Self-Directed IRA -How To Fund Yours

This piece is for those who are interested in starting a new Self-Directed IRA account but who aren’t yet sure how to fund it. It’s important to know a few things about how Self-Directed IRA and other related retirement accounts work.

Funding Self-Directed IRA accounts is not complicated, but it’s important to execute them right in order to avoid future headaches and possible unwanted tax consequences.

There are three ways to fund a Self-Directed IRA:

  • Contributions
  • Transfers
  • Rollovers

We’ll deal with each one in turn.


A contribution is a direct movement of fund from a non-taxed advantaged account to a retirement account. In the case of IRAs and Roth IRAs, these are transfers of personal assets. Contributions to traditional IRAs allow you to take an income tax deduction in the current year as long as you make the contribution by April 15th (normally) of the following year, and you meet certain income requirements.

If you make over a certain amount, your allowable deduction may be reduced or eliminated. But you can still make contributions on a non-deductible basis, no matter how high your income is.

Roth IRAs do not allow for current tax year reductions, but growth is tax-free, provided you keep the money in your Roth IRA for at least five years.

Again, You must meet certain income requirements for the Roth IRA.

Under current law, total contributions to all traditional or Roth IRAs are limited to $5,500 per year, with an additional $1,000 ‘catch-up’ contribution allowed for those age 50 and older.


A transfer is simply a movement of funds from one custodian to another, within like accounts. For example, if you have a traditional IRA at a conventional investment company, such as Fidelity, and you decide you want to open a self-directed retirement account with American IRA, you would simply transfer the funds from your Fidelity account to American IRA, using our transfer form.

In most cases, we recommend doing a trustee-to-trustee transfer of the funds. This simply means you authorize us to forward your request to the existing custodian and have us receive the funds directly from them. This ensures that there will be no negative tax consequences and prevents botched transfers.

The other alternative is to have your existing custodian transfer money to you – either via wire or a paper check – and then have you wire or mail the funds in to us. If you go this route, you must complete the transfer to us within 60 days, or the IRS will deem you to have taken a withdrawal. Taxes and early withdrawal benefits may apply, though in some cases your tax professional can write a letter to the IRS explaining why you were unable to complete the transfer in 60 days.

Otherwise, properly executed transfers are not taxable events. As long as the money moves from one account to another like account, there is no taxable distribution, no capital gains and no income tax due.

Unlike contributions, there are normally no limits on the amount of funds you can transfer during a single year, and there are no income requirements you have to meet to qualify.


A rollover is a movement from one type of account to another. It can happen between to accounts with the same trustee, or it can involve a movement of funds between two trustees. The receiving account is normally an IRA.

Examples of rollovers include:

  • 401(k) to IRA
  • 403(b) to IRA

Getting started with a Self-Directed IRA is very easy, and the contribution, transfer or rollover process is very simple. Simply download the appropriate form from American IRA, LLC, fill it out, sign it and mail it back, or FAX it to 828-257-4948.

As always, representatives from American IRA, LLC are happy to answer your questions about the process and about self-directed retirement accounts in general. We are one of the leading experts nationwide on self-directed retirement accounts, and work in tandem with your existing team of financial advisors to ensure your transactions are executed accurately and on time.

For more information, visit us at, or call us today at 866-7500-IRA(472).

We look forward to working with you.

Self-Directed IRA Update: The Fiduciary Rule

This week, the Treasury Department is expected to release a series of new rules that could affect how securities and other investments are sold – whether in or out of a Self-Directed IRA.

In the past, when a stock broker/registered representative from a FINRA-regulated broker/dealer made a recommendation to you to invest in a given security, he or she did not have to act as a fiduciary. That is, they didn’t have to have your best interests at heart – and they often didn’t.

Instead, the recommendations these advisors made only had to rise to a much lower standard of suitability. Basically, as long as the stock or bond or other investment was suitable – that is, not an outrageously bad idea – the advisor was essentially doing his or her job.

Predictably, the Wall Street investment companies exploited this window of opportunity to maximize their own revenue streams at the expense of the client. For example, while most of us realize that it is quite easy to buy an S&P 500 index fund for 0.2 percent expenses or less, Wall Street brokers routinely put their clients in mutual funds that cost five or ten times that much to own – or even more. This was true even as the vast majority of these actively-managed funds could not beat an unmanaged index fund, once you took their expenses into account.

