Montana Self-Directed IRA

Montana Overview

Montana real estate developers have marketed the Treasure State as a retirement destination and as a desirable place to raise a family, away from the big city. And for those who enjoy spectacular natural beauty and have an appreciation for the rugged outdoors, it certainly is that.

Those who enjoy medium-sized towns will love Billings, which boasts a small but lively cultural and culinary scene with plenty of locally-brewed craft beer and restaurants of all types.

Bozeman is a terrific college town – home to Montana State University – and conveniently located to the incomparable Yellowstone National Park.

Yellowstone alone would be enough for a long visit, but some say that Glacier National Park is even more spectacular – and less crowded during peak seasons.

Camping, hunting and fishing enthusiasts will never run out of things to do.

You will want a car. Outside of Missoula and Bozeman (which have zero fare busses!) Montana’s cities have very limited public transportation, and no public transportation outside of the bigger towns. If you are not driving, you will probably want to take that into consideration.

None of Montana’s golf courses are listed among Golf Digest’s 100 Greatest Courses in America, but Golfers can find very good courses at Rock Creek Cattle Co. in Deