Using a Self-Directed SIMPLE IRA to Invest in Real Estate

The SIMPLE IRA is a type of defined contribution pension plan designed for smaller employers – and it lends itself quite well to self-direction and investment in real estate, provided you know the rules.

Who Benefits from Self-Directed SIMPLE IRA?

Any small business with 100 employees or fewer can set up a SIMPLE IRA. They are less expensive to set up than a full-fledged 401(k) and have fewer ongoing reporting and actuarial requirements. Employees get the opportunity to contribute pre-tax dollars to a retirement plan, just as they might with a 401(k). The employer just deducts the contribution from their paychecks and forwards them to the SIMPLE IRA administrator – along with employer matching contributions, if any.

The employer gets to offer a more competitive overall compensation package, which may help you compete more effectively for the best talent – especially if you offer an employer match.

As the business owner, you can set up the option to self-direct your own SIMPLE IRA investments by contacting American IRA, LLC and setting up an account.

SIMPLE IRA Contribution Limits

For 2015, the allowable contribution to a SIMPLE IRA is $12,500.  If you are over the age of 50, you may contribute an additional $3,000 in ‘catch-up’ contributions for a total of $15,500.

Self-Directed SIMPLE IRAs

You can use your SIMPLE IRA money to invest in anything you want, with just a few restrictions. Prohibited investments include:

  • Life insurance
  • Alcoholic beverages
  • Art and collectables
  • Real estate that you or certain related parties use for personal benefit
  • Gems and jewelry
  • Certain kinds of precious metals (coins and bullion) of uncertain or insufficient purity or consistency of manufacture or minting.

That is pretty much it. Which, of course, liberates you as the owner of those assets to invest them into just about anything else you like, including rental property, a house-flipping business, commercial real estate, mortgage or hard money lending, tax liens and certificates, and much more.

Naturally, most investment companies don’t offer these options in their off-the-shelf retirement plans offered to small business owners. They get revenue when you or your employees invest in mutual funds. Not so much when you invest in something not in their inventory.

For this reason, most investment companies that handle SIMPLE IRA investments won’t tell you about self-directed SIMPLE IRA plans at all – much less help you set one up. But it is quite legal and quite easy to do so.

For current SIMPLE IRA Plan Sponsors

If you currently sponsor a SIMPLE IRA plan for your company and you are interested in using your plan balance to invest in real estate, while allowing your employees to continue contributing to the plan as they have in the past, this is a relatively simple procedure. Just call American IRA LLC at 866-7500-472(IRA) and we will walk you through the process.

Who Is a Self-Directed SIMPLE IRA Best Suited For?

A Self-Directed SIMPLE IRA may be for you if:

  • You own a business with 100 employees or fewer.
  • You want to offer your employees a retirement plan
  • You don’t want the complexity or expense of offering a 401(k) plan
  • You are willing to give up the higher contribution limits of 401(k) plans
  • You want to be able to control how much you contribute in matching contributions each year.
  • You want to reduce business taxes
  • You want to have some of your retirement portfolio invested in real estate.
  • You won’t need the money until after you turn 59½
  • You don’t plan on wanting to borrow from the plan. (If you want a plan you can borrow from, you may want to set up a 401(k) instead.

For more information on self-directed SIMPLE IRAs and real estate SIMPLE IRAs, give us a call at the number listed above, or visit us online at We have an extensive library of informational articles and blog posts, as well as several exclusive guides to self-directed retirement investing and an e-book – all available free of charge, with no obligation.

Whichever route you choose, we can work with you no matter where you are in the U.S.A. We look forward to serving you.

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