Louisiana Self-Directed IRA

Louisiana Overview

Louisiana offers relaxed southern living with a decided French and Caribbean flair. Long a traditional port of entry into the U.S. for Central and South American and Caribbean shipping to the south and east, New Orleans is a key cultural center with a rich cultural history. Long considered the birthplace of jazz – one of the true uniquely and originally American art forms, New Orleans is one of America’s cultural treasures.

The four biggest cities are New Orleans, Baton Rouge, Lafayette and Shreveport.

Much of the state is still rural, and housing costs tend to be lower in the rural parishes, but also older, requiring more upkeep.

Hurricanes are a concern every year in Louisiana – and hurricane parties notwithstanding, hurricane preparation is deadly serious business, with much of New Orleans and the Mississippi Delta area below sea level.

Population flows have tended to be negative in Louisiana in recent years, with many people leaving the state to pursue jobs elsewhere. This tends to limit real estate price growth. Real estate investors around New Orleans should also be alert to the possibility that any given home built in 2005 or before could have significant hidden flood damage.

It’s also not an area where you want to skimp on flood insurance or hurricane insurance coverage. But if you are willing to put up with the periodic hurricanes and flooding along the Mississippi and Gulf Coast, and take the hot and humid summers in stride, then you are in for a great time: Music is a big part of life both in New Orleans and out of it, with multiple unique musical traditions including New Orleans jazz, Cajun and zydeco.

Foodies will love the amazing local culinary traditions.

And Geaux Saints!

Why a Louisiana 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 Louisiana Self-Directed IRA means freedom, opportunity, and self-determination. It means not being satisfied that the “market” is the only market that exists. It doesn’t 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, Louisiana Self-Directed IRAs come with all sorts of investment protections.

Understand Your Louisiana 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 Louisiana 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 Louisiana 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 Louisiana 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 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 isn’t as complicated as it might sound. The steps are very simple:

• Open a Louisiana 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 Louisiana Self-Directed IRA Owners

The cost of living in Louisiana is fairly low, thanks largely to the relatively low cost of housing. The average price for a single-family home in Louisiana, as of January 2019, is $145,300, which is well below the national average of $216,200. However, transportation costs tend to be high – 25 percent higher than the national average, according to an index that includes car insurance costs, gas taxes and typical commuting costs. Overall, Louisiana is about 5 percent cheaper to live in compared to the rest of the U.S. according to Sperling’s Best Places.

If you want to live in New Orleans, housing costs are somewhat higher than in the rest of the state, but still below the national average, with a median house price of $187,100.

Military Retirement Income

Louisiana does not tax military retirement pensions.

State income taxes on Louisiana Self-Directed IRA Income

Louisiana has three marginal tax rates of 2%, 4% and 6%. There’s a combined personal exemption-standard deduction of $4,500 ($9,000 for heads of household and joint filers), with additional personal exemptions of $1,000 for dependents. As of 2019, top tax rate applies to all income over $50,000 earned during the calendar year for singles, and over $100,000 for couples. Overall, Louisiana’s income tax rates are slightly higher than the national average, according to SmartAsset.com.

The Pelican State also taxes both long-term and short-term capital gains at rates of either 2% or 4%, depending on your income, with the exception of proceeds from the sale of non-publicly-traded businesses

Louisiana taxes interest and dividend income as ordinary income, unless it’s within a tax-advantaged account such as a Self-Directed Roth IRA. However, military retirement, federal retirement, state retirement benefits and Social Security income is also exempt.

There’s also an exemption of up to $6,000 in retirement income from other sources for residents age 65 and older.

Louisiana sales taxes

On average, the combined state and local sales taxes in Louisiana are over 10 percent – the highest state average in the country. The state sales tax is 4.45 percent, but the individual parishes add their own sales taxes. These parish sales taxes are more than 10 percent in several areas, including Calcasieu, Catahoula and St. Landry parishes. However, food cooked at home and prescription drugs are exempt from the state sales tax, though not necessarily from the parish tax.

Sales taxes are lowest in Lafourche, St, Martin, St. Mary and St. Tammany counties, where the parish sales tax rate is zero.

Louisiana Self-Directed Real Estate IRAs and property taxes.

Louisiana is a friendly spot for real estate investors, with an average property tax effective rate of just 0.52 percent, which ranks the state as one of the most favorable tax environments in the country – especially for out-of-state landlords who do not have to spend their income in Louisiana and subject themselves to the high state and local sales taxes.

Louisiana Estate and Inheritance Taxes

Louisiana does not have a state estate or inheritance tax.

Other Louisiana Taxes

We are dismayed to report that Louisiana imposes a tax of up to 40 cents per gallon of beer.

Louisiana’ fuel tax is 20.01 cents per gallon on gasoline and diesel fuel.

The State of Louisiana also imposes a 2 percent tax on electric power.

Benefits of Retiring in Louisiana

If you are interested in seeking retirement in Louisiana, or if you simply want to think about it as a long-term option, you might consider a Self-Directed IRA. A Louisiana 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 Louisiana? 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 a Louisiana 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 Louisiana 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 Louisiana 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 Louisiana 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).