The Self-Directed Roth IRA Tips You Might Not Have Heard
Many people are aware of the Self-Directed Roth IRA. But you might be surprised at how many people don’t use these accounts to their full potential. If so, here’s a quick background. Roth IRAs are powerful retirement tools that let you invest after-tax income towards retirement. This means that the money owed to taxes is already paid, which means that if you use a valid Roth IRA according to the rules, you can pull distributions from the Roth IRA without paying additional taxes in retirement (as long as all requirements are met).
But how can people use these retirement accounts, and what are the less-known tips for using a Self-Directed Roth IRA to build a retirement nest egg? Here’s what you’ll need to know.
Using a Self-Directed Roth IRA in Retirement Years
One of the key distinctions of the Roth IRA is that the taxes are already paid on it—you don’t have to pay additional taxes when taking valid retirement distributions from the account later in life. And while this might seem like an obvious tip, it does create one lesser-known tip: you can keep the retirement funds in the account longer than hitting retirement age if you want.
Typically, there are “required minimum distributions” (RMDs) for pre-tax retirement accounts. For example, if you used a Traditional IRA, you would have to take minimum distributions after hitting a certain age. This ensures that the government does eventually get the taxes owed on that money. But with a Roth IRA, the government isn’t looking to collect on retirement distributions. And for that reason, they don’t require that you take distributions. This means you can continue to keep the assets in the retirement account and let them build value. This is especially great for people who are healthy and have plenty of assets built up over time.
The great part about this tip? You don’t have to do anything if you don’t want to. You don’t have to take distributions if you don’t want to. You also don’t have to wait to take distributions if you don’t want to. You can immediately start taking those tax-free distributions as soon as you hit valid retirement age (and meet all necessary requirements), which would put you in the category of beginning to capitalize on all of that hard work and wisdom you showed in investing in a Roth IRA.
Using Self-Direction to Use Your Specific Investment Experience
If there’s something many investors don’t do, but should be aware of, it’s this: you can self-direct a Roth IRA to make it line up with your specific investment experience.
Let’s use an example to demonstrate what we mean. Let’s say you have a lot of experience in investing in real estate. You’ve done a lot of research in a specific market, you have experience flipping homes, and you know what looks like a good deal. You typically wouldn’t be able to use tax protections in a retirement account to do more of this—but with a Self-Directed Roth IRA, you can.
That’s because self-directing with a Self-Directed IRA administration firm like American IRA means you can have all sorts of options for retirement investing, including a wider range of potential assets. Real estate, precious metals, private stock—if you have experience in a specific sector, it’s possible you can use a Self-Directed Roth IRA to build that experience into a retirement nest egg.
Interested in learning more about Self-Directed IRAs? Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation. Download our free guides or visit us online at www.AmericanIRA.com.