Wall Street advisors have been steering their clients into products with higher commissions, or into products that have nasty hidden expenses, or fees, or that generate ridiculous capital gains taxes because they are not managed to keep the owners’ tax bill down.

The new rules, however, would essentially force most of these advisors to move into the role of a fiduciary.

The effects will be numerous. If you buy stocks or bonds or mutual funds through a broker, either within your Self-Directed IRA or separately, you will soon buy fewer securities on a commission basis. Instead, a lot of these investment firms will charge a percentage of assets under management.

This is fine for a lot of investors, who are not being well-served by the commission model. But for most of our clients who use a Self-Directed IRA and prefer to diversify into non-traditional asset classes for their retirement funds, this is not a great deal.


If you don’t trade a lot, but prefer to take a buy and hold approach to investing, and you measure your typical holding period in years rather than days, you will likely be better off paying only for the transactions you engage in.

For example, you can open an account with American IRA, fund it, and own several investment properties, C-corporations, partnerships, LLCs, direct ownership of precious metals, or own a private lending portfolio with competitive returns for a fraction of what it would cost you to own equivalent assets within a conventional investment company account.

The new rules will also probably make it easier to sue your broker or brokerage firm for wrongdoing, since their actions and recommendations will have to rise to a higher fiduciary standard.

The new rules will have an especially significant effect on 401(k) rollovers to IRAs – one of the sensitive transactions that earned the scrutiny of the Labor Department in the first place.

Under the expected new rules, any advisor getting paid to move 401(k) money to an IRA, for example, must not only affirm that the strategy was appropriate, but that the fees and other expenses in place are reasonable.

American IRA, LLC was never involved in the kinds of abusive transactions that became all too common among many investment companies. We have always believed that a flat fee approach to self-directed investing is a superior alternative for most of our clients. In the vast majority of cases, our fees are a fraction of those charged by most big Wall Street firms that charge a percentage of assets under management, or even mutual fund ownership in some cases, since the average expense ratio of a mutual fund is still almost 1 percent.

For more information, or to arrange a head-to-head fee comparison with your existing strategy, call American IRA at 866-7500-IRA(472), or visit us online at



Interested in a Self-Directed IRA -Ask Your Advisor These Key Questions

Many of our clients come to a Self-Directed IRA relatively late in life, after they have been investing for a while.

Only after spending a number of years in the work force and saving and investing do they even discover that a Self-Directed IRA or other retirement account is even an option!

By that time, of course, many of them have saved up some significant assets in their more conventional retirement accounts – and they may have some comfortable relationships with advisors.

It’s important not to let those relationships become too comfortable, however. Any financial advisor worth his or her salt should be ready to answer some questions. The answers they give you may tell you that you have a terrific all around advisor, or they may tell you it’s time to scale back or change that relationship.

More often, we find that a financial advisor may be a fantastic stock and fund picker, but at this stage of your life you may need to diversify beyond stocks and mutual funds into different asset classes in which your advisor doesn’t have much expertise.

And that’s where the Self-Directed IRA concept comes in.

Next time you meet with your advisor, ask these questions:

  • If the S&P 500 falls by 40 percent next month, what happens to my portfolio?
  • If interest rates fall by 20 percent, what happens to my income?
  • If interest rates rise by 20 percent (say, from 5 to 6 percent), what happens to the value of my bonds?
  • What is my current allocation?
  • How are you compensated? How much is in commissions versus fees?
  • Have these funds you recommended to me outperformed their benchmark indexes?
  • Can you explain each of these funds to me and tell me why you chose this fun, rather than an index fund?
  • Am I paying 12-b-1 fees? If so, what do I get in return for those fees?
  • What is the total amount in fees, expenses and commissions I’ve paid out last year?
  • What aspects of financial planning are you best at?
  • Are you compensated differently for selling A-shares versus B-shares?
  • Can I see the sales loads? How are they calculated?
  • (For annuity salespeople) Can you tell me what the M & A fees are?
  • Can you tell me what the subaccount fees (in variable annuities) are, and compare them to similar mutual funds?
  • Why a variable annuity and not a mutual fund?
  • How much of this sales load do you earn, and how much goes to your broker/dealer?
  • What aspects of financial planning are you weakest at?
  • How does the cash sweep account work? Do I earn interest on uninvested money?
  • Do you or your company receive “soft dollar” money from mutual funds and other financial companies to promote them in 401(k)s?
  • Do you discount your AUM fees or commissions for larger accounts? What is the threshold?
  • Are my dividends being reinvested?
  • What is my exposure to unrealized capital gains taxes?
  • Do I pay more fees if I don’t convert to a Roth?
  • What financial designations, licenses and qualifications do you have?
  • Are you acting as a fiduciary?

