s credentials before taking him on.
Retirement IRAs are non-taxable and a legal business. You could transfer a portion of your existing retirement accounts into a self-directed IRA, while if it fails, you would not have to lose everything. Setting a business under your IRA could give you a salary as well as increase stakes by bringing in outside investors.