Florida Self-Directed IRA

Florida Self-Directed IRA

Florida Overview

Florida has long been a popular retirement destination for seniors from colder climates up north. The weather is hot and humid in the summer but mild all winter long. Recreational opportunities abound with plentiful coastlines, some of the best freshwater, saltwater and deep-sea fishing in the country and lots of beautiful golf courses all over the state.

Northern Florida is culturally quite similar to the rest of the U.S. southern states, while more cosmopolitan Latin and Caribbean influences abound as you move further south towards Miami.

Why a Florida Self-Directed IRA?

Stocks. Mutual funds. CDs. Bonds.

For years, you have heard that these are the types of investment vehicles through which to secure your retirement. The stock market tends to appreciate over the long haul, after all, and bonds are conservative and low on risk. Mutual funds have popped up in recent decades as one of the most popular investment vehicles as well, closely monitoring certain aspects of the stock market.

What most people do not know is that these are not the only investment types available for retirement.

In fact, if you choose self-direction, you will find that the IRS allows for all sorts of different types of investments in a retirement account. You can invest in gold and precious metals, real estate, private companies, and more. There are a few select limits on the sorts of investments you can make, but the good news is: you often have more legal options than you have limits.

For many people, a Florida Self-Directed IRA means freedom, opportunity, and self-determination. It means not being satisfied that the “market” is the only market that exists. It does not mean you have to switch away all of your old investments. But if you want to invest in real estate or gold to help ensure a secure retirement, those options are indeed open…

And, like other IRA types, Florida Self-Directed IRAs come with all sorts of investment protections.

Understand Your Florida Self-Directed IRA Plan Options

Let’s take a moment to consider the various retirement account types:

  • Traditional Self-Directed IRA: A retirement account in which you can invest pre-tax or after-tax dollars, and in which your investments grow tax-deferred, meaning you will pay taxes on them once you begin withdrawing them. When you start making retirement withdrawals–defined as withdrawals after you turn 59.5 years old–the money is treated as income.
  • Self-Directed Roth IRA: Similar to a Traditional IRA, except you make after-tax dollar contributions so you are paying taxes on the front end. This allows your investments to grow tax-free. After the account has been established for 5 years and after you turn 59.5, your withdrawals are tax and penalty-free.
  • Traditional 401(K): A qualified plan that allows employees to make pre-tax elective deferrals. Business owners who want to self-direct can use these as well and allow employees to self-direct their accounts.
  • Self-Directed SEP IRA: Simplified Employee Pension that allows employers to make contributions to the retirement of their employees. An employer can also contribute to their own retirement with a Self-Directed SEP IRA.
  • Self-Directed SIMPLE IRA: Savings Incentive Match Plan for Employees. A “tax-favored” plan that small businesses and individuals can set up for their employees.
  • Self-Directed Solo 401(K): A 401(K) plan that a self-employed individual can use for retirement that offers high contribution limits.

As noted throughout, these same accounts offer a high degree of self-direction if you want to direct your own accounts.

A Variety of Investments

One of the chief benefits of directing your own retirement account is that you get to choose your investments from a wide range of options:

  • Real estate: Apartment buildings, commercial property, retail space, raw land, etc. If you want to earn an immediate income for your retirement account with your investments, rent can be one of the most powerful ways to ensure that. You can also use leverage in a Florida Self-Directed Real Estate IRA when using non-recourse loans.
  • Private IRA Lending: You can negotiate the terms, interest rate, and length of the loan, as well as other variables like the monthly payment amounts and whether the loan is secured or unsecured.
  • Private companies: Public stocks are what most people think of as “investments,” but there are also private stocks to consider. There is a lot of opportunity for growth in private company stock, but also plenty of risk to consider.
  • Tax liens: With a high rate of return, these investment types are ideal for self-directing investors with smaller accounts.
  • Precious metals: Gold, silver, platinum, palladium. These metals are famous as a “hedge” against economic downturn, which is why many people turn to them as a way to avoid putting all of their eggs in the stock market basket.
  • Single Member LLC: An investor can create an LLC to be owned by their Florida Self-Directed IRA, managing it themselves. This gives a significant degree of protection; however, you will likely want to consult with a professional to learn how to do this properly.

