Self-Directed IRA for Independent Minded Investors

Lots of people want or need a financial advisor to work with them for every financial decision. And that is ok. There is a time and place for that, and there are great advisors and brokers out there who do a lot of good for them.  And then there are the kind of investors who use a Self-Directed IRA.  These investors prefer to diversify or may just want all their retirement funds in alternative assets.

Self-Directed IRA Basics

Structurally and legally, a Self-Directed IRA is just a subset of Traditional IRAs or Roth IRAs. The difference is that the owner of a Self-Directed IRA has chosen to sidestep the Wall Street distribution system – the vast network of brokers and advisors that channel money into the stock, bond and mutual fund markets – and invest money directly, usually in one or more alternative asset classes or in direct placement opportunities that bypass Wall Street.

Assets Commonly Held in IRAs

Conventional (Traditional or Roth) IRAs Self-Directed (Traditional or Roth) IRAs
Mutual funds Mutual funds
Publicly traded stocks Publicly and non-publicly traded stocks
Publicly-traded bonds Publicly-traded and privately-placed bonds
Annuities Annuities
CDs and money markets CDs and money markets
Publicly Traded REITs Publicly and privately-traded REITs, direct ownership of rental real estate
Master limited partnerships Any partnerships, MLPs or privately held
Publicly traded private equity funds Private equity funds and direct private equity placement
Hedge funds and funds of funds (accredited investors only)
Oil and gas investments
Fix and flip real estate
Tax liens and certificates
Private mortgage lending
Hard money lending/bridge loans
Asset-backed lending
Gold and precious metals
Closely-held C corporations
Partnerships and LLCs
Farms and ranches
Accounts receivable factoring
Commercial lending
And much more…

As you can see, the Self-Directed IRA is a tremendously flexible vehicle. If you are willing and able to look beyond the relatively narrow set of asset classes that Wall Street brokers have in their inventory, you can achieve a much more diverse portfolio than you can limiting yourself to paper assets.

In many cases, you can gain exposure to better performing investments, simply by virtue of the ‘go anywhere’ benefit of the Self-Directed IRA strategy. You may be able to reduce risk at the same time, either by investing in very safe and secure investments, or adding investments with a very low correlation to the S&P 500 or other paper assets you may hold elsewhere in your portfolio.

Custodians and Administrators

IRS rules do not allow investors to hold IRA assets directly. Instead, all assets in an IRA have to be held in trust for you, in the IRA’s name, by a custodian, trustee, or administrator such as American IRA, LLC.

The process is simple:

  • Open an account with American IRA, LLC
  • Transfer funds to the account
  • Provide written instructions to American IRA, detailing what assets you want us to buy and sell on behalf of your IRA; what expenses you want us to pay with IRA funds, and what you want us to distribute to you.

Prohibited Transactions.

 You can invest in almost anything with a Self-Directed IRA. But you have to avoid just a few types of investments, and you cannot transact directly with certain family members.

For example: You cannot use IRA money to invest in life insurance, collectibles, alcoholic beverages, jewelry and gemstones, gold and precious metals of uncertain provenance or insufficient purity and mint quality (call us for specifics).

Additionally, you cannot use IRA money to buy or borrow from or lend or sell to yourself, your spouse, any of your lineal descendants, ascendants, or any entities they control. That means you cannot buy a property and let your son or stepdaughter handle the property management for a fee, and you cannot lend them money from your IRA to buy a home.

You also cannot transact with an advisor who provides advice about your IRA investments. Any of these would pose a conflict of interest and potentially be disallowed by the IRS.

Ready to learn more? Download one of our investment guides at, or call us today at 866-7500-IRA (472).




Return of Stock Market Volatility Underscores Need For Self-Directed IRAs and Diversification

February 2018 has been a stressful month for stock investors. Volatility is back with a vengeance: The Dow Jones Industrial Average components – what we used to call “blue-chip stocks” for their safety and staidness, took some big stumbles early in the month. This happens every once in a while, – but this time the declines triggered some program trading, computers were programmed to dump stocks as soon as the Dow, S&P 500 or some other signal dropped below a given level. The selling forces stocks lower, triggering even more program trade selling, and so a vicious cycle takes over.

And that, despite an economy that is prospering by most metrics, is how the Dow recorded a record 1,175 point loss on February 8th.

