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Investing in alternative assets with an IRA or 401(k) has never been easier
Few investors realize that the IRS has always permitted real estate to be held inside IRA and 401(k) retirement accounts. Alternative asset investments, such as in real estate, investments funds, and more recently cryptocurrency, are fully permissible in self-directed accounts and popular choices among investors.
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Have questions about investing in alternative assets? Call or send us a message and a specialist will respond as soon as possible.
3 Simple IRS Rules
The Internal Revenue Code does not describe what a self-directed retirement account can invest in, only what it cannot invest in. Sections 408 and 4975 prohibits Disqualified Persons from engaging in certain types of transactions. Only 3 types of investments are not permitted:
- Life insurance (an exception exists for 401(k) plans)
- Collectibles, such as art
- Any transaction that involves or directly or indirectly benefits a “disqualified person,” which is generally defined as the retirement account holder, their lineal descendants, or any entities controlled by such persons.
Most Popular Alternative Asset Investments of 2022
- Residential or commercial real estate
- Domestic or foreign real estate
- Raw land
- Foreclosure property
- Hard money lending
- Private loans and businesses
- Tax liens
- Limited liability companies and partnerships
- Precious metals and certain coins
- Stocks, bonds, mutual funds
- Foreign currencies
- Hedge funds
- Private equity funds
- Mortgage pools
Advantages of Investing in Alternative Assets
Diversify Your Assets
Investing in alternative assets offers a form of investment diversification. The more diverse your portfolio, the greater chance that your assets will offer lower correlation.
Invest in what you know and understand, such as real estate, Bitcoin, raw land, tax liens, and much more.
Invest Tax Free
All income and gains from your alternative asset investments flow back into your Self-Directed IRA or 401(k) plan tax free.
Self-Directed Retirement Options
You’ve decided you want to invest in alternative assets, so what plan should you choose? A lot depends on the type of income you earn. Are you self-employed or do you work for someone else? If you are self-employed, it’s a no-brainer; the Solo 401(k) is the best plan for you. For everyone else, a Self-Directed IRA is the way to go.
The best retirement plan for the self-employed or small business owner with no full-time employees. Contribute up to $58,000 or $64,500 in pre-tax or Roth, borrow up to $50,000 tax and penalty-free, invest in stocks and alternative assets, use leverage for real estate without tax, and gain strong asset and creditor protection.
The perfect vehicle for making alternative asset investments if you are not self-employed. You can have IRA Financial make your IRA investment directly or you can use an LLC, wholly owned by the IRA, to gain checkbook control. As manager of the LLC, making an investment is as easy as writing a check.
How we’re different
Our tax and ERISA experts have helped over 16,000 clients invest $4.6 billion in alternative assets.
Our founder, Adam Bergman, was a tax lawyer and is the author of 8 books on self-directed retirement plans.
In addition to tons of online resources, IRA Financial gives clients access to experienced specialists dedicated to your peace of mind.