A Self Directed individual Retirement Account, also referred to as a self directed IRA is an IRA where the owner of the account is required to make investments and investment decisions as it relates to the retirement plan. Either a custodian or trustee is required by IRS regulations to hold the assets of the IRA for the IRA owner.
It is usually the practice that the custodian or trustee will keep the assets, all transactions, and additional records that relate to them. They will also will issue client statements, file reports required by the IRS, and help clients comprehend the regulations and rules that relate to actions that are prohibited and perform other duties as they relate to the owner of the self directed IRA for the life span of the IRA account.
Common Investments that are Permitted
Some investment options that are permitted within the regulations stocks include self directed IRA real estate, partnerships, tax liens and private franchises, stocks, and mortgages. The real estate IRA may include commercial and residential properties, raw land, property renovation, new construction, passive rental income, farmland and development. self directed IRA real estate can have a mortgage that is held against a property where the amount of the total cash that is needed for a purchase is lowered.
Investments in the area of business may include private stock, joint ventures, and partnerships. This can be the foundation for a business just starting out or it can be the means for a for-profit venture whose manager is someone other than the IRA account owner. Some other investments include commercial paper, U.S. T-bill, foreign stock, leases and equipment, a self directed Roth IRA, hedge funds, commodities and more.
There are self directed IRA investors that opt for what is known as a self directed IRA LLC structure in order to reduce paperwork, lessen fees and reduce delays in processing. With a self directed IRA LLC, the holder of the account directs the custodian of the IRA to invest in a limited liability company that is managed by the account owner. The owner of the account can make transactions at the limited liability company level without the involvement of the IRA custodian, which results in lessening fees and eliminating the transactional delays and fees of the custodian.Another great option for retirement investments is a Solo 401K. Solo 401K’s allow an individual to make large contributions and high tax deductions. Both Solo 401K’s and Self Directed IRA’s provide great solutions for your financial future. Both Solo 401K’s and Self Directed IRA’s provide great solutions for your financial future.