Self-Directed IRA Administrators vs. Custodians

April 16, 2018/in Articles, Blog, How Do Self-Directed-IRAs-Work, Individual Retirement Accounts, Investing, Real Estate IRA Investing, Resources, Self Directed IRA Services, Self-Directed IRAs, Uncategorized /by Jim Hitt

More and more people are coming to understand the power behind Self-Directed IRA strategies. Further, they are embracing the wisdom of diverse and unconventional asset classes while liberating their retirement portfolios from the narrow outlooks frequently characterizing the big Wall Street investment firms.

As such, with that knowledge comes the increased openings of Self-Directed IRA accounts. Many of these new investors are not yet clear on the role of custodians and third-party administrators in the Self-Directed IRA industry – and the important distinctions between the two.

Let’s take a closer look.

IRA rules prohibit investors from taking personal, direct possession of assets within their Self-Directed IRAs. Yes, you can own the house down the block within your Self-Directed IRA, but you cannot personally reside there. What is more, you cannot keep the gold coins your IRA owns in a safe in your living room. To use a more traditional example, it is no different than not being able to personally hold your stock certificates residing in a Schwab IRA account.

Custodians hold your Self-Directed IRA assets on your behalf. Administrators process the paperwork on behalf of the custodian. American IRA is an administrator and New Vision Trust Company, a South Dakota chartered Trust Company, holds the assets. New Vision Trust Company and American IRA, LLC are an integrated financial company providing both custodial and administrative oversight for your Self-Directed IRA transactions.

A custodian handles transactions and holds Self-Directed IRAs and other retirement assets on your IRA’s behalf. The IRS has stringent requirements for Self-Directed IRA custodians. These businesses are subject to regular inspections and audits by federal regulators. They can hold titles, cash, investments and other types of property on investors’ IRAs’ behalf, and handle a lot of transactions.

If you own gold or other precious metals, or physical assets within an Self-Directed IRA, chances are there will be a custodian in the mix, holding the gold or other assets in a secure, insured facility somewhere – or at least physically holding certificates.

An IRA third party administrator, such as American IRA, LLC, has a more tapered scope of engagement. Administrators are the account record-keepers responsible for generating statements and documents. We do not hold assets directly, but work with New Vision Trust Company, a South Dakota chartered Trust Company on your behalf. New Vision Trust Company and American IRA, LLC are an integrated financial company providing custodial and administrative oversight for your IRA transactions. We simplify the process, document your transactions, generate statements and 1099s, and work with your advisors to help you stay in compliance with IRS rules and regulations.

We do not advise on the suitability or non-suitability of any particular investment for your individual portfolio. That is up to you and your own financial advisors. We focus on quickly and accurately executing and recording the transaction on your behalf, in accordance with IRS regulations.

Moving down the Self-Directed IRA industry hierarchy, there are other professionals and salespeople known in the industry as “promoters” and “facilitators.”

These individuals do not handle transactions and do not hold assets on your behalf, but they support the Self-Directed IRA process in other ways.

One type of promoter might be a real estate agent who focuses on helping investors find properties for their Real Estate IRAs, and who becomes very knowledgeable in that niche. Others are financial advisors, RIAs, IARs, accountants and attorneys who also promote the Self-Directed IRA approach and help facilitate your Self-Directed IRA strategy.

For example, an attorney may help create entities within your Self-Directed IRA such as C corporations and LLCs which may help insulate other properties and IRA assets against the claims of creditors.

Every Self-Directed IRA investor needs a custodian or administrator affiliated with one or more custodians to create and maintain a functional Self-Directed IRA account. Few are totally go-it-alone beyond that. Most investors require a knowledgeable and experienced, multi-disciplinary team of professionals to get the most out of their self-directed retirement accounts.

Fortunately, getting started in Self-Directed IRA investing is very easy, and our team of professionals at American IRA, LLC is available to help you throughout the process.

To learn more about our services as one of the leading Self-Directed IRA administrators in the country, or to set up an account and get started investing, call us today at 866-7500-IRA (472), or visit us at www.AmericanIRA.com.

You can also read more on this subject at our blog, here.

Do not delay! Give us a call today! We look forward to working with you!

