Self-Directed IRA Administrators vs. Custodians

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

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!

Recovering Interest Rates Make Private Lending Within IRAs More Attractive

Bad news for borrowers can be good news for lenders. After a very long dry spell, interest rates are starting to nose up out of the cellar. Which means it’s getting more profitable to lend money, as opposed to borrowing it.

At the same time, many folks have been looking at taking some profits in the real estate world, capitalizing on a broad housing recovery over the past several years. Essentially, this reflects a ‘risk-off’ strategy, including potentially de-leveraging retirement portfolios by converting them – wholly or partially – from net borrowers to net lenders.

Outlook for Private Lending in IRAs

The rising interest rate trend is likely to continue for some time. It took a while for interest rates to get as low as they did, and it will take time for them to move back up to healthier and more sustainable rates for net savers.

With that in mind, it’s time to take a look at the potential of using self-directed retirement accounts, such as IRAs, Roth IRAs, SEPs and solo 401(k)s to engage in Private Lending.

Advantages of self-directed IRAs and Private Lending

Normally, interest income is taxed at ordinary income rates. But by lending money from an IRA or other retirement account, you can defer any income taxes due on this interest income. All interest received goes back into your retirement account, where it can be reinvested, instead of going to the IRS and taken out of action, as far as you’re concerned.

The general tax rules concerning traditional versus Roth IRAs apply: Interest income in tradition IRAs as well as 401(k)s, SIMPLEs and SEPs is normally tax-deferred. Interest in Roth IRAs and designated Roth 401(k) accounts grows tax-free, subject to the same 5-year rule that applies to stocks, bonds and mutual funds within Roth accounts.

Penalties for Early Withdrawal

Further, you will have to pay a 10 percent excise tax on amounts you withdraw from an IRA or 401(k) prior to age 59 ½, unless you are over 55 and have left the work force, in which case you can begin taking penalty-free 401(k) distributions once you are older than 55.

A few rules concerning lending from within retirement accounts that most other lenders don’t think about: You can’t take a current tax write-off on bad debts. There was no current income tax due if they paid you, and there’s nothing to deduct against if someone defaults on a loan. Ultimately, you’ll just have less money available for eventual distributions in retirement than you would if the borrower(s) had not defaulted.

Furthermore, traditional IRAs, 401(k)s and SEPs have required minimum distributions (RMDs). You must begin taking income out of these accounts by April 1 of the year after the year in which you turn age 70½.

That means you can’t have your entire portfolio lent out when the deadline comes! If you don’t make your RMDs as required, the IRS can and almost always will levy a 50 percent penalty on any amounts you should have taken as RMDs and didn’t. Ouch.

Prohibited Transactions

It’s always tempting to lend to oneself or to family members. That’s not allowed in IRA accounts, though. Here are the rules:

  • Disqualified persons include the IRA owner’s fiduciary and members of his or her family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant).
  • The following are examples of prohibited transactions with a traditional IRA.
    • Borrowing money from it
    • Selling property to it
    • Receiving unreasonable compensation for managing it
    • Using it as security for a loan
    • Buying property for personal use (present or future) with IRA funds

To open an account with American IRA, or simply to learn more about the flexibility and benefits of self-directed IRA accounts, including real estate IRAs and IRA partnerships, call us today at 866-7500-IRA(472).

Real Estate IRA Basics FAQ

If you’re coming here because you saw something on the Web about real estate IRAs, or you heard something from a friend, you came to the right place. Yes, real estate IRA investing is legal, has a long track record of success, and is an increasingly popular option for investors who understand the asset class, or who are looking to diversify further.

Is it legal?

Yes, real estate investing within your IRA is quite legal. That’s even true for foreign real estate – the assets aren’t restricted

What are the advantages?

The advantages to real estate within an IRA, compared to other asset classes, are many:

Downside protection. Compared to conventional financial products such as stocks, bonds and mutual funds, real estate has a crucial advantage: Any stock or bond can potentially fall to zero overnight. This is not true for real estate. No matter what happens to the economy, or to Wall Street, at the end of the day a house is a house, and will have value as long as people need a place to live. That’s substantial downside protection.

