Self-Directing Your IRA
IRA stands for Individual Retirement Arrangement, which is more popularly known as an Individual Retirement Account. This allows persons to save money for retirement. The word “self-directed” easily implies that you, as the personal account holder, have full power over choosing and commanding your personal retirement account investments. The investment to real estate may be possible under a self-directed account, since you are able to use your retirement funds to invest in alternative assets through this type of account.
Nicknames are provided to self-directed IRAs that invest in particular assets, for instance, a self-directed IRA holding a real estate property is called a Real Estate IRA. It is required that a competent trustee acts as a proxy to hold the IRA account of the IRA owner under the rules of the Internal Revenue Service (IRS). Self-directed IRA trustees are qualified to manage the increased complications of documentation needed for transactions engaged in alternative investments.
A self-directed IRA allows you to diversify your investment into several different investment assets, such as real property, mortgages notes, and foreign currencies. You can invest in any of these assets, and others, through the use of your self-directed IRA.
There are also tax advantages obtained from self-directed IRAs. This is because no tax is imposed to investments under this account which could mean an acquisition of higher profits. Mix this benefit with the capability to actually diversify and invest in a variety of assets, and you could have a winning combination for a higher return.
Disclaimer: The Company introduces general information and education concepts about self-directed retirement accounts (such as 401(k) and IRA accounts). Like any investment, there is risk in using retirement funds for investing in real estate assets. It is possible to lose a portion or all of an investment in real estate – including those purchased with retirement funds. Please review IRS Publication 3125 regarding the use of retirement funds for alternative investments. The document can be found at: http://www.irs.gov/pub/irs-pdf/p3125.pdf. Every individual is different, with unique circumstances. We do not offer tax, accounting, financial or legal advice. Prior to acting upon this information, you may consult your own accounting, legal and financial advisors to evaluate the risks, consequences and suitability of that transaction. The Company is not a retirement account custodian, trustee, or securities dealer.