One might call it a reaction to a bull market that stockholders have appreciated over the last year. While we have seen a recovery since then (and stocks are setting new highs), the recent volatility has hopefully reinstated a healthy appreciation for risk: It is pretty scary to see 5 to 10 percent of your retirement nest egg disappear in a couple of days. Volatility can hurt.

Fortunately, the vast majority of our clients did not need to bat an eyelash. Indeed, some of them may even benefit from the volatility, as investors dump stocks looking for safer assets.

Self-Directed Investing means you do not have to worry about what the stock market does every day. Many of our clients have much of their long-term money invested in far more sound assets than stocks such as:

  • Rental properties
  • Commercial real estate
  • Tax liens and certificates
  • Gold and precious metals
  • Closely-held companies, LLCs and partnerships
  • Farms and ranches
  • Land
  • Private equity
  • Venture capital
  • Private lending
  • Mortgage lending
  • Equipment leasing

… and more.

While the value of each of these investments fluctuate, none of them are tied to the day-to-day fickleness of the stock market. Our clients have the luxury of being indifferent to most of the noise on Squawk Box and Jim Cramer’s Mad Money.

Most mature investors regard shows like these as a waste of time. The smart money is always way ahead of what the average consumer sees on TV.

As television and radio personality Dave Ramsey is fond of saying, “investing is a crockpot, not a microwave.” That is the approach taken by most Self-Directed IRA owners, who define holding periods in terms of years and decades, not hours and days. The longer your holding period, and the longer your investment time horizon, the less you have to worry about short-term volatility.

For alternative asset investors, there is no daily price index to track – and certainly no intra-day prices to obsess over. The focus is on the intrinsic value of the investment, and not on the opinions of millions of strangers – most of whom are not very smart anyway.

The lack of intraday pricing, and an overall more deliberate approach to investing and valuation, makes it much easier to avoid falling into the many traps of stock market speculation such as:

  • Focusing on the short-term
  • Panic selling on an impulse
  • Program trading causing you to sell when you should be buying
  • Thinking you are diversified when all your assets tend to move together

For many of our investors, the lack of correlation with the fickle stock market is a source of comfort. They derive piece of mind, knowing however fearful the talking heads on TV are behaving (generally at the wrong times), they do not have to participate in any correction or bear market.

Diversification is a fundamental principal of sound investing. Most individual investors do not do nearly enough of it, and find themselves over-exposed to a volatile stock market at the wrong time.  Self-Directed IRA strategies help you diversify, providing a much-needed hedge against stock market volatility – while still exposing you to opportunities for long-term growth and income.

If you want to do a thorough portfolio review, and find out how you can benefit from implementing Self-Directed IRA strategies in your own retirement investing, call us today at 866-7500-IRA(472).

Private Equity In Your Self-Directed IRA

Own tomorrow’s Dow components today! Or we hope, anyway. But you did not have to invest with Steve Jobs while he was still running Apple out of a garage in the 1970s to do well with private equity or private placements in a Self-Directed IRA.

Just invest in solid, well-managed companies with good accounting and controls, who have a viable business that provides a good value and you can do just fine – and even get better returns over the long run, in many cases by taking advantage of the tax benefits of a Self-Directed IRA.

What is private equity?

When a small company wants to raise capital, it can borrow the money, or it can sell off a piece of itself to investors, who are then entitled to a share of all future dividends the company issues. If the company is publicly traded, it can sell shares over the stock market. But if the company is not publicly traded, it will seek out investors anywhere it can, and negotiate a share price privately.

Many companies do not want to go through the time and expense of issuing a publicly-traded security. Just maintaining a listing on boards like Nasdaq or the NYSE can cost tens of thousands of dollars per year. Unless they are getting major investment bank support to help them place their shares, it is just not worth it to these smaller companies.

Many smaller companies with no regular earnings cannot get traditional lender financing, either. Most traditional lenders just are not equipped to serve this market, as borrowers typically do not meet the lending criteria for the banks’ backers. They do not have the regular earnings to support income-based underwriting, and they may not have real estate or other kinds of readily marketable collateral that most banks rely on to justify a loan.

But Self-Directed IRA owners are not limited by these criteria. Moreover, Self-Directed IRA owners also frequently have the long time horizons that companies seeking investment need. For example, if you lend to or invest in a real estate developer, it may be years from the time you provide the financing to the time the real estate developer has a property completely built and sold off so that it has some cash to pay lenders and investors with!

