Self Directed IRA

What is a Self Directed IRA?

2012-01-10T21:52:00.000-08:00

A Self Directed IRA is an IRA that allows you to choose your own investments. Your current IRA provider will probably tell you that you can choose your own investments -- "Oh sure, you can choose between the Janus Fund and the Fidelity Fund." No, that's not what I'm talking about. With a real Self Directed IRA, you can invest in not only stocks and mutual funds but also real estate, businesses, notes, and just about anything you want, as long as you avoid certain prohibited transactions. Prohibited transactions are simply transactions where you use the money to benefit yourself instead of your IRA, but it's important to read and understand the details.

So if you're tired of losing money in the stock market by mutual fund managers, a Self Directed IRA is the way to go.

You can easily convert a non Self Directed IRA into a Self Directed IRA. You can also convert a 401K, if you have one sitting around from a former employer. If you have a 401K with a current employer, you probably don't want to convert it to an IRA, since you would no longer get matching funds.

Downsides of a Self Directed IRA

While Self Directed IRAs offer a lot of advantages, there are also some downsides to be aware of. For one thing, you can't just go out and invest the money. You have to have a custodian company (i.e. babysitter) that actually does all the investing. So, for example, let's say you want your IRA to invest in a house. Rather than writing a check to buy a house, you have to request that your custodian send a check. And instead of managing the property yourself (not that you'd want to), you have to hire a property management company and the custodian has to pay them out of the IRA. There are a few little tasks like this that the custodian has to carry out, and they all seem to cost money.

But the upsides definitely outweigh the downsides.

Selecting a Custodian

I looked at all sorts of custodians. Some really nickel and dime you for every little thing, (Pensco and Sterling Trust for example). No thanks.

A lot of real estate gurus promote Equity Trust for some reason. Equity Trust doesn't nickel and dime you as much, but their annual fees get really high (up to $1850 per year) if you have a lot of money in your account. And I for one plan to have a lot of money in my account! So no thanks.

Entrust offers a pretty good deal. But the best one I found was Sunwest Trust. They charge a $50 setup and then a flat $190 per year if you go with the IRA LLC option.

IRA LLC

The best way to go when setting up your Self Directed IRAs is to set up an IRA LLC. "IRA LLC" is not a legal entity type. It just refers to an LLC that your IRA invests in. The operating agreement will have some verbage relating to the fact that the LLC is set up for your IRA. If you're only going to have your own IRA investing in the LLC, then you would set it up with the IRA as the sole member of the LLC, and you as the manager of the LLC.

Setting up an IRA LLC provides the following benefits:

Checkbook control. Once the LLC is funded, you no longer need the custodian to write the checks. The LLC can write its own checks, and since you're the manager, you have control.
No nickels and dimes. Since the custodian is only managing one asset, you pay a flat $190 per year, if you go with . Entrust has a similar plan for $250 per year.

Options for Setting up the LLC

Now you need to set up your IRA LLC. How should you go about it?

You can have your lawyer set it up. He will probably charge you $3,000 to $5,000. And he may not know much about Self Directed IRAs. Not the best way to go.
If you google "IRA LLC kits" you'll find a few inexpensive options such as this one, which costs $89.

the operating agreement content is probably not as important as the lawyers say it is. You'll probably be fine setting up your own. But the important thing is that you avoid prohibited transactions, and file the proper paperwork with the IRS. For the LLC you need to file an informational return each year, which basically just tells how much the LLC is worth. For the IRA your custodian should handle the forms.

How to start a Self Directed IRA LLC

2012-01-10T21:08:00.000-08:00

What is a Self Directed IRA LLC? It is your ability to control how your IRA is invested. It is the ability to invest your IRA your way. But where do you begin? How can IRA My Way help me obtain investment freedom?

There are IRA Custodians who profess that if you open an Self Directed IRA account with them, you will have a Self Directed IRA. These Self Directed IRA custodians allow you to buy non-traditional investments. But you still have to get permission from the custodian prior to any investment. This causes several problems. You do not have checkbook control; therefore, any time sensitive investment doesn't work. What real estate deal isn't time sensitive? And what about tax liens and tax deeds? Doesn't it make more sense to have the authority to write the check right on the courthouse steps? Not to mention the fees that the custodians charge.

We structure your Self Directed IRA LLC so that you obtain absolute checkbook control. You acquire a checkbook where you are the signer. You don't need to go to the custodian or anyone else to write a check. When you find that great investment, you write the check immediately. It is that simple.