What You Cannot Do with a Florida Self-Directed IRA

As fun as it is to talk about the various options you can have with a self-directed retirement account, it should be noted that there are certain limits, as well. You cannot self-direct a retirement account to invest in life insurance, collectibles like art, gems/jewelry, coins, alcoholic beverages, and tangible personal property. As enticing as it might be to put that wine cellar under a Self-Directed IRA protection, it’s simply prohibited–so look for your protected retirement investments elsewhere.

Who You Cannot Do Business With

A disqualified person is anyone the Self-Directed IRA has decided is not “arm’s length” from the IRA.  Your IRA cannot engage in any transactions with these individuals or you risk the tax-status of your IRA.

A Disqualified Person is:

  • You
  • Your spouse
  • Any of your lineal ascendants or descendants (parents, children, grandchildren, and the spouses of children, grandchildren, etc. – including legally adopted children).
  • Any investment providers or fiduciaries of the IRA.
  • Any entity (a corporation, LLC, trust, etc.) where a disqualified person owns more than 50%.
  • Any entity (like previously listed) where the IRA account holder is an officer, director, a 10% or more shareholder, or a highly compensated employee.

Getting Started with American IRA

Although we have thrown a lot of abbreviations and words at you, you should know that self-directing your retirement is not as complicated as it might sound. The steps are very simple:

  • Open a Florida Self-Directed IRA with American IRA. Make sure to put thought into the type of account you would like to open; review the options available to you and select the one that makes the most sense for your individual situation.
  • Fund your account. This is where the options can throw people off. Let’s take a look at them quickly:
    • Contribution: Simply putting money into the account throughout the year. This is what a lot of the funding will look like once the account is already opened.
    • Conversion: Withdrawing part or all of the cash/assets from a Traditional IRA and putting them into a Self-Directed Roth IRA is called a conversion. Once the cash/assets are distributed, you have 60 days to put them in the Roth IRA account.
    • Rollover: A tax-free distribution of cash/assets from one account to be put in another retirement account. You are permitted one rollover per year.
    • Transfer: Transferring cash/assets directly from one retirement account to another retirement account. Because you do not take direct possession of the cash/assets, you are allowed unlimited transfers and there is no tax.

How it Works

1.)  Open an American IRA Self-Directed IRA

  • Select the type of account that you would like to open.

2.)  Fund Your Account

  • Move money into your account by transfer, rollover or contribution.

3.)  Select an Investment

  • Find an asset you want your IRA to purchase and submit an Investment Form. American IRA will work with you and your professionals for a smooth closing.

4.)  Review the Instructions

  • Visit the “How it Works” page on our website to review the instructions for the asset you want to purchase and submit the paperwork required for the investment you have chosen.

5.)  Provide Payment Authorization

  • Submit Payment Authorization Forms for expenses that pertain to the asset your IRA has purchased.

6.)  Submit Deposit Coupons

  • Deposit income generated from the asset your IRA purchased by submitting a Deposit Coupon along with the funds.

Tax and Financial Considerations for Florida Self-Directed IRA Owners

Florida is a relatively tax-friendly state for Florida Self-Directed IRA owners. Perhaps more important for some, Florida is also an extremely debtor-friendly state when it comes to bankruptcy protections. Florida residents can exempt an unlimited amount of home equity from bankruptcy seizures (provided they have lived in the home long enough) and can also shield an unlimited amount in annuities and cash value life insurance from creditors.

The cost of living is modest in most of the state, though Miami, Fort Lauderdale, Palm Beach and Naples can be quite pricey.

The state retail sales tax is currently 6 percent. Counties may add up to 2 percent to that state sales tax.

State income taxes on Florida Self-Directed IRA Income

Florida is one of a handful of states that impose no state income tax on any income, much less on Florida Self-Directed IRA income. The lack of any state income tax whatsoever helps to make Florida a popular destination for retirees. However, you have to be able to show that you reside in Florida at least 183 days out of the year in order to claim Florida as your state of residence.

Florida also imposes no inheritance or estate tax, making it a great state for those with children and grandchildren to whom they would like to pass on a financial legacy.

