With the recent downturn in the financial markets, it has become even more important for retirement fund investors to diversify their retirement assets and protect their hard earn retirement savings from overexposure to Wall Street and to a falling U.S. Dollar. Many investors are starting to turn to a Self Directed IRA Real Estate as a means of diversifying their investment portfolio. An increasing number of U.S. investors have lost faith in Wall Street and have recognized the value of diversifying their retirement portfolio with real estate and other investment options. When people talk about diversifying your retirement portfolio what they generally mean is that you should diversify your investments completely and globally. The investment research writings suggests that a fully diversified retirement strategy is superior. Therefore, using an IRA Real Estate Self Directed to purchase domestic or foreign real estate is an excellent vehicle to diversify your retirement portfolio.
Unfortunately, all major financial institutions will now allow one to allocate IRA or 401K funds in real estate or anything essentially outside of Wall Street. The reason for this is simple. Banks do not make money when you buy real estate or gold. They make money when you buy stock, mutual funds, and other financial products they market. As a result, a large number of individuals have been turning to an IRA Real Estate Self Directed to purchase real estate.
A Self Directed IRA also called a Self Directed IRA LLC with checkbook control or a Real Estate IRA is an IRS approved structure that allows one to use their retirement funds to make real estate and other investments tax-free and without custodian consent. The IRA Real Estate Self Directed involves the formation of a limited liability company (“LLC”) that is owned by the IRA and managed by the IRA holder (i.e. you) or any third-party. As manager of the IRA LLC, you will have checkbook control over the IRA assets to make the investments you want and understand when you want, such as real estate, not just investments forced upon you by Wall Street.
With an IRA Real Estate Self Directed, you will have the power to act quickly on a potential real estate investment opportunity. When you find a real estate investment that you want to make with your IRA funds, as manager of the Checkbook IRA LLC, simply write a check or wire the funds straight from your Self Directed IRA LLC bank account to make the investment. The IRA Self Directed Real Estate allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself. In addition, with the IRA Self Directed Real Estate structure, all income and gains from IRA real estate investments will generally flow back to your IRA LLC tax-free. Because an LLC is treated as a pass-through entity for federal income tax purposes and the IRA, as the member of the LLC, is a tax-exempt party pursuant to Internal Revenue Code Section 408, all income and gains of the IRA Real Estate Self Directed LLC will flow-through to the IRA tax-free!
In light of the recent Wall Street meltdown, the IRA Real Estate IRA Self Directed provides an attractive diversification tool for investors looking to diversify and protect their retirement portfolio.