You also have total investment decision making power over your Self Directed IRA. You are able to capitalize on your research and expertise rather than relying on others. And who has the vested interest in your retirement money? A broker, custodian or you? You should be the one making the decisions.

If you have a Self Directed IRA custodian, do you feel like you are drowning in fees? IRA My Way can potentially save you thousands a year in fees. No longer will you have to pay the custodian for every move you make.

We will structure your Self Directed IRA and show you how to get total control over your retirement money so that you can invest Your IRA Your Way.

Products & Services:

Self Directed IRA
Self Directed IRA Options
Self Directed IRA LLC

Education:

Self Directed IRA Investing
What is a Self Directed IRA
Self Directed IRA Facts
What types of Accounts can I rollover in a Self Directed IRA

Investments:

Permitted Self Directed IRA Investments
Self Directed IRA Investments
Types of Prohibited Self Directed IRA Transactions
Permitted Self Directed IRA Investments for Real Estate

Real Estate IRA

2012-01-04T15:01:00.000-08:00

What is a Real Estate IRA?

A Real Estate IRA is generally also referred to as a Self Directed IRA LLC with Checkbook Control. A Real Estate IRA or Self-Directed IRA LLC with "Checkbook Control" plan is an IRS and tax court approved structure that will allow you to use your IRA funds to purchase real estate or make almost any other type of investment tax- free!
With a Real Estate IRA you will never have to seek the consent of a custodian to make a real estate investment or be subject to excessive custodian account fees based on account value and per transaction.
To establish a Real Estate IRA with "Checkbook Control" structure, a limited liability company ("LLC") is established that is owned by the IRA and managed by the IRA account owner (you). The passive custodian then transfers the IRA owner's funds to the new IRA LLC bank account. As the manager of the IRA LLC, the IRA owner will have the authority to make real estate investment decisions on behalf of the IRA providing the IRA owner with "checkbook control" over his or her IRA funds.
When you find a real estate investment that you want to make with your IRA funds, simply write a check or wire the funds straight from your Self Directed IRA LLC bank account to make the investment. The Self Directed IRA LLC with "checkbook control" allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right real estate investment opportunity presents itself. "Checkbook Control" is especially important when it comes to making real estate or tax liens investments, since custodian delays could cause you to lose an investment opportunity.

Real Estate is an IRS Approved Investment

The IRS has always permitted real estate to be held inside IRA retirement accounts. Investments with a Real Estate IRA are fully permissible under the Employee Retirement Income Security Act of 1974 (ERISA). IRS rules permit you to engage in almost any type of real estate investment, aside generally from any investment involving a disqualified person.

Types of Real Estate Investments That Can be Made Using a Self Directed IRA LLC

With a Self-Directed IRA LLC with "checkbook control," you will have the ability to invest in almost any type of real estate investment.
Below is a partial list of allowable real estate investments:

Residential or commercial real estate
Raw land
Foreclosure property
Mortgages
Mortgage pools
Deeds
Tax liens
Domestic real estate
Foreign real estate
Vacation homes
Rental units
Condos or coops
Farm land

A Real Estate IRA Offers Growth Potential

A Self-Directed Real Estate IRA LLC can offer the opportunity to greatly accelerate the growth in your retirement portfolio. With a Real Estate IRA you can take advantage of the high growth real estate investment sector while benefitting from the tax-free IRA benefits.
As an alternative to the stock market, income-producing real estate properties can provide consistent income as well as long-term gains through appreciation. There are no limitations on the types of properties that can be held by a Real Estate IRA. A few real estate investment possibilities include domestic or foreign residential or commercial real estate, industrial buildings, raw land, and farm land. You can also invest in real estate related notes, liens & options.

Leverage your Real Estate IRA

The Real Estate IRA can be utilized when making a real estate investment all in cash, or may be used when using a non-recourse loan to fund an investment. A non-recourse loan is the only type of loan allowed for a Self Directed IRA. A nonrecourse loan is a secured loan (debt) that is secured by a pledge of collateral, but for which the borrower is not personally liable. Whereas, a recourse loan is a loan for which the borrower is personally liable. Recourse loans are no permitted when using IRA funds. Note – if nonrecourse leverage used, the debt-financed portion of the investment will likely trigger a tax under the Unrelated Debt Financed Income rules (UDFI).

