You Can Invest in Real Estate With Your Retirement Savings Account
The Truth About Self-Directed IRA's
Most people believe that an IRA can only be used to purchase investments like stocks and mutual funds. Not true! When IRA's were first introduced, the only companies that offered them were large brokerage firms that only sold stocks and mutual funds. When you chose to open an IRA with them, they gave you a variety of investment options to choose from. What they didn't tell you was that all the options given to you were investments that they sold and would make commissions on. They left out all the other things that you're allowed to invest in with your retirement dollars. All because they didn't sell them and would not make any money on those investments.
Which gave birth to Self-Directed IRA. The IRS set forth guidelines dictating what you can and cannot invest in with your IRA. You wont believe all the the option you have available to you: Gold bullion, to tax liens, to real estate investments and even real estate notes. IRA's are much more powerful than most people ever realized. Add to that the power of a Roth IRA which allows you to enjoy your earnings tax-free, and you've got a fast road to retirement.
Unfortunately, many people don't know what they don't know and blindly invest in stock markets established by their custodian. Most people that have retirement accounts, in our experience, didn't know they could invest those funds, via a Self-Directed IRA, in real estate Notes that are fully secured by a Deed of Trust or Mortgage, and insured.
Imagine having a fixed, secured, insured, tax-free gain of 10% to 15% or more annually. Then compound that over the next couple of decades! That's a beautiful blend of safe, secure investments, with the high yields normally found only in more aggressive and risky investments.
Now before we dive into the juicy details… Understand, we are not financial advisers nor does the literature above or below constitute financial, tax, or legal advice. It is for informational purposes only. Consult your own professional advisers before making any financial choices.
Rolling Over Existing Retirement Plan Funds
"Hey Mr. Investor, I have an existing retirement account, Can I move it to a self-directed IRA?"
- I have 401(k) or a 403(b) account with a former employer.
Yes, you can rollover to a self-directed IRA or Self-Directed 401k.
-I have a traditional IRA with a bank or brokerage.
Yes, you can transfer to a self-directed IRA or Self Directed 401k.
- I have a Roth IRA with a bank or brokerage.
Yes, you can transfer to a self-directed Roth IRA.
- I inherited an IRA and keep the account with a brokerage or bank as an inherited IRA.
Yes, you can transfer to a self-directed inherited IRA.
- I have a 401(k) or 403(b) account with a current employer and I am under 59 1/2.
Probably not, usually while employed and below retirement age (59 1/2) you cannot
transfer or roll over your retirement plan funds. Its only once you have resigned
from that establishment are you able to directly allocate your funds.
What Real Estate Transactions Can I Invest In???
Lets See an Example...
Lets say you've have a SDRP (Self Directed Retirement Plan) and decided you want to work with a real estate investor to start making profits for your Retirement plan.
What would that look like?
Prohibited Transactions and Disqualified Personnel
Ok Great! How Do I Get Started?
Locating the Perfect Self Directing IRA Custodian
This can be easy-peazy with the right guidance and that's something Kiwi Home Buyers can help with. Fill in your information Here for Help. An IRA custodian basically is a financial institution that holds your account's investment(s) for safekeeping and sees to it that all IRS and government regulations are adhered to at all times.
If you've read this far you probably see the advantage of SDRP's and interested in creating one for yourself. For your reference we have included links to companies that help with set up and account transfer.
We strongly suggest you do your due diligence first before selecting the right Custodian for you.
What Do I Need to Know Before Opening an SDRP Account?
There are a few eager SDRP companies looking to obtain your business so be wise in your decision making. For instance, finding a IRA custodian that has no Annual Fees is always a plus. Transactional fees and or investment management services are also expenses to watch for. Some companies charge as little as 0.25% to 0.50% of your account balance for a full-service investment management services.
P.S. See if they have promotions or cash incentives.
Before you start comparing, take time to consider what you want from your IRA an ensure they are applicable custodians. For instance some custodians only offer access to stocks and bonds, while others permit more exotic investment options such as commodities or real estate properties as discussed above. To see custodians that cover a wide range of investments including Real Estate, see below.
Most custodians are good about providing you with what you can and can't do for account transfers so be sure that the custodian is transparent about all the account details for crating a Self Directed Account. Also, ask them to discuss the age-based rules that may affect you, particularly at ages 55, 59½ and 70½. This can be important in your fifties and sixties, as you prepare to transform your IRA from a vehicle for saving and investing money to a retirement source of income.
See the links below for further details
Join Our Community to Discover your Best Life.
Make sure to have fun while you're making money! Increasing your portfolio should be a joyful event. Earning while you learn real estate and finance is such a rewarding gift. When you invest and begin to understand the ends and outs of Investments and finance, you soon realize you have a jewel that no one can take from you. Now the biggest benefit becomes using your new found knowledge to show someone else the way. Taking a step towards financial freedom isn't always easy, so your courage is admirable.
But! That's just the first step. It's crucial to have resources that help you navigate your financial road track, someone who's opinion you value. The importance of this is so you don't have to feel like you are going this journey alone.
That's why we, Kiwi Home Buyers, are here to help. Feel free to reach out to us by phone @ 224.201.6044 or by email @ info@KHBchicago.com. We'd love to be a resource to help you get investing in secured and insured real estate today. We also have a big reference book that allows us to get in touch with the right professionals that are right for you. Congratulations and we look forward to talking to your soon.