Meanwhile, private equity seekers have to sweeten the deal, to compensate the Real Estate IRA investor for the cost of tying up their money for a long time. That usually means better terms, and better long-run expected returns. That is, private equity seekers (and private debt seekers as well) have to discount their offerings to attract investors.

Qualifying for Private Equity Placements for your Self-Directed IRA

Not just anybody can be a private equity investor and be eligible for direct placements. In order to invest in a direct placement of private equity, you must meet the definition of an accredited investor, according to Rule 105(a) of the SEC’s Regulation D.

Specifically, you must have a net worth of at least $1 million (not including your primary residence), OR;

You must have an income of at least $200,000 in the last two years if single OR;

Have an income of at least $300,000 in the last two years if married.

Reputable brokers or sellers will have you submit proof of your status as an accredited investor before selling you the shares or bonds, if it is a private debt placement.

Because of the substantial returns available in private equity (the potential is virtually unlimited), and the long time horizons involved, private equity placements can make excellent candidates for Self-Directed IRA investment.

Before you invest, though, understand that these investments, like many popular Self-Directed IRA assets, are frequently not registered securities, and are exempt from a number of SEC regulations and reporting requirements.

They also tend to be very early stage companies, subject to substantial economic risks. They may have unproven products, service offerings, inexperienced management teams, difficulty securing follow-on funding, and they could even be fraudsters. It is, therefore important to engage in a thorough due diligence process before you invest in any private placement offering within a Self-Directed IRA.

What the Tax Cuts and Jobs Act Means for Self-Directed IRA Investors

The passage of the Tax Cuts and Jobs Act – the new, sweeping tax reform bill just signed into law by President Trump – means that those of you who contributed to Traditional IRAs over Roth IRAs in high-tax years may have made a very good bet. The new tax law means that income taxes on most middle-income retirees will be much lower than they otherwise would have been, had the tax reform not passed.

Those of you who contributed to Self-Directed Roth IRAs over the years, only to see this year’s tax reform bill bring taxes down, and not up, still have the consolation of tax-free growth on assets you leave in the Roth for at least five years. So you have not lost anything, but Self-Directed Traditional IRA owners may be much better off under the Tax Cuts and Jobs Act.

Here are the highlights of the new tax law as they pertain to Self-Directed IRA investors:

  • The standard deduction is nearly doubled, to $12,000 for singles, $18,000 for heads of households and $24,000 for married couples. However, the $4,050 personal exemption and dependent exemptions are repealed. The number of people who do not itemize their tax returns is likely to substantially increase.


  • The Child Tax Credit is increased through 2025. The law increases the maximum child tax credit from $1,000 to $2,000 per qualifying child. The refundable part of the credit is raised, from $1,000 to $1,400. That means taxpayers can qualify for a tax credit of up to $1,400, even if they have no tax liability for the current year.


  • The new law retains seven tax brackets, but the tax rate for each bracket except the lowest one is reduced. The old tax brackets were 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. The new brackets are 10%, 12%, 22%, 24%, 32%, 35% and 37%.



  • The corporate tax rate is lowered from 35% to 21%. The effects of double taxation on C corporations are much reduced.


  • The Child Tax Credit is increased to $2,000, $1,400 of it will be refundable. That is, you can get the benefit of it even if you have zero tax liability, or less than $1,400 of tax liability.


  • The alternative minimum tax (AMT) threshold is raised from $86,200 to $109,400.


  • Alimony is no longer deductible to the payer, but not countable as income to the recipient. This provision begins in 2019, and may have a substantial effect on divorce proceedings.


  • Section 529 plans may now be used to pay for K-12 schools. Previously, they could only be used for college/post-secondary expenses. Section 529 plans can also be used for homeschooling costs.


  • Businesses with up to $25 million in income may use the cash accounting method. Previously, businesses with $5 million or more in income were required to use the accrual method of accounting.


  • The Affordable Care Act penalty for not having qualified health insurance is reduced to zero under the Tax Cuts and Jobs Act.


  • Personal income tax preparation fees are no longer deductible.


For 2018, Use Self-Directed IRAs to Help Diversify Your Portfolio

2018 was a great year for Self-Directed IRA investors and stock market investors alike. A strong economy and the prospect of corporate tax cuts (made a reality by the newly signed Tax Cuts and Jobs Act of 2017) sent both the stock market and alternative asset classes popular among Self-Directed IRA investors soaring.