These and other similar questions almost invariably spark a useful and valuable conversation – especially for clients. Most advisors do just fine – though many people find they are paying higher fees than thought they were. Or they discover that they will be much better off using a flat rate fee structure, such as the one we have at American IRA, LLC, rather than paying a 1-2 percent AUM fee or paying mutual fund expense ratios – especially on larger balances.

As always, we’re happy to take a look at your current strategy and speak with you about the exciting self-direction option. Though American IRA, LLC has offices in Charlotte and Asheville, North Carolina, we work with investors all over the country.

Call us today at 866-7500-IRA(472). Or visit our extensive online library at

We look forward to serving you.

Self-Directed IRA -Can Help Protect Your Retirement In Case of a Market Crash

In the long run, stocks have a comparatively high return on investment. But that’s compared to bonds and CDs and other less volatile asset classes. One of the advantages of a Self-Directed IRA is that it opens up your options to a lot investments beyond the asset classes that Wall Street companies are pushing – that is, the ones that generate fat commissions and assets under management (AUM) fees for their own managers, brokers and advisors.

This week, the S&P 500 moved into positive territory for the year in a bull market that appears to be getting pretty long in the tooth. As any experienced Self-Directed IRA investor knows, the U.S. stock market could fall by 20, 30, 40 percent or more very quickly, at any time. Can your portfolio withstand the risk?

Here are some ideas that may help you weather any market storms on the horizon.

Rental real estate. Historically, real estate moves very differently than stock prices. Markets are local, rather than global. And even where prices are falling, rental real estate kicks off a steady stream of income that can be an important stabilizer – particularly for those who need cash flow to meet living expenses or to execute their investment strategy.

Rental real estate is also ideal for leveraged strategies that can help you increase your individual return on invested assets. And yes, you can have your IRA or other self-directed retirement account borrow money to invest – especially in real estate. But be mindful of the increased level of risk that come with leverage, as well.

Gold and Precious Metals

Gold, silver, platinum and copper are all hedges against economic declines and collapses that have stood the test of time. And with a Self-Directed IRA or other type of retirement account, you can take a direct position in gold or any of these other precious metals.

The catch: You can’t take personal possession of gold and silver or any other precious metal held directly by your IRA or other self-directed retirement account. You also can’t hold jewelry or gems in your Self-Directed IRA. Rather you must hold certain forms of bullion or coins that meet minimum legal standards for purity. For more information, download our exclusive guide to gold and precious metal IRAs, available at

Tax Liens and Tax Certificates. If a homeowner fails to pay required property taxes, many cities and municipalities will allow investors to pay the property tax on their behalf. In exchange, the investor has a lien on the home until the homeowner pays the investor back the money he or she paid in taxes on the owner’s behalf. Meanwhile, the home cannot be sold unless the lien is satisfied – plus interest. The interest rate is normally far superior to rates offered in other income-oriented investments, and the loan you make to the homeowners by paying their property taxes is secured by plenty of collateral, in most cases.  After a certain amount of time, the investor can foreclose on the home – occasionally receiving a windfall of a home for a fraction of the market rate.

Historically, however, the loans are eventually repaid with interest, as homeowners are loath to lose homes because of such relatively small unpaid tax bills.

You can take advantage of these programs using a Self-Directed IRA or other retirement account.

Cash flows are not regular or predictable, as they are with bond portfolios or even with rental real estate. However, they are not correlated with the stock market, historically.

