Self Directed IRA

A self-directed Individual Retirement Account is an Individual Retirement Account (IRA), provided by some financial institutions in the United States, which allows alternative investments for retirement savings. The account owner for all IRAs chooses among the investment options allowed by the IRA custodian.

Individual Retirement Accounts, originally known as Arrangements, were first introduced by the congress in 1974, with the enactment of the Employee Retirement Income Security Act (ERISA). This is when saving for retirement on an individual basis came into the mainstream. Taxpayers could contribute a percentage of their annual income each year and reduce their taxable income by the amount of their contributions. There are many different types of accounts, such as 401k, 403b, 457, SEP IRA, Health Savings Accounts, etc. They are generally used either as a Traditional IRAl, which is Tax Deferred, or Roth IRA, which is Post Tax dollars.

A retirement plan has lots of benefits for you, your business, and your employees. Retirement plans allow you to invest now for financial security when you and your employees retire. As a bonus, you and your employees get significant tax advantages and other incentives.

A self-directed IRA is an individual retirement account that gives you complete control over your investment choices. Unlike other IRAs, you’re not limited to stocks, bonds, or mutual funds.  This means you can take advantage of investing in alternative assets – such as real estate, limited partnerships, and gold – with your self-directed retirement account.  Utilizing a credible custodian as the administrator of your self-directed retirement account, you have the power to take an active role in your retirement planning.

A Self-Directed IRA gives you the opportunity to make investment decisions in areas based on your knowledge and expertise. From real estate to private lending, you can choose from a wide variety of different types of investments allowed. Here are some of the most common options:

– Apartment Buildings
– Commercial Properties
– Single family homes
– Senior living care
– Promissory Notes
– And more!

There are a wide variety of investment options using a self-directed IRA plan, including:

-Enjoying the same tax benefits as an IRA that is limited to publicly traded securities
-Diversification: the ability to adapt to economic conditions
-Control: Investors can rely on their own market expertise
-Private Knowledge: Account holders can access private investments which the general public may not know about.

And much more…

Lack of knowledge about the rules can lead to serious tax consequences, including disqualification of your IRA assets.  The department of labor provides a list of transactions IRA holders should avoid, referred to as “prohibited transactions,” which include, but are not limited to:

Borrowing money from your plan
Selling property to your plan
Paying unreasonable compensation for management of your plan
And more…

Generally, if a self-directed IRA owner takes an early distribution from a retirement account, meaning he/she withdraws money before reaching the age of 59 ½, the IRS will impose an additional tax penalty on any taxable  distribution. However, there are a few exceptions to this rule:

Medical insurance while unemployed
First home purchase
Medical expenses

The Penalty Tax

The IRS’ rule of thumb for early distributions is to impose a 10% penalty on any taxable funds being withdrawn. In the case of a tax-deferred account, that means the withdrawn funds not only be taxed as regular income, the amount distributed will have an additional 10% imposed on top of the income tax.


Contact our Investor Relations Consultant team to discuss your retirement plan performance at (855) 720-2623