Self-Directed IRAs

Tax Benefits of Self-Directed IRA Investing

One primary appeal of Self-Directed IRAs is that they offer unique investment opportunities that go beyond traditional stocks and bonds. One of the most significant advantages of these accounts is the tax benefits they provide. In this post, we’ll explore how Self-Directed IRA investing can lead to significant tax savings and potentially long-term financial outcomes.

Tax-Deferred Investing with Self-Directed IRAs

With a traditional IRA, contributions are typically tax-deductible. This means that you get to defer paying taxes on the money until you withdraw it in retirement. This tax-deferred growth can make a significant difference in the size of your retirement savings. Especially if you start early and let your money compound over time.

Self-Directed Traditional IRAs

Self-Directed Traditional IRAs work the same way as a regular Traditional IRA. In years previous, you could contribute up to $6,000 per year (or $7,000 if you’re over 50) and claim a tax deduction on the contributions, though recent changes have elevated this number to $6,500 and $7,500 a year respectively—depending on your circumstances. Once the money is in the account, it grows tax-deferred until you withdraw it in retirement.

Self-Directed Roth IRAs

Roth IRAs work differently than Traditional IRAs. Contributions are made with after-tax dollars, so you won’t get a tax deduction upfront. However, the money grows tax-free in the account, and you won’t have to pay taxes on qualified withdrawals in retirement. This provides you with a key advantage once you hit retirement age, because you don’t have to pay taxes on the money you take legitimately from a Roth IRA once you can take qualified distributions from the account.

Private Note Investing

It isn’t just the account types that you’ll need to know about, either. With a Self-Directed IRA, you can also invest in a wide range of property types and assets, which can potentially yield all sorts of benefits. One of the unique investment opportunities available with Self-Directed IRAs is private note investing. When you invest in private notes, you lend money to individuals or businesses in exchange for regular interest payments. This provides you with the potential to generate steady income at rates that may be higher than typical market rates at the time.

Real Estate Investing

Real estate is another popular investment option for Self-Directed IRAs. When investing in real estate with a Self-Directed IRA, any rental income or capital gains are tax-deferred or tax-free, depending on the type of account you have. Additionally, you can use the IRA to sell properties within the account without triggering any taxes or penalties. As long as the funds stay within the account.

Precious Metals Investing

Self-Directed IRAs also allow you to invest in precious metals like gold and silver. These investments can provide diversification benefits and can help hedge against inflation. When you invest in precious metals with a Self-Directed IRA, any gains are typically tax-deferred or tax-free, depending on the type of account you have.

Private Equity Investing

Self-Directed IRAs can also be used to invest in private equity, such as startups or small businesses. These investments can provide high potential returns, but they also carry the potential for greater risk. With a Self-Directed IRA, any gains or income from private equity investments can be tax-deferred or tax-free, depending on the type of account you have.

Self-Directed IRA investing can provide significant tax benefits that can help you maximize your retirement savings and improve your long-term financial outlook. Whether you’re interested in private note investing, real estate, precious metals, or private equity, Self-Directed IRAs offer unique opportunities to diversify your portfolio and grow your wealth.

Interested in learning more about Self-Directed IRAs and how they can be used to invest in precious metals and other alternative assets?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guide or visit us online at