All three of these asset classes can help you achieve above-market returns – especially with the skillful use of leverage – while helping you reduce your exposure to stock market risk.

American IRA, LLC is among America’s foremost authorities in providing administrative services to owners of Self-Directed IRAs who are attracted to outside-the-box investment ideas, and who want to increase their diversification without necessarily sacrificing potential investment returns.

We have offices in Charlotte and Asheville, North Carolina, but we serve clients all over the country. Call us today at 866-7500-IRA (472), or visit our website,,  and see our vast library of informational articles and resources.

We look forward to serving you.



Self-Directed IRA Owner’s Guide to Tax on Social Security Benefits

Many Self-Directed IRA investors reach retirement age, begin taking Social Security Benefits and IRA distributions, file their taxes, and get a nasty surprise: Up to 50 percent of their Social Security benefits are taxable as income under current law.

The higher your income in retirement (whether from a Self-Directed IRA or otherwise), the higher the percentage of your Social Security benefits subject to income tax. Currently, the average American retiree pays taxes on about 44 percent of his or her Social Security Benefits.

It wasn’t supposed to be this way, originally. Back in 1984, when Congress first established an income threshold, above which Social Security Benefits would become taxable, the tax was only supposed to affect a small percentage of wealthier taxpayers. But Congress never indexed the threshold for inflation, and as the dollar became worth less and less and as the nominal dollar amounts of retirement income grew and grew, the effects of the tax crept further and further into the working class. A similar dynamic is now affecting an increasing number of Americans subject to the alternative minimum tax.

So how can you shield as much Social Security Income as possible from the tax? If you’re collecting a substantial pension from a former employer, there’s probably not much you can do, other than trying not to take benefits before you have to. But most people can benefit from adopting one or more of the following strategies to lower Social Security income tax exposure.

  1. Convert traditional Self-Directed IRA and conventional IRA assets to Roth IRAs. Yes, you’ll have to pay income taxes on the entire amount you rollover. And that will impact the amount of Social Security Income subject to the tax – but only in the year of the rollover. After that, any distributions from Roth IRAs or Self-Directed IRA assets will not count against you for the purposes of counting Social Security income tax.
  1. Tap your Self-Directed IRA or conventional IRA for income relatively early in retirement. Use your IRA to allow yourself to put off taking Social Security income. Yes, you deplete your IRA faster. But in later years, you’ll qualify for a larger Social Security benefit. This, in turn, may reduce the amount of IRA income you will need. Meanwhile, since your Social Security benefits are a larger percentage of your income and your taxable IRA distributions are lower, your income will be more tax efficient. A larger percentage of your Social Security Benefits will be exempt from tax than would otherwise be the case. (Research indicates that the ‘sweet spot’ for this strategy seems to be for people with retirement portfolios between $200,000 and $600,000, according to research by Social Security Solutions.
  1. Don’t rely on municipal bond income to sidestep the tax on Social Security benefits. Yes, the IRS excludes muni interest from ordinary income taxes in most cases. But they do force you to include it in Social Security Tax calculations.

American IRA, LLC specializes in assisting people who choose to self-direct their retirement accounts, rather than leave the decisions to Wall Street. Whether your interests are in real estate IRAs, gold and precious metal IRAs, private equity IRAs, or anything in between, we want to work with you to ensure your transactions are handled efficiently, while saving you thousands in fees in many cases.

To learn more, call us today at 866-7500-IRA(472), or visit us online at

We look forward to working with you.


Self Directed IRA -Four Easy Ways to Fund One

“Self-directed” is a phrase that intimidates a lot of people. If you’ve never really been too forward-thinking or controlling when it comes to your personal finances, then it’s difficult to imagine a scenario in which you might be in charge of your own retirement account. But the truth is, you’re always in charge of your retirement account: you say where the money goes and when, because it’s your money. You’ll be delighted to learn, then, that a Self Directed IRA is easy to get started once you know how to fund one.