A Real Estate IRA Eliminates or Reduces Custodian Costs

With a Self-Directed Real Estate IRA LLC with "Checkbook Control", you, as manager of the IRA LLC, can act quickly on a great real estate investment opportunity. With a Real Estate IRA LLC, when you find a real estate investment that you want to make with your IRA funds, simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. The Self-Directed IRA LLC allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right real estate investment opportunity presents itself.

Self Directed IRA LLC - Truly Self Directed IRA with Checkbook Control

2012-01-03T09:58:00.000-08:00

You are the only individual who understands more than anyone else what value you place on your hard-earned wages. Having the ability to design your retirement savings to suit your individual needs is an important factor to consider. Why allow a third party to make all of the significant decision about your lifestyle when it comes time to retire? You can dream and create your future on your own by setting up a truly self-directed IRA (aka self-directed IRA LLC) and using wise investment strategies.

Why is my current self-administered IRA not effective?

Regardless of what kind of IRA you have (traditional IRA or self-direct IRA) you must get the approval of your IRA custodian to act. What this means is that your broker or custodian needs to give you approval to invest your own money. As compared with traditional IRA holders, self-directed IRA holders are a bit better off because they have a few more opportunities to invest.

Nonetheless, people who have self-directed IRAs will tell you that it's frustrating to operate this kind of account as the custodian makes you jump through bureaucratic hoops and charges you all kinds of niggling little fees that add up to big expenses over time.

In this area, a truly self-directed IRA (aka: checkbook IRA or IRA LLC) scores higher than a traditional and standard self-directed IRA.

How does an IRA LLC differ from a self-directed IRA?

With a completely self-directed IRA, the owner can write checks or maintain control of the checkbook. With checkbook control, you (as the IRA account holder) will have complete freedom to decide when, where and how to invest your money. Your choices must simply remain within the self-directed IRA rules. You will be able to choose your investments from many options including gold, silver, real estate, tax liens, stocks and bonds.

Standard self-directed IRA's can exhaust the funds you are trying to protect. No matter what you are doing: holding an account, earning a profit, carrying out transactions or reviewing investment deals, a standard self-directed IRA will charge you for anything you do. Compare this with the option of opening a self-directed IRA that lets you keep our money in a bank account that belongs to the self-directed IRA program.

The services you receive are the same, but your payments are minimal and only happen once per year. To put it another way, the drain on your resources is halted, and you save a decent amount over the lifespan of your IRA.

What are the reasons why you should choose to have a Self Directed IRA LLC?

- There are some important benefits in choosing an IRA LLC in that there is asset protection plus limited liability.
- Complete checkbook control that makes you flexible enough to choose which investments you make when.
- Your account might be eligible for many tax saving opportunities with this IRA.
- Your custodian will make distinctions between your IRA investments and your other types of investments; however, they can all be handled by the same custodian.
- Results in a tax advantage compared with other investors seeking only margin.
- You will have some advantage of time over other investors who are also competing to invest.

In practice, this means that your tax-free or tax-deferred gains will increase.

Aside from that, you won't have to worry about delays and losses caused by bureaucratic red tape. A checkbook IRA makes you the only one who makes decisions. For the absolute best outcome with great results you will be able to decide immediately.

Other advantages of a real self-directed IRA…

- Self-directed IRAs are simpler to do and manage.
- They are less costly and give the user some less apparent benefits as well.
- The least possible IRA custodial intervention
- The most possible liberty to come to your own investment decisions
- You can invest in in foreign assets more easily, dependent upon the custodian
- You will have more protection from litigators as well as creditors
- Your account will be tax-free and will have a self-directed Roth IRA plan
- Paperwork will be reduced so processing can be faster
- You will be able to make investments that you could not have made via a custodian
- You will be able to get in and out of many different investment markets and trends via one consolidated vehicle versus instead of going through brokers and custodians.

The number one advantage in having a self-directed IRA LLC is that this type of IRA acknowledges your total rights to own and develop your investments within your Individual Retirement Account. In house restrictions result when others are custodians of your securities, deposits, and private investments which will end up causing restrictions on what is in your IRA. The law states that an IRA is just limited to specific investments and transactions that would prevent the main purpose of the IRA – saving retirement money. You have the freedom to choose the right IRA account type for yourself, if you aren't limited by these investments or transactions that are prohibited.

Learn more about the Self Directed IRA LLC.