That is very nice for those who invest by looking in the rear-view mirror. But most people smart enough to use Self-Directed IRAs and other retirement accounts to diversify their retirement assets know that the bigger the returns in the past, the tougher it may be to find acceptable returns in the future.

Veteran investors know: As asset prices increase, so does risk. And with the S&P 5oo gaining 19.42 percent for 2017 – on top of an 11.96 percent return for 2016 – the bull market in stocks has got to be getting a little creaky.

This does not mean we cannot continue to have good returns for a while: It depends on what happens to corporate earnings and whether they are strong enough to support the recent U.S. stock market returns.

Investors should use Self-Directed IRAs and other self-directed retirement accounts as a vehicle to help diversify their assets going into 2018. While there is no shortage of mutual funds and individual securities you can stuff into a conventional, old-fashioned broker-sold IRA, some assets are only available as retirement assets to those who use Self-Directed IRAs. For example:

Direct ownership of gold, silver and platinum bullion and coins.

Direct ownership of real estate.

Closely-held, private C-corporations. This asset class, especially, got a boost from the Tax Cuts and Jobs Act because corporate tax rates applicable to C corporations were significantly reduced, from 35 percent to 21 percent. Since dividends are not tax-deductible expenses for corporations, the previous tax regime punished owners of C corporations who relied on them for income, as the effects of double taxation were truly pernicious. Dividends from C corporations took a 35 percent haircut before they were even distributed to the owner, who must pay taxes on them either on their current income tax return (outside of retirement accounts) or when they withdraw the money from a traditional IRA, 401(k) or other retirement account.

The Tax Cut and Jobs Act does have the effect, though, of lessening the incentive of income-sensitive investors to direct money into REITs and Business Development Companies. This is because the tax benefit of treating these entities as flow-throughs is reduced by about a third, from a 35 percent tax to a 21 percent tax on their C corporation alternatives. It remains to be seen how this may affect capital flows to REITs and BDCs. We expect the impact to be relatively small, though, as the best reason to invest in REITs and BDCs is because of the investment properties of the real estate and microcap/VC-stage asset classes. Most people do not let the tax tail wag the investment dog, as it were.

At any rate, the case for diversification into real estate, precious metals, tax deeds and certificates, partnerships, LLCs, oil and gas investments and pipelines remains strong. A good economy should support a wide variety of asset classes, though it may force the Fed to continue to boost interest rates, which will tend to hurt existing bond portfolios.

How to Lower Retirement Account Fees Using a Self-Directed IRA

The big Wall Street investment firms are very good at maximizing their own profits. Unfortunately, they are not very good at delivering market-beating returns for their own customers. This is part of the reason more people are turning to Self-Directed IRAs and other types of self-directed retirement accounts.

Say ‘No’ to the Assets Under Management Fee

If you are a buy-and-hold investor who does not trade much, and tends to hold onto investments for a long time, assets-under-management fees (AUM) can tear a chunk out of your retirement nest egg over time. If you are a long-term real estate IRA investor or you tend to hold securities for a long time, and you do not need a broker’s advice for all your trades, you may be able to save thousands of dollars by holding IRA assets with a Self-Directed IRA administrator that charges a set fee schedule for individual transactions, rather than an AUM or ‘wrap fee’.

For example, a $500,000 portfolio with a 1.5 percent AUM fee would cost you $7,500 just to keep the account open, even if you never made a trade. That is a lot of money to pay someone to send you a statement every month.

If they are not adding $7,500 worth of value to you each year, you may be better off moving buy and hold assets to an administrator like American IRA, LLC. In many cases, your total fees would be a fraction of that amount.

Consolidate Accounts

It may make sense to consolidate IRAs and previous employers’ 401(k)s by rolling them into a single IRA – Especially if the investment company charges you a monthly statement fee, or if the expense ratios for the funds within an old 401(k) are relatively high.

According to Morningstar data, here are average mutual fund expense ratios as of 2017:

Large-Cap Stock Funds: 1.25%
Mid-Cap Stock Funds: 1.35%
Small-Cap Stock Funds: 1.40%
Foreign Stock Funds: 1.50%
S&P 500 Index Funds: 0.15%
Bond Funds: 0.90%

If your old 401(k) is charging you much above these levels, it may make sense to roll assets over to an IRA or self-directed IRA where you have the flexibility to find assets that have comparable expected returns over time, while charging a much lower expense ratio.