Starting a new Self Directed IRA—even if you’re working off of a previous IRA that you want to rollover—doesn’t have to be an intimidating process. Here are four ways of kicking off a new IRA in which you’re in charge:

  1. Contributions to a Self Directed IRA

The simplest form of investing in a Self Directed IRA is to insert money into it directly. You can open a new account and fund it with your personal money—it’s that simple. “Contributions” is also a term for the enduring additions you make to your IRA over time. Whether you invest in gold, real estate, stocks, and more, these “contributions” will still be called the same thing because they essentially start with you writing a check.

  1. Conversion

If you want, you can withdraw a portion or even the entirety of a traditional IRA and put the money into a Roth IRA, thus “converting” the money into the new retirement account. However, there are some rules in play here: most specifically, you’ll be expected to move the funds within 60 days, otherwise it’s not really a “conversion.” There are also tax consequences in a conversion, which means you’ll want to keep track of everything that goes on in order to ensure that all of your taxes are in line and appropriate considering the actions you’ve taken.

  1. Rollover

You’ve likely heard this phrase “rollover” on television—there’s no end to the commercials telling you about IRA rollovers and what they can do for you. But they don’t really get into specifics, do they?

A rollover happens when cash and/or assets from a retirement account are given to you directly for the purpose of reinvesting in another retirement account. You get one “rollover” per year, which means you can’t constantly shift money between retirement accounts. As is the case in the conversion, you need to make the switch within 60 days or else it won’t be considered a “rollover.”

  1. Transfer

Directly transferring cash and/or assets between one retirement account and another. Directly transferring these investments has a number of advantages; true, you don’t see the money yourself in your personal account, but so long as that’s not your purpose, you should be fine with that. Because these transfers are seen as trustee-to-trustee transfers and you aren’t taking direct possession of the money and/or assets involved, there’s no limit to how many of these you can execute per year. Unlike a rollover and a conversion, wherein you receive the money, you never “receive” the money from your accounts in this case, removing many of the tax consequences of rollovers and conversions.

If you’re interested in taking control of your financial destiny, you’ll want to be aware of everything that goes into using a Self Directed IRA. And that includes funding options. You’ve read the four funding options supplied here, but if you want to learn more about these IRAs and how to get started with them, you can call us at 828-257-4949 or simply keep browsing

Self Directed IRA -7 Income-Generating Investments For Yours

One of the many advantages of adopting a Self Directed IRA investing strategy is that you can take a ‘go anywhere, do anything’ approach to investing. You aren’t limited to the asset classes that traditional investment advisors sell or even know about. This lets you add additional diversification to your portfolio while still giving you the flexibility to discover additional yield over and above what you can get from the run-of-the-mill investments your old boss would approve in a boring 401(k). But you can still go back to the old standbys when market conditions warrant it!

Here are some examples of solid-yielding investments or savings vehicles, – all of which are doable in a Self Directed IRA, and all of which may be appropriate for the income-focused investor.