Simplicity. Further, real estate is easy for most people to grasp. You don’t have to be a financial guru to be a successful real estate investor. Just have a good grasp of numbers and a good feel for a property’s potential value and how to unlock it.

Potential steady income stream. For most of us, retirement is about income generation. Real estate has a centuries-long and proven track record as a reliable income generator through all kinds of economic cycles and upheavals.

Inflation protection. The dollar is almost certain to lose value over the long haul as inflation takes its course. Land and buildings tend to go up, even as the dollar loses value.

Tax deferral. Most landlords have to pay income tax on rental income – a substantial current year cash flow burden. If you hold your real estate in an IRA, however, any rental income tax is deferred until such time as you withdraw the money from the IRA. In the case of Roth IRAs, withdrawals are potentially tax-free, as long as your money has remained within the IRA at least five years.

How big an account do I need?

There’s no specific minimum size. Just be aware that any expenses the IRA incurs has to be met using cash available within the IRA, plus any allowable contributions for the year, which could be limited by your income.

I heard I can’t borrow money in my IRA. Is this true?

Here’s the deal: Your self-directed IRA can, in fact, borrow money, but only on a non-recourse basis. That means the lender can have no claim or collateral on any asset outside of the IRA itself. It is true that you cannot pledge assets in your IRA as collateral for a loan made to you, personally, and you cannot pledge non-IRA assets in a loan made to your IRA. But IRAs and other retirement plans can and do borrow money every day.

Before you borrow, though, understand that any profits or income attributable to borrowed money may be subject to unrelated business income tax.

Are no money down options available?

Normally no. Typically, lenders willing to make loans to self-directed retirement accounts to buy real estate require a down payment of 35 percent or more. It is possible, however, to partner with your Real estate IRA! That way, you can provide the down payment with your own funds, and your real estate IRA picks up the rest, or vice versa. See this article for more information.

What restrictions apply?

You cannot use any property your self-directed IRA owns for your own personal use, or for your spouse’s use. This is true even if your self-directed IRA only owns a tiny fraction of the property-if it owns a single penny’s interest in your property, you cannot use the property for yourself or your spouse.

The same applies to select family members, including ascendants, descendants, their spouses, and any financial, tax or legal advisors working with you on the self-directed IRA and their spouses.

You cannot personally lend money to or borrow money from your self-directed IRA, nor may any prohibited party described above. Nor may any entities they control. Neither may any prohibited party.

You cannot sell property to, nor buy property directly from, your own self-directed IRA. Nor may any prohibited individual or entity. You also cannot directly provide services to your self-directed IRA, nor may any prohibited party, nor may any entity they control. That means you can’t hire your own company to do repairs on the property, and you can’t hire your son as the property manager to oversee the real estate held within your self-directed IRA.

Where can I find out more?

To open an account with American IRA, or simply to learn more about the flexibility and benefits of self-directed IRA accounts, including real estate IRAs and IRA partnerships, call us today at 866-7500-IRA(472).

Sell Your Property and Save Taxes with 1031 Exchanges

Sean McKay (Senior Vice President at American IRA), John Hazlehurst, Esq. (Partner in the Hazlehurst & Blake PLLC law firm), and William (“Bill”) G. Hester (President of Exchange Accommodators, Inc.) will be presenting this joint webinar.

Event Location: This event is a webinar that you can attend from your computer.

Click here to register.

Date: April 8th

Time: 7 p.m. to 8:30 p.m.


We love Self-Directed IRA’s because of the ability to invest in real estate tax free or tax deferred.

What if we told you there was another strategy to sell a property and not have to pay Uncle Sam?!?!

At American IRA, we want to continuously expand your investment knowledge and on April 8th, we have a terrific educational opportunity. John Hazlehurst and Bill Hester from Exchange Accommodators will educate us on doing 1031 exchanges!

Speaker Bios:

John Hazlehurst, Esq.