Think of it: In an era where many bonds have yields of 5-6 percent on a good day, it does not make much sense to pay a Wall Street firm 15-20 percent of your yield every year.

Consolidating may also help you qualify for better pricing. For example, some investment companies waive under-minimum fees once you reach a certain threshold with them, or waive their monthly statement fee. You may be able to qualify for a better expense ratio, as well.

Eliminate 12b-1 fees

12b-1 fees are fees an investment company charges every year to pay their fund marketing costs. But they do nothing for you, the investor. These fees can range from 0.25 percent to 1 percent of assets every year. If you are paying 12b-1 fees to your current investment company or IRA custodian, it may make sense to find a better solution.

Manage your own investments

Money managers make a lot of money – at your expense. Expense ratios in mutual funds have been inexcusably high for many years. Especially when lower cost alternatives are available. Funds with high expenses, in the aggregate, have failed to even match the returns of an unmanaged index over time.

That does not mean a good advisor cannot add value: Every year, the DALBAR organization publishes a study that finds investors with professional advisors outperform those that do not, because investors that do not receive professional advice tend to get greedy or fearful at the wrong times, and make poor market timing decisions.

If you are able to be greedy when others are fearful, and fearful when others are greedy, as Warren Buffett likes to put it, you may well be ready to declare independence from Wall Street and manage your own money using a Self-Directed IRA.

Over 70? Don’t Miss Your Self-Directed IRA RMD Deadline

It’s that time of year again: It’s time to take those required minimum distributions from your self-directed IRA or other tax-deferred retirement account. If you made deductible contributions to an IRA, self-directed IRA, SEP, 401(k) or other tax-deferred retirement account, and you are age 70½ or older, you may be required to withdraw some income from your account – and pay income taxes on that income.

The reason: Fairness. When Congress passed the Employee Retirement Income Security Act of 1974, the landmark legislation that led to the rise of the IRA and 401(k) accounts, they wanted to ensure that taxpayers could not defer taxes on their own contributions indefinitely. Taxpayers are allowed to let their accounts accumulate tax deferred until the year after the year in which they turn age 71½. At that time, they must begin taking distributions and pay Uncle Sam his due.

  • For those with SEPs, SIMPLE IRAs, and traditional IRAs, including self-directed IRAs, you have until December 31st to complete your RMDs for 2017.


  • For those who inherited an IRA from someone other than a spouse, you must also complete your RMDs prior to December 31st. This is true regardless of your age.
  • If you turned age 70½ in 2017, you have until April 1st of 2018 to take your first RMD. But you must take a second RMD by the end of next year.
  • If you inherited a non-spousal IRA in 2017, you also have until April 1st of 2018 to take your first RMD.

There are no RMD requirements on Roth IRAs or self-directed Roth IRAs, nor on designated Roth accounts within a 401(k) or self-directed 401(k).

The penalty for failing to take a required minimum distribution is severe: As much as 50 percent of the amount that should have been distributed. So it’s important you stay on top of the RMD requirements.

If you have an RMD to make, contact us right away to start the process.

Self-Directed IRAs and Illiquid Assets

Many self-directed IRA investors have illiquid assets in their retirement accounts. If you are facing an RMD on a tight deadline and you can’t find a willing buyer for your asset at a fair price so you can take out cash, you can also take an in-kind distribution. This simply involves retitling assets out of the IRA and under your name, personally. However, the IRS still needs to put a number to the value of this transaction in order to calculate the taxes due. In some cases, you may need to get an independent valuation of the asset or property that you are distributing to yourself.

Alternatively, you could convert some assets to a Roth – paying taxes now, but securing tax-free growth for as long as you live in the future.

Hardship Distributions From Self-Directed IRAs

Life happens. Many investors have found themselves needing to tap into an IRA because of a short-term financial crunch, purchase a first-time home for themselves or a family member, or fund college costs. Under normal circumstances, withdrawals from both self-directed IRAs and conventional IRAs are subject to a substantial 10 percent excise tax if made prior to age 59½. Congress enacted the painful penalty to ensure that taxpayers would truly treat their IRAs as long-term investment vehicles rather than short-term tax-advantaged playthings.

But they were also realistic: They anticipated that people would occasionally need to access their retirement funds for financial emergencies. They also believed that if they didn’t cut people a break on the 10 percent penalty under some circumstances, or allow access to their money, people would be less likely to actually contribute to IRAs. This would defeat the whole purpose behind IRAs and self-directed IRAs: To help secure a retirement income for the taxpayer and his or her family.