  • Rental real estate. Real estate has its ups and downs, like any asset class (ask anyone big into real estate between 2008 and 2010!). But over the long haul, rental real estate has been a proven wealth creator and income generator for centuries. Many of the worlds’ great fortunes have been built on land and rents. Real estate provides a unique combination of simplicity (anybody can understand it!), income and potential for capital gains – magnified by the ready availability of leverage for real estate investments.
  • These are financial assets, but they are specifically designed to produce income – either now or at some point in the future. Assets in an annuity grow tax-deferred, similar to a traditional IRA, and are normally taxable when you take the money out. You can hold them in a Self Directed IRA or 401(k). While some advisors don’t like to double up the tax deferral benefit, some investors like the many guarantees that you can get with an annuity contract, such as an attractive guaranteed minimum income benefit. You can’t get those with mutual funds or stocks. For example, when you own a lifetime income annuity, you own a contractual guarantee that you will not run out of the promised income for as long as you live – subject, of course, to the continuing solvency of the insurance company.
  • Closed-End Funds. These are mutual funds whose shares are bought and sold over the stock exchange, rather than issued directly to and from the fund company. As a result, the price of a closed end fund can and often does differ markedly from the net asset value of all the securities in the fund’s portfolio. As a result, you can often buy income-generating closed end funds at a discount. But you still get the entire dividend. The net effect: A nice boost to your yield.
  • These are essentially stocks in real estate holding companies. But unlike C corporations, which pay taxes before they issue dividends (thereby reducing income to their shareholders, who have to pay income tax on those dividends), REITs are ‘pass through’ entities. As long as the REIT gets 75 percent of its income from its real estate operations and distributes at least 90 percent of its income to shareholders, the IRS gives REITs favorable tax treatment.
  • Business Development Corporations. These are designed as pass-through income entities similar to REITs, but they invest in early stage companies rather than in real estate. They can pack a substantial income wallop, but they are, of course, subject to the same risks as any other fund devoted to small cap equity investment or lending. They invest in a similar space as a venture capital or private equity fund, though you don’t have to be an accredited investor.
  • Tax Liens and Certificates. These can generate substantial current income, though it is pretty lumpy. Here’s how it works: When a homeowner doesn’t pay property taxes, the county may foreclose on the property to collect. However, the county doesn’t want to foreclose. They just want the tax money. So they allow investors to pay off the tax owed, in exchange for a lien on the home. Essentially, you are lending money to the homeowner, with the loan secured by the home. Interest rates on these loans can be quite high, which allows for the possibility of a substantial return on investment. If enough time goes by and the homeowner still hasn’t paid the tax, you can potentially foreclose on the property yourself. The downside is that you don’t know for sure when the homeowner will pay off the lien and you can recover your investment with interest.
  • Muni Bonds. These oldies but goodies are popular among investors in high tax brackets – especially in states with income taxes. Municipal bond income is generally exempt from federal taxes, and from state income taxes, too, if the owner is a resident of the state in which the municipal bond was issued. Munis typically have a low nominal interest rate – but higher interest rates on an after-tax basis than other income investment alternatives.

Need help getting started or navigating the world of income investments? We’re here to help! American IRA, LLC is one of the leading Self Directed IRA administrators in the country. We have successful clients involved in all these types of investments. Give us a call today at 828-257-4949. Or visit us online and take advantage of our extensive library of educational information, booklets, pamphlets and seminars. We look forward to working with you.

Self Directed IRA Investing – Beware of the Liquidity Premium

Everybody needs some liquidity in their portfolio. After all, all of us are going to have to go to the grocery store at some point before the end of the month, and we’ll have to pay cash. Cash flow is a very good thing. But Self Directed IRA owners should know that IRA money is long-term money.

This isn’t money for your next grocery store trip, or next month’s mortgage payment, or ‘walking around’ money. For the vast majority of Self Directed IRA owners, their retirement money is money they intend to invest over time, and to let it compound over time, to gain the maximum benefit of the tax advantages of IRA/401(k) investing.

Self Directed IRAs and Alternative Asset Classes

And that’s precisely why more investors should consider using more alternative asset classes within their retirement accounts: Assets like direct ownership of real estate, non-traded REITs, private equity and venture capital, and on the debt side, private lending and tax liens and tax certificate investing each have risks, of course (depending on the collateral you lend on!), but in general, the expected long-term returns of each class are usually going to beat the long-term returns on publicly traded, popular securities that are easy to buy and sell at the drop of a hat.

Liquidy is a fine thing, and a necessary thing when it comes to income that you need to live on. When you’re deep-sea diving, you cannot live for long on oxygen stored in tanks on the boat!

But there’s a price to be paid for liquidity. Indeed, liquidity can be very expensive indeed.

Why should this be so? Well, simply because the people looking to attract your Self Directed IRA capital to fund very liquid projects can get away with it. The people who want to tie up your capital for months or years at a time know they have to offer investors a sweeter deal, to compensate for the lack of liquidity.

Think of it: Imagine two classes of shares in the same real estate development project. Both are expected to have a value of $100 per share in three years, at which time the company expects to liquidate. The Class A share comes with a guarantee that the investment company will return your money to you within 24 hours, upon request. Class B share, on the other hand, comes with no such guarantee. They only want B-share investors who are willing to commit to leaving their money in place for the entire three year period.

Everything about each share class is the same, and the amount each share generates at the end of the three year lock-in period are identical. But the A shares come with liquidity and the B shares have no built-in liquidity feature. Do you think these two shares are going to sell at the same price? No. The B-shares will sell for a much lower price!