Real Estate IRA – Benefit – Demand Exceeds Supply

April 11, 2018/in Articles, Blog, Individual Retirement Accounts, Investing, IRA Advantages, Real Estate IRA Investing, Roth IRA, Self-Directed IRAs /by Jim Hitt

The stock market got wobbly in early 2018. But Real Estate IRA investors are doing just fine.

Home sales rebounded 3 percent in February 2018 after a holiday slowdown to reach a seasonally-adjusted annualized rate of 5.54 million homes – soundly beating the consensus analysts’ estimate of a 5.42 million annualized rate of gain. That is good news for Real Estate IRA investors as we head into the traditional spring home sales season

Traditionally the busiest time of year for home sales as families prepare for their house search and move during summer when optimal weather is met with children out of school.

The housing market inventory also increased by 4.6 percent compared to January. It is down by over 8 percent however, compared to this time last year. Meanwhile, demand continues to exceed supply as record employment numbers make it possible for more and more families to qualify for a home mortgage. Though mortgage rates have been trending up, they are still near historic lows, which supports home prices and is leading homebuyers to work to lock in today’s relatively low rates in anticipation of future rate increases. A 30-year mortgage is currently 4.4 percent in late March 2018. That is a 3.78 percent increase since September 2017, according to data from Freddie Mac.

What results is a scarce housing market for a growing number of buyers. Historically, as this continues, house prices increase over time.

Sales increases hinted a regional focus. Home sales climbed in the South (6.6 percent) benefitting many American IRA real estate investors; and West (11.4 percent), while slipping in the Midwest and Northeast colder climates.

The Northeast region was particularly hard hit, with sales falling over 12 percent.

Existing home sales accounted for nearly 90 percent of purchases in February 2018 leaving new-construction homes remaining on the market.

The economy remains strong in the Southern and Western states as these regions continue to experience expansion and employment gains.

The current supply and demand is affecting first-time buyers trying to get their foot in the door. These buyers, represent 29 percent of the market, compared to 34 percent a year ago according to the 2017 Profile of Home Buyers and Sellers published by the National Association of Realtors.

The housing inventory is likely to remain tight for the foreseeable future. The strong job market is causing labor costs to increase, making new homes more expensive to build. Higher interest rates may also negatively affect construction loans, leading to higher hurdle rates on capital and restraining new construction.

There may also be some fallout because of tariffs on steel as other countries retaliate, which could affect commodity prices. It is too soon to tell.

In the jumbo loan market and higher end homes, the recent Tax Cuts and Jobs Act also reduced the favorable tax treatment of home mortgage interest on bigger loans. This may also lead to a modest reduction in demand for homes at the higher end.

From the point of view of the Self-Directed IRA investor, multi-family dwellings and the middle-class market appears to be the place to be.

First-time homebuyers are getting squeezed out, making entry level homes a tough sell. These people will be renting apartments for a while, boosting demand and rents in multi-family buildings.

Wealthier buyers may hold off on buying luxury homes, since they cannot write off the entirety of the interest anymore. But the engines fueling strong demand for a shortage of houses are firing on all cylinders for homes in the middle market.

A Real Estate IRA in many ways is ideal for hold long-term real estate investments. The assets grow sheltered from income taxes. There are no tight timelines to meet or Section 1031 exchange rules to worry about if you want to exit real estate for a while or take your time finding a replacement property after selling an investment. Assets in Self-Directed IRAs enjoy substantial creditor protection.

You do give up the ability to take depreciation – but that is because there is no current tax liability on Real Estate IRA properties to depreciate against!

The biggest downside is that gains in a Traditional Real Estate IRA portfolio are eventually distributed as ordinary income in retirement, rather than as long-term capital gains, taxed at a lower rate. However, gains on Roth Real Estate IRAs grow tax-free and are normally distributed tax-free in retirement, if the asset has been in the Roth IRA for at least five years.

Getting started in Real Estate IRA investing and Self-Directed IRA investing is easy. To get a free investor kit and informational brochure, or to discuss your personal situation with one of our Real Estate IRA experts, call American IRA, LLC today at 866-7500-IRA (472). Or visit us on the Web at www.AmericanIRA.com.