Florida Self-Directed Real Estate IRAs

Thanks to high housing prices, the cost of living is quite high in Broward, Dade and Palm Beach counties as well as in Naples and some of the resort areas of places like St. Petersburg. Prices are more modest the more you move inland and further north. However, The Tampa Bay area remains perhaps one of the better values in coastal real estate.

Florida’s real estate market is famous for its wild boom-and-bust cycles, so it is best for people who can withstand some volatility in their Florida Self-Directed Real Estate IRA portfolios. Because of the volatility, mortgage lenders willing to write business in the Self-Directed Real Estate IRA market may ask the borrower to retain more equity. For example, while mortgages of up to 65 percent of the estimated value of a Florida Self-Directed Real Estate IRA property are not uncommon elsewhere in the country, some lenders will cap loans at 50 percent for this market, because of the historic volatility.

Property taxes in Florida currently average 1.1 percent of a home’s assessed value, which is slightly below the national average. You can find the actual property tax rate for each county by visiting this site.

Florida Self-Directed Real Estate IRA owners should not skimp on hurricane/windstorm insurance, as well, for obvious reasons. Deductibles are substantial, as well, with deductibles of 2 percent to 5 percent of a property for hurricane/windstorm damage being common.

Look into the cost of insuring a home before buying: Florida homes that do not have some more recent construction features and wind mitigation measures may be more difficult to insure, and premiums could be up to four times higher for a home that has had some wind mitigation measures done than homes that have not.

Termites are an issue in much of the state, too, thanks to the lack of winter ice and snow in most of the state. Do a thorough inspection for termites before investing in a Florida Self-Directed Real Estate IRA property.

Real estate investors and homeowners in Florida should also be aware of the risk of sinkholes, which are common throughout the state but especially in Hillsborough county and inland through the Orlando area and Orange county.

Benefits of Retiring in Florida

If you are interested in seeking retirement in Florida, or if you simply want to think about it as a long-term option, you might consider a Self-Directed IRA. A Florida Self-Directed IRA will allow you to handle plenty of different investments under your own control—all while enjoying the tax protections of retirement accounts.

Are you interested in retiring in Florida? Want to learn more about how to take advantage of all of the retirement capabilities you have? Then it is time to think about a Self-Directed IRA. Continue browsing this website to learn more about a Florida Self-Directed IRA or contact us at 828-257-4949 to learn more about how you can secure a retirement for yourself.

About American IRA, LLC

American IRA, LLC is one of the leading third-party administrators for self-directed retirement accounts in the United States.  The custodian New Vision Trust Company is a South Dakota regulated trust company.   Founder and president Jim Hitt has been investing his own personal assets in Self-Directed IRAs, including Self-Directed Real Estate IRAs, for more than 35 years, and has helped thousands of others declare independence from Wall Street investment companies with their high fees and limited investment menus and become successful Self-Directed IRA investors.

American IRA has offices in Asheville and Charlotte, North Carolina, and Atlanta, GA, but we serve investors from all over the United States and even expats who want to realize the benefits of self-directed retirement investing techniques in Florida Self-Directed IRAs, Self-Directed Roth IRAs, Self-Directed SEP IRAs, Self-Directed SIMPLE IRAs and even Self-Directed CESAs and Self-Directed HSAs.

A Florida Self-Directed IRA with American IRA, LLC can help you achieve greater diversification by making it easier to invest in alternative asset classes not commonly available from large investment companies. Self-Directed IRAs also allow you to take more direct control of your retirement assets, while minimizing exposure to needlessly high expense ratios, commissions, wrap fees, 12-b-1 fees and AUM fees commonly charged by Wall Street investment companies. Our much more efficient flat-fee, menu-based fee schedule frequently allows investors to save thousands in fees each year – particularly with larger accounts and buy-and-hold investors.

With a Florida Self-Directed IRA from American IRA, LLC, you can quickly and easily invest in alternative asset classes like direct real estate ownership, tax liens and certificates, mortgage lending, precious metals, and much more.

To get started, click here to open an account, or call American IRA today at 866-7500-IRA(472).