The difference between the two share prices is called the liquidity premium, and simply shows how expensive liquidity is.

Another way to look at it is to compare the annualized interest rates on a money market – convertible to cash at the end of the day no matter what (almost, anyway!), and a 1-year certificate of deposit. Going to today, the average interest rate on a 1 year CD is 1.11 percent. The average rate on a $10,000 money market account is 0.56 percent.

For risk-free money, the liquidity premium costs a Self Directed IRA investor half his or her returns in a single year.

For assets you don’t need to liquidate for a number of years, you will get a much better rate of return on your investment if you buy them at a much better price.

The Self Directed IRA Advantage

That’s where Self Directed IRA strategies have an advantage over conventional IRAs. By expanding their options beyond the off-the-shelf funds, bonds and annuities offered by most investment companies, they have the opportunity to buy assets at much better discounts to future NAVs, and sidestep the substantial cost of liquidity.

With offices in Asheville and Charlotte, North Carolina, American IRA specializes in working with investors who reduce hidden expenses, improve expected returns increase diversification by including alternative asset classes in their retirement strategies.

For more information or a no-obligation consultation, contact us at 828-257-4949, or visit our website at


Self Directed IRA Owners – Don’t Make These IRA Mistakes

Every so often, it’s worthwhile to go over the most common mistakes Self Directed IRA owners make.

Surprisingly, even though the vast majority of our own Self Directed IRA clients are successful and experienced investors, we find that even these folks are prone to making some of these mistakes, though occasionally we can alert them before they commit, or their financial or tax advisors can show them how to avoid making them.

  1. Don’t get too religious about the Roth IRA. Yes, it has some great benefits for a lot of people. But it is not always the most tax efficient vehicle in the long run – especially when you can contribute tax deductible dollars, or when you’re going to retire in a very high tax bracket.
  1. Don’t wait until the last minute to contribute. If you think your investments are going to go up over time (that’s why you’re making them, right!), don’t wait until April to make your contributions for the previous year. The sooner you contribute your earnings or money from taxable accounts, the more interest and growth will be sheltered from taxes, and the more it’s likely to compound for you.
  1. Selling Assets Prematurely to Contribute to a Self Directed IRA. While we think you should contribute to your IRAs and other self-directed retirement accounts as early in the year as you can, there are times you should be a little patient. For example, if you need to sell appreciated assets in a taxable account to raise money to contribute, and you bought the assets 11 months ago, then it’s probably wise to wait another month before selling. That way, you qualify for long-term capital gains treatment rather than short-term capital gains.

Conversely, if you have assets that have fallen in value and you’ve held them less than a year, then it may be wise to sell and lock in some short-term capital losses.

4.) Converting to a Roth and paying taxes from within the account. Always use money from outside the account to pay income taxes on IRA conversions, if possible. This maximizes the amount of capital that is free to compound tax-free. If you take money out of the IRA and hand it over to the IRS, you’re paying a substantial price in what economists call “opportunity costs.”

5.) Not remaining liquid enough in Self Directed IRAs. Remember: Unless you’re in a Roth, you’re going to have to begin making required minimum distributions by April 1st of the year after the year in which you turn age 70½. That means you’re going to have to have some cash or other easily-liquidated assets in the IRA. Indeed, you may simply need the cash flow before you make it to that age. Other scenarios where we’ve seen Self Directed IRA owners run into a cash crunch include suddenly needing a new roof for a house in their real estate IRA – but finding that they are fully invested in real estate. That means they’d have to sell another property within the IRA before they can raise the cash to put a new roof on. Always maintain enough liquidity to take on needed repairs, maintenance, property management bills and other expenses from within the IRA. Don’t paint yourself into a liquidity corner.

American IRA, LLC works with thousands of successful investors pursuing all different kinds of Self Directed IRA strategies from coast to coast. Whether your interest is in alternative asset classes, real estate, land banking, private lending, owning partnerships, LLCs, MLPs, or any one of scores of other strategies, we’d like to put our unique expertise and experience in handling Self Directed IRA transactions and administration to work for you. Call us today at 828-257-4949, or visit our online library and event calendar at

We look forward to working with you.