John is a partner in the Hazlehurst & Blake PLLC law firm, 5925 Carnegie Blvd, Suite 200, Charlotte, North Carolina 28209.  (Yale Law School (JD), University of North Carolina at Chapel Hill (Economics)).  He specializes in commercial real estate, small business corporate and financing law.  He was a founding member, in 1992, of Realty Exchange, Inc. a qualified intermediary company located in Charlotte, and then started Exchange Accommodators, Inc. in 1996.  Together with Bill Hester, John has handled many hundreds of “like kind” exchange transactions in the States of North and South Carolina (and the east coast of the United States, in general).

William (“Bill”) G. Hester

Bill is the President of Exchange Accommodators, Inc. (qualified intermediary company) and Associated Real Estate Advisors, Inc. (commercial real estate broker) and he attended Clemson University. He specializes in acquisition and the sale of commercial real estate and is a specialist in the use of 1031 exchanges in order to defer taxes. He has been in the real estate business for more than 20 years.  Bill joined Realty Exchange, Inc. in 1994, and then joined Exchange Accommodators in 1997, and has been an officer of the company since.

Click here to register.

How Real Estate Investors Can Leverage Self-Directed Funds to Invest and Grow Their Business or Self-Directed 401Ks

Sean McKay, Senior Vice President at American IRA, will be speaking at this event.

Date: 22 April 2014

Time: 6.00 pm to 9.00 pm

Time Line:

Dinner on your own.

Networking begins at 6 p.m.

Presentation begins at 7 p.m.

Zorba’s Greek Restaurant
6169 Saint Andrews Road
Columbia, SC 29212

Topic:  Basics of Self-Directed IRAs, strategies for using other peoples money, and using a Self-Directed IRA as a source for investing with Private Money.

Keynote Speaker: Sean McKay

Cost: Free for REIA members. Guest fee is $19.99 includes a 30-day trial membership and 1 guest pass.

Supercharge Your IRA with Real Estate hosted by CREIA (Carolina Real Estate Investors Association)

CREIA (Carolinas Real Estate Investors Association)Jim Hitt (CEO of American IRA) and Sean McKay (Senior Vice President of American IRA) will be presenting at this event.

Event Location: AB-Tech Main Campus – Sycamore Building, 340 Victoria Rd, Asheville, NC  28801

Date: April 19, 2014

Time: 8 a.m. to 4 p.m.

This seminar will guide you through the many advantages of setting up and using Self-Directed IRAs to invest in real estate to boost your retirement funds.

Click here to register.

You’ll learn:

  • What exactly a Self-Directed IRA is
  • Why most Americans are not on track to retire
  • How Self-Directed IRAs give you the freedom to invest in single-family and multi-family homes, apartment buildings, condominiums land, commercial property and more
  • How to get started with Self-Directed IRAs
  • How to sell property within a real estate IRA without having to worry about capital gains taxes
  • How to use a tax-deferred exchange inside a real estate IRA to defer UDIT tax
  • Specific investment strategies
  • Advanced real estate concepts including limited liability companies, options, wrapping mortgages
  • How to realize tremendous rates of return with minimal investments
  • How to raise private capital
  • And much more

Cost: Price is just $59 for CREIA members and $79 for non-members if you sign up by April 15th!  On the 16th & 17th, Prices go to $69 & $89.  After April 17th, please register at the door.

Click here to register.

Atlanta REIA Main Monthly Meeting April 2014 (Real Estate Investors Association)

Atlanta REIA (Real Estate Investors Association) LogoJim Hitt, CEO at American IRA, LLC will be attending this event

Event Location: Crowne Plaza Ravinia Hotel

Address: Crowne Plaza Ravinia Hotel, 4355 Ashford Dunwoody Road in Atlanta, GA

Date: 4/7/2014


Meeting Agenda:

6:00 – 6:45PM Haves & Wants Speed Marketing Session

6:45 – 7:10PM Announcements, Mini-Sessions, etc.