50-Somethings: Is Your Retirement Saving Behind Schedule?

March 28, 2018/in Articles, Blog, Individual Retirement Accounts, Investing, Precious Metals, Roth IRA, Self-Directed IRA, Solo 401K /by Jim Hitt

Life happens. Maybe you had kids. Maybe you got clobbered by the Great Recession. Maybe you got divorced. Maybe it was all three. But your contributions to retirement accounts were not what you hoped they would be. Your dreams of a big Self-Directed IRA or Real Estate IRA generating awesome rental income in retirement fell behind schedule.

You are not alone.

But regardless of what happened in the past, now is the time to aggressively save and invest to secure your future.

If you are close to or into your 50s and you are still behind the power curve when it comes to saving for your retirement, here is a short list of things you can do to catch up:

Use “Catch Up” Contribution Limits

When Congress designed the IRA, Self-Directed IRA and 401(k) vehicles to help Americans provide for their own retirement security, they knew lots of people would need to play catch-up as they got into their 50s and 60s. Most of these people are now empty-nesters in their peak earning years. Since their kids’ previous college expenses are paid in full and they have no other debt, they are able to channel those savings towards the catch-up contributions.

So, if you are age 50 and older, you too should do your best to take full advantage of these expanded retirement account contribution limits:

Self-Directed IRAs

Whether you have a Self-Directed Traditional IRA or Roth IRA, the contribution limits are the same. Including your catch-up eligibility, you can contribute $6,500 to either account. It is important to note, however, if you have both Traditional IRA and Roth IRA accounts the $6,500 is the total contribution for all accounts. i.e., you cannot contribute $6,500 to your Traditional IRA and another $6,500 to your Roth IRA.

401(k)s and Self-Directed 401(k)s

401(k) plan beneficiaries can defer an additional $6,000 per year on top of the applicable $18,500 limit on salary deferral contributions. Max out your salary deferrals, including the expanded ‘catch-up’ contribution limit, and you can generate another $24,500 for your retirement over your baseline.

You also get the benefit of any employer matching contributions.

If you are self-employed, or you are the owner/operator of your own business with just you and/or your spouse as full-time eligible employees, you can also increase your company contributions to the 401(k) as well – up to a combined limit of $55,000 if under the age of 50 and $61,000 if 50 and older, per year.

If you have enough free cash flow to fully fund a 401(k) for you and your spouse to that level, consider doing so. That maximizes the amount of money compounding for you on a tax-advantaged basis and may help shelter those assets from creditors.

Own Investment Real Estate

Investment real estate is a proven long-term wealth generator. It provides both current income and the potential for future price appreciation. Additionally, real estate investment also comes with the potential for increasing streams of income, an important source of protection against inflation as well as stock market declines.

You can own investment real estate in your own taxable account, or you can own it within a Real Estate IRA. You can even own investment real estate directly in your Self-Directed Solo 401(k).

Whether you have real estate exposure via direct ownership of real estate or via REITs, some exposure to real estate can help diversify your portfolio and provide a vital source of income and inflation protection going forward.

It is also a lasting legacy you can pass to your children.

Do not Hide from Risk.

Markets are volatile. But it is important not to hide from risk entirely. Returns on ‘risk free’ assets like money markets and CDs are abysmal and provide no real hedge against inflation. You could be retired 25, 30 years or more. Going all cash will not generate a living income over time. Inflation and cost of living increases will eat away at your savings like a cancer.

Keep some exposure to stocks, possibly including private equity assets. Also consider income generators like pipelines, oil and gas investments and other limited partnership structures using a Self-Directed IRA or Self-Directed Solo 401(k). Or just keep money you will not need for at least 5-10 years invested in stock markets for the long run.

For more information, call us today, or visit our website at www.AmericanIRA.com.

Self-Directed IRA Administrators vs. Custodians

Real Estate IRA – Benefit – Demand Exceeds Supply

The stock market got wobbly in early 2018. But Real Estate IRA investors are doing just fine.

50-Somethings: Is Your Retirement Saving Behind Schedule?

Use “Catch Up” Contribution Limits

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The stock market got wobbly in early 2018. But Real Estate IRA investors are doing just fine.

Use “Catch Up” Contribution Limits

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