Self-Directed IRA Hardship Withdrawals

The rules for self-directed IRA hardship distributions are the same as those for conventional traditional IRAs. You can access your principal and any growth from deductible contributions by paying income tax on the distribution, but the 10 percent penalty is waived under the following circumstances:

  1. Death.
  2. The disability of the taxpayer.
  3. When the withdrawal is necessary to avoid foreclosure or eviction.
  4. To pay health insurance premiums (if you’ve been unemployed for at least 12 weeks).
  5. To make a down payment on a home for a first-time homebuyer (up to a lifetime limit of  $10,000). For the purposes of administering the rules on IRAs or self-directed IRAs, a first-time homeowner is one who has not owned a home in the previous two years.
  6. To pay for higher education for the IRA owner or a family member.
  7. To pay unreimbursed medical bills (in excess of 10 percent of the taxpayer’s adjusted gross income).
  8. IRS levies against the IRA. If the IRS levies your account to pay unpaid taxes, you won’t be charged a penalty. But you will have to pay income taxes on the amounts they take from a traditional IRA or traditional self-directed IRA.
  9. As part of a series of substantially equal periodic withdrawals. In other words, if you want to retire early, you can begin accessing your IRA penalty-free as long as you commit to taking it out in a steady stream of monthly or annual payouts based on your life expectancy or the combined joint life expectancy of you and your designated beneficiary.

Roth IRAs, including self-directed IRAs, have similar hardship distribution rules. The main difference is that any principal you have contributed and that has remained in the account for at least five years can be withdrawn tax-free and penalty free. The taxes and penalties only apply to the growth attributable to that money, as well as to contributions that have been made within the last five years.

Self-Directed IRA Hardship Withdrawals vs. 401(k)s

From the perspective of flexibility in the event of financial hardships, IRAs are generally superior to 401(k)s, as 401(k)s do not have these hardship exceptions. In fact, some 401(k) plan sponsors do not allow for in-service withdrawals for any reason, or they may make you jump through hoops before you can access your money.

Furthermore, your plan administrator will automatically withhold 20 percent of the amount you withdraw from a 401(k) and forward it to the IRS against taxes. However, if you have penalties to pay, you will have to pay income taxes on the entire amount withdrawn, even for the amounts you never receive because they’ve been forwarded to the IRS.

For this reason, if you have a 401(k) from a former employer, and you anticipate the need to make a hardship withdrawal in the future, or if you just want much more flexibility on what you can invest it in and to reduce the amounts you pay in fees, it may well make sense to roll your 401(k) over to an IRA with American IRA, LLC.

What’s Popular Isn’t Always Most Effective: Why You Need a Self-Directed IRA

Famous investment guru Benjamin Graham once said: “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.” If someone were to ask you what the most popular way to fund retirement was, you would probably hear some version of the same response: find a wealth manager, use retirement accounts, and keep saving. And that is great. For some people, it is very effective. But what if there are tweaks along the way that could potentially boost your ROI in significant amounts, further bolstering your chances at a fully-funded retirement? The Self-Directed IRA is one such path.

Unfortunately, a recent article in—while offering plenty of insight about retirement—did not spend any of its time talking about the Self-Directed IRA. And while they talked about the five most popular ways to finance retirement, it is important to remember one basic fact: effectiveness and popularity are two different things entirely.

Why a Self-Directed IRA Makes Sense

The first item on the list at makes a lot of sense: taking advantage of retirement accounts to maximize investment growth. Putting aside money in this fashion allows investors all over the country to build wealth easily and passively. The article went into detail about the types of accounts—including SEP-IRAs—but never addressed what happens when an investor self-directs their own retirement.

A Self-Directed IRA is just that: an account that you control. And while the second item on the list at addresses real estate, there is little time spent pointing out that it is possible to hold real estate within a Self-Directed IRA account. Given that real estate is one of the most powerful ways to generate returns on investment, it is clear that what is “popular” is not always the total picture.

Understanding the Self-Directed IRA Landscape

Why is Self-Direction so powerful? It not only helps investors avoid the often-expensive management fees associated with money managers, but it allows investors to tap into those investments they would otherwise make through general accounts. For example, if an investor is strong in real estate, they would typically make the investment using the simple, routine processes of real estate investing. But with a Self-Directed IRA, they can hold real estate within a retirement account.