7:10 – 7:25PM Networking Break

7:25 – 7:30PM Giveaways & Door Prizes

7:30 – 9:00PM Main Speaker Session

9:00PM Late Nite Networking at the Tilted Kilt Perimeter (1155 Mt Vernon Highway, Atlanta, GA 30338)


To be announced soon

Cost: Free for Members, $15 for Guests (Guests can RSVP online)

Charlotte REIA April Monthly Meeting (Real Estate Investor’s Association)

Charlotte REIA



Jim Hitt, CEO of American IRA-a national Self-Directed IRA provider-will be in attendance at this information packed event and available to answer any questions attendees have about investing with their Self-Directed IRAs.

Event Location: Charlotte Executive Park

Address: 5700 Westpark Drive, Charlotte, NC 28217

Date: 4/3/2014

Time: 6:00PM – 9:00PM


Ron LeGrand on Quick Turning Real Estate for Fast Cash at the Crowne Plaza Charlotte Executive Park

Charlotte REIA Members & Guests Can Attend This Month For FREE if You RSVP Now!

Ron LeGrandCharlotte REIA is very excited to announce that real estate investing legend and millionaire maker, Ron LeGrand, will be speaking at our Charlotte REIA Main Meeting on Thursday, April 3rd at the Crowne Plaza Charlotte Executive Park located at 5700 Westpark Dr in Charlotte, NC (map) which starts at 6:00 PM. Ron has bought and sold over 2500 houses and helped create more millionaire real estate investors than anyone else on the planet and you can be one of them!

Come spend the evening with Ron where he will teach you how to “Quick Turn Real Estate for Fast Cash” and become a “transaction engineer” so you can kick start your real estate investing career and make this your most profitable year ever! You will learn about…

  • Update on Dodd-Frank Law – Ron will update us all on the new Dodd-Frank Law that went into effect in January and how that new law will or will not effect us as creative real estate investors.
  • Making Big Money With No Money Or Credit – Ron will show you where the big money is in real estate and how you can get it with NO money, credit or risk on your part.
  • Making Huge Profits On Over Leveraged Houses – Ron will show you how to control houses without ownership and make a minimum of $5,000 per house 3 to 4 times a month.
  • Getting Rich In Your IRA Tax Free – Ron will teach you how to use real estate to grow your IRA to a MILLION DOLLARS in less than five years without you ever personally contributing another dime.
  • Where To Find The Best Deals Even With Hot Competition – Ron will show you the best tool he’s ever used to absolutely ensure you never struggle to find deals and it only costs pennies to implement.
  • Where To Get The Money To Buy Bank-Owned Deals– Since banks require cash to purchase their properties, Ron will show you where to get the cash to buy bank-owned homes that won’t come from other banks or require credit or qualification.
  • Purchasing a Beautiful New Home for Your Family – Ron will show you how you can purchase a new home for your family in the next 45 days and never fill out an application, apply for a loan, or put up a down payment.

Cost: Free for members, $20 for guests

How to Avoid Getting Ripped Off When Buying Turn-Key Real Estate

This webinar will be presented by: Dan Doran

Date:  April 9th, 2014

Time: 7:00 p.m. to 7:30 p.m.

Click here to sign up for this free webinar.

Dan Doran has been a national speaker, trainer and coach to real estate entrepreneurs for over a decade.  He has trained thousands and created over a hundred training systems in the process.

In 2010 he was approached by a group of wealthy investors and asked to sell turn-key real estate to large groups, as that was all the rage at the time.  After investigating the industry, he was shocked to discover the massive problems that most promoters of turn-key real estate created by selling sub-par houses for inflated prices to unsuspecting investors.

To help others avoid these problems, Dan created a series of simple questions that any investor can easily ask any promoter before investing in any turn-key real estate program.  This webinar will arm you with those questions and you’ll understand the rationale behind them so you’ll never get ripped off when you invest in turn-key real estate.

“Passive Cash Flow from turn-key real estate is great”, says Dan.  “But you must ask a few simple questions; otherwise you’re at the mercy of the promoter”.

Don’t get ripped off.  If you have an interest in investing in turn-key real estate then this webinar is a must for you to attend.  It’s free, it’s informative and you can use it tomorrow to help you to make better investment decisions.

Click here to sign up for this free webinar.