Indiana Self-Directed IRA

Indiana Self-Directed IRA

Indiana Overview

If you are planning on retiring in Indiana, we have some important advice: First, learn to love basketball. Or at least fake it. Second, forget Heinz and Hunt’s ketchup brands; Indiana people are all about their Red Gold brand ketchup. And third, develop a taste for pierogis. If you are not familiar with them, think of them like Polish ravioli, only better. A healthy appreciation for pierogis will help you more fully enjoy the annual Pierogi Festival, held every year in beautiful Whiting, Indiana.

If you can do these three things, then you have every chance at making it in the Hoosier State.

A love for covered bridges (Indiana has lots of them for some reason) and auto racing can also really boost your quality of life.

Indiana’s a great spot for music lovers: Bloomington is home to some of the finest young musicians in the country and is a Mecca for classical string music, among many other styles. Indianapolis will have lots of music, too, and of course, Chicago is just over the state line to the Northwest.

If you like the outdoors and recreation, you will probably want to be up north, close to Indiana Dunes state park, which extends for 40 miles along the shore of Lake Michigan and is the go-to resort area among Hoosiers, especially in the summer.

Winters will be cold, and summers quite mild and great for golfing.

Why an Indiana 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, an Indiana 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, Indiana Self-Directed IRAs come with all sorts of investment protections.

Understand Your Indiana 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 Indiana 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 Indiana 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 Can’t Do with an Indiana 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 an Self-Directed IRA protection, it is 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 an Indiana 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 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.

Financial Considerations for Indiana Self-Directed IRA Owners

The Median home value in Indiana is about $130,200 at press time, according to Sperling’s Best Places – much lower than the nationwide median home price of $216,000, while the overall cost of living places Indiana about 13 percent below the national average.

Military retirement pay:

Anyone who reports military retirement income and/or survivor’s benefits is eligible to deduct up to $6,250. No age limit.

State income taxes on Indiana Self-Directed IRA Income

Indiana has a Flat income tax rate of 3.23%, subject to a number of deductions. Social Security income is exempt, as is interest from U.S. government bonds, including saving bonds and Treasury bills.

However, income from non-Roth retirement accounts is fully taxable under Indiana’s state income tax rules.

Taxpayers age 62 and older may deduct from their adjusted gross income $1,000 from a federal civil service annuity. Out-of-state pensions are fully taxed. Homeowners can deduct up to $2,500 from their income taxes for property taxes on their residence.

Got long-term care insurance? If it is tax qualified, you may be eligible for a special deduction for the amount of your premiums paid. Additionally, the premiums paid for a tax qualified long-term care insurance policy can be included in non-reimbursed medical expenses on Schedule A of the Federal tax form.

There’s also an Over 65 deduction of up to $12,480 for low-income senior homeowners with combined incomes of not more than $25,000 and assessed property values of $182,430.

Full list of Indiana state tax deductions here.

Indiana sales taxes

Indiana’s sales tax is a bit higher than the national average at 7 percent, but there are no local sales taxes, and food, medical equipment, prescription drugs are exempt.

Indiana Self-Directed Real Estate IRAs and property taxes.

The average property tax rate is 0.87 percent. That’s number 28 in the country, according to the Tax Foundation. But total collections are under $1,000 per home, on average, making it among the least expensive states, thanks in part to the relatively modest price levels.

You may be able to take a deduction of up to $2,500 of the Indiana property taxes paid on your principal place of residence.

At press time in early 2019, Indiana homeowners are eligible for a homestead deduction, which is $45,000 or 60% of the assessed value of the homestead, whichever is less. A taxpayer entitled to receive a standard homestead deduction is also entitled to a supplemental deduction — 35% for a homestead with an assessed value of less than $600,000, or 25% for a homestead assessed at more than $600,000.

Indiana Estate and Inheritance Taxes

Indiana has no state estate or inheritance taxes.

Other Indiana Taxes

The Indiana state gas tax is 41.9 cents per gallon, ranking it the seventh highest in the country. Smokers will pay another $0.995 per pack of 20 cigarettes.

Benefits of Retiring in Indiana

If you are interested in seeking retirement in Indiana, or if you simply want to think about it as a long-term option, you might consider a Self-Directed IRA. An Indiana 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 Indiana? Want to learn more about how to take advantage of all of the retirement capabilities you have? Then it’s time to think about a Self-Directed IRA. Continue browsing this website to learn more about an Indiana 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 Indiana Self-Directed IRAs, Self-Directed Roth IRAs, Self-Directed SEP IRAs, Self-Directed SIMPLE IRAs and even Self-Directed CESAs and Self-Directed HSAs.

An Indiana 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 an Indiana 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).

For other easy Indiana Self-Directed IRA solutions, talk to our valued partner TurnKey IRA.