This does mean that there are some important regulations to keep track of. One cannot simply purchase a home and live in it through a Self-Directed IRA—the IRS prohibits these kinds of investments from being used within a retirement account. A Self-Directed IRA is considered a separate entity from the investor, which means that the property itself will also have to remain separate.

There are other options, such as investing in precious metals.  This opens up the possibilities of a more diversified investment portfolio. See our section on Investing to find out what these are.

Popularity vs. Effectiveness in Retirement Planning

There is nothing wrong with a strategy being popular. The concept of buying and holding mutual funds in an IRA is popular because it is effective, it works. Over the long-term, this can generate amazing returns for investors who have the patience to withstand challenging market conditions.

But that does not mean that what is popular is also the end of the available options, especially in the world of retirement investing. There is more to consider. There are other advantages investors can use. There are different asset classes that can potentially bring wealth to investors who understand them well. It is vital for investors to broaden their horizons so they know each and every potential advantage they can use on the path to financial independence in retirement age.

Want more information about Self-Directed IRAs? Visit our section on Self-Directed IRA accounts or call American IRA at 866-7500-IRA.

An IRA-Owned LLC Offers Checkbook Control – But Is it Right for Me?

When ordinary investors hear phrases like “IRA-owned LLC” and “checkbook control,” they tend to zone out. After all, these concepts sound a little wonky—a little too complicated for something as simple as a long-term retirement plan. But while this type of setup might sound like a lot of work, the truth is that a Self-Directed IRA can be a powerful and, yes, simple plan to help you maximize the results you get from your retirement investments.

But there’s another question that needs to be answered here, and you’ll rarely find it addressed in any articles about IRA-owned LLCs. Is this arrangement right for you? Here’s what you’ll need to know.

Defining the Self-Directed IRA Owned LLC with Checkbook Control

The concept of the Self-Directed IRA is simple: these are like any other retirement accounts, except you’re in charge. You’re not outsourcing investing to someone else or even necessarily investing in stocks. Rather, when you’re in control, you can make IRS-approved investments such as real estate and precious metals, provided you meet the requirements.

One potential avenue of investing is the LLC, or Limited Liability Company. This business structure can be a great way to shelter your assets from potential issues such as litigation—without requiring that you sacrifice the kind of control you would expect over your own retirement plans.

So what exactly does “checkbook control” entail? It means that you’ll have the power of buying and selling within your IRA—the power of the checkbook. This can have advantages and disadvantages, including:

  • Checkbook control means you’re in charge of avoiding IRS penalties. When working with an IRA custodian, these custodians can help make sure that you adhere to all tax requirements. When you have more control, you also have more risk.
  • Checkbook control requires being proactive. If you enjoy the responsibility of seeking out experts including lawyers and tax professionals—great. If not, then you might want to think about working with a Self-Directed IRA custodian instead.

How to Get Started in Atlanta with a “Checkbook IRA”

The so-called “Checkbook IRA” can be of tremendous benefit for those in Atlanta or in the surrounding areas. Not only is Atlanta’s local real estate market a tremendous opportunity for those who live there, but the same investments can perform well within an IRA with checkbook control. That means that it’s possible to make investments in real estate for retirement while still retaining the kind of control you would normally enjoy in other arrangements.

Why Atlanta? As local station WSB-TV recently reported, the current market looks similar to previous housing booms, especially with higher prices than there were in the housing boom of the early 2000s. That could represent a prime opportunity.

Real estate also functions as a way to hedge against inflation. Inflation should be a concern for any investor—after all, it’s vital that your retirement dollar old on to its value. By holding real estate, you move money out of dollars and into real property. That real property then can go up in value, which in turn helps you hold on to the initial investment.

With a Self-Directed IRA owned LLC and checkbook control, you’ll have plenty of options for seeking out opportunities in the Atlanta area. That means that you don’t have to depend on other markets or even look into moving to make retirement happen just where you are. And that’s at the core of Self-Directing: making your own destiny when it comes to your retirement investments.

However, checkbook control also means that you can give yourself too much responsibility in too big of a hurry. What’s right for you? Keep reading. For more information on these “checkbook power” arrangements, keep checking out our website. You can also call American IRA with your retirement inquiries by calling 866-7500-IRA or visiting more of our information right here at