Did you know that it was possible to use your IRA retirement funds to invest
in investments other than stocks, shares and mutual funds? Did you know
that, in fact, any legitimate business investment opportunity may be open to you
for investment - real estate, mortgages, tax liens, private notes, structured
settlements, riverboats, factoring, oil and gas exploration, golf courses,
franchises, bonds, commodities and futures, marinas and limited partnerships?
All of these meet the requirements as IRS-permitted investments which can be
made within a qualified retirement account. Once established, the custodian or
facilitator should roll the current funds into a self-directed IRA LLC. This is
a nontaxable, penalty free and legal business transaction.
You didn't know?! This isn't surprising. The majority of Americans and their
financial advisors are not aware of the use of self directed IRAs. Or, in the
case of financial advisors, if they are, are not willing to provide the required
custodial and administrative services for such accounts.
But you shouldn't let your existing financial advisor's lack of knowledge on
the subject matter prevent you from taking advantage of this method of
diversifying your retirement.
The stock market has let many investors down over the past few years due to
financial scandals and economic and political uncertainty as a result of global
terrorism and uncertainty over oil and gas pricing. Yet other markets and
business arenas have prospered plentifully. America is currently undergoing a
real estate boom and other money-making areas are demonstrating strong and
consistent performance.
It would be nonsensical not to benefit from these developments. No one is
advising moving all of your funds across to these areas, but the old adage about
not putting all your eggs in one basket applies as much to stocks and shares as
to any other investment.
Only a small number of financial service firms in the nation have the ability
to deal with the challenging research, extensive paperwork and IRA-reporting
required to administer non- traditional assets within IRA accounts. But they do
exist.
The custodians of these accounts are not there to sell you a product,
something not always true of more traditional firms. Instead they act as a third
party as required by IRS rules to ensure that the year-end IRA statement
reflects the state of the LLC.
A self directed IRA Advisor can assist investors in identifying any
prohibited transactions which are likely to result in a penalty or taxes or
even lead to the IRA being disqualified.
If you are going to make investments in the self directed mode it is
recommended you don't make an investment decisions without at least bouncing the
strategy off an experience self directed IRA advisor. To go it along could be
financial suicide for your IRA and your retirement.
So if you're current retirement plan is not giving you the returns you
expected or allowing you the flexibility to diversify your investments, the
self-directed IRA provides you with a legitimate and potentially far more
profitable and secure alternative.
However, you should also be aware of the potential pitfalls -
* You must enlist a custodian to legally protect your retirement savings
under IRS rules.
* Beware of cookie cutter solutions to setting up the self directed IRA LLC-
your IRA LLC must be compliant with IRS rules as they apply to your particular
business.
* You don't have to transfer all your IRA funds in one self directed IRA, you
can transfer only part of your existing retirement accounts so that if the
investments do fail or the IRA is disqualified due to a prohibitive transaction
you haven't put your whole retirement fund at risk.
* It is a good practice to run any business deal by a knowledgeable advisor -
the primiary reason for suffering disqualification or penalties is using an
asset for your immediate benefit or that of your family.
An experienced self directed IRA advisor can help you stay clear of the
potential prohibitive transactions. This could not be anymore true than Rollins
vs. The IRS Court Case
* If you set up a business under your IRA, bring in outside investors not
only to increase the stake but so that you can draw a salary.
Above all, make sure you pick a qualified self directed advisor who provides
support can help you avoid potential pitfalls and IRS penalties. Some so called
self directed IRA opportunities are at best are an accident waiting to happen.
Always check your financial advisor's credentials before taking him on.