Self Directed IRA Investors – “Less Than Zero.” What Should They Make of Negative Interest Rates?

Here in the United States, Self Directed IRA investors have generally taken it for granted that the interest rates commonly available on ‘safe money’ – what investment theorists refer to as the “risk-free rate of return’ will be positive.

Sure, we understand that inflation could outpace the rate of return on money markets. But at least we have the consolation that the nominal rate of return on safe money will have some sort of positive value.

But as millions of people in Europe and Japan are now discovering, that’s not entirely the case. Central banking authorities in a number of major economies have now set their key rates lower than zero. That’s right – these central banks have set the time value of money at a negative number.

That’s a direct attack on the world’s savers and lenders. And the rot is spreading through the world’s bond markets: According to Bloomberg, some 25 percent of all the global outstanding bond debt in the world has a negative interest rate. That amounts to more than $7 trillion of issued debt.

Yes, in America we’ve had moments in which a ‘flight to safety’ resulted in a temporary glut of savings moving to Treasuries, forcing yields slightly below zero for a brief period of time. That’s just investors paying a premium for bonds. But what’s happening in Europe now, and what’s happening in Japan, is different. These negative yields are a direct and intended result of national monetary policy. Their governments and central bank authorities (to the degree they have independence) are desperate to stimulate consumption that they will rob investors to provide them with an incentive to spend now, rather than provide the capital their economies will need to create productive assets in the future.

They can get away with this for a while if they anticipate a deflationary cycle. After all, if deflation is faster than the negative interest rate, these deposits still earn a net positive rate of return compared to domestic alternatives. But money doesn’t necessarily have to stay local.

What should Self Directed IRA investors do?

Self Directed IRA enthusiasts have some key advantages compared to conventional IRA investors: You can retain the tax advantages of an IRA or other retirement account while still retaining the ability to invest nearly anywhere. While the folks who have all their money in an account with a major investment house are getting advised to just sit there and take it, you have the ability to seek greener pastures elsewhere – particularly if you are willing to take on a bit of risk in the process.

Here are some examples:

Borrowing is cheap. If returns on bond investments are low, that means money is available cheap. If you want to leverage up and buy some assets – in whatever class – now’s the opportunity to do so. When the time value of money is negative, then it makes sense to borrow and invest as much as you can.

Time to buy gold. As returns fall, so does investor interest, and so does the local currency, most of the time. Gold – and by extension, silver – is a proven hedge against declining currency values. If central banks are not defending their currencies, than it’s up to you to defend yourself.

Real Estate may be attractive. Obviously, local factors will dominate global ones. But where the currency is not defended, real estate, like gold, becomes more attractive. Even though the real estate market has appreciated substantially (the easy money has probably been made), rents continue to climb on strong rental demand in many markets. While very expensive markets like San Francisco are risky, there are lots of opportunities in smaller inland cities that are experiencing strong economic growth, where populations are increasing steadily and which continue to attract business and investment.

Think Outside the Box. Safety is getting more expensive in traditional asset classes. But leveraging is still relatively cheap and where interest rates go negative they actually pay you to do it! There are still opportunities in tax liens and tax certificates, for example, and hard-money lending to borrowers who traditional lenders are not serving well. This leads to some compelling spread opportunities for adventurous Self Directed IRA investors.

If you don’t want to be stuck in the same 60/40 stock-bond asset allocation or whatever some broker is suggesting for you even as central banks crush your expected returns by driving interest rates down to less than nothing – if you want to create an escape hatch from pathetic returns, we want to work with you.

American IRA, LLC, works with investors all over the country who want to take an off-ramp from conventional investing, Wall Street companies and their long history of high expenses and low returns. Our clients all take personal control of the assets in their IRAs and declare independence from the big investment firms through Self Directed IRA investing.

They benefit from the vastly greater freedom of movement, diversity in asset classes available to them, and more access to leveraging strategies, and greater personal control of their investments. In many cases, our Self Directed IRA investors have a controlling interest in the assets in these accounts. That’s a very different scenario than owning a few shares of a big mutual fund whose manager will never take your call!

To learn more about self-directed investing, visit us on the Web at, or call us today at 828-257-4949.

We look forward to hearing from you.