Do you need a stronger base on which to build the rationale that a self-directed IRA is superior? If you ask any economist for the top method of creating wealth, real estate investments surely would be the number one choice. It's also a good idea to invest in assets that are easy to research. You should know and understand everything about them. It is hard to do this with securities or other investments, since to do so would be very tedious, if not impossible to truly understand. So then why hasn't your broker or custodian suggested you consider this as part of your retirement plan? This is because you will be the only one to benefit from your investment or real estate earnings. As a consequence of bypassing a large number of middle men and paper peddlers, it is possible to have great returns without high risk. The drawback is that all the decision-making will be your responsibility. This, in turn, may lead to retaining qualified and skilled assistance. Can you justify the benefits? Only you know whether this is right for you. Sad to say, while it is quite legal to have IRAs invested in real estate, a great majority of people are not aware of this fact. You can benefit your IRA or 401k by adding allowable assets such as real estate. This is a sensible economic choice.

Put your money into a real estate IRA.

There are few restrictions when you use a Self Directed IRA LLC to make your real estate investments.

Dependent upon your individual preference, it will let you choose from a many different real estate IRA investment options. These include:

- Tax liens and deeds
- Foreign real estate
- Investment property purchase
- Private developments
- Foreclosures
- Mortgages and deeds of trust
- Partnerships
- Commercial property purchase
- Raw land

As time passes you will have more and more options.

Diversify your self-directed IRA investments according to your best desire.

Pick the area that helps you to feel the most comfortable. It is an accepted fact that when you diversify your investments, you have less risk, and your portfolio has a better chance of surviving when the financial market has periods of volatility.

If you are not interested in real estate, don't worry.

There are a number of other asset classes you can invest in by using a truly self-directed IRA. Some are:

- Futures
- Secured and unsecured loans
- Discounted notes
- Mutual funds
- Private placements
- Foreign currency
- Tax liens and deeds
- Stocks and options
- Bonds
- Physical silver and gold

With the passage of time, possibilities will continue to increase. Just be sure you follow the rules for self-directed IRA.

Think about getting a self-directed checkbook IRA.

When you set up a Checkbook IRA, you will have the same services you get with a business checking account; however, you won't own the account. It will be your IRA account. When you complete the necessary forms and requirements, you then receive a checkbook plus a bank account debit card to use with this special type of IRA account. There are no special skills needed to operate this account, it works just like maintaining your regular bank account. How hard can it be to balance your checkbook, keep up with your file folder, gather support documentation, and keep your bank statements, contracts and settlement statements? You don't have to sit around hoping and worrying about what your custodian is doing with a checkbook IRA. It's as simple as drafting a check from your IRA account when you invest in real estate investments.

Custodian's role with checkbook IRA services.

We want to be clear that a knowledgeable custodian is an important factor in management of an IRA account. Actually, since we provide IRA services, we have good working relationships with a number of good custodians. Even with a truly self-directed IRA, you must have a custodian according to section 408 of the tax code. By utilizing your own checkbook IRA, you will no longer be dependent upon your accounts' custodian to plan, select each transaction and approve each transaction. Your custodian will hold and invest in your IRA LLC. S/he will then file a report with the IRS once a year.

Your retirement accounts need to be directed by you.

As you continue working at your career, the monies you accumulate for retirement may be out of sight and out of mind. They should be focused on, though, and not overlooked. It is exactly like your take home pay. It belongs to you, and it should be available to you even after time has passed. Lots of people, however, are under the unfortunate illusion that "experts" are best equipped to handle their life's savings, when said "experts" haven't proven that they can deliver results and thus aren't who we turn to. When you are thinking about investing for your family and your future, you will always want the best investments possible, so you shouldn't just trust this investing to a total stranger without first doing a fair amount of research.

Proceed with Caution! Before you decide on a truly Self Directed IRA, be sure you understand the IRA rules. When you are operating on your own, you must be careful of prohibited transactions. People in the know can follow these rules easily, but most investors are not really familiar enough with them to be able to follow them carefully. If you violate the regulations unwittingly, your IRA will be invalidated, and you will have to pay big fees, taxes and penalties. You might not have an IRA custodian that points out possible violations when you choose to own a completely self-directed IRA, but it is always possible to get in touch with the custodian who oversees the IRA and ask the custodian your questions. Although they may advertise themselves as knowledgeable in this area, they may be limited in advice on a variety of aspects of laws and taxes.

- You can make more of your retirement earnings by finding alternative assets for investment.
- Boost your earnings by reducing custodial fees.
- Have checkbook control over your IRA transactions from now on.
- Take full ownership of your self-directed IRA by taking advantage of investment opportunities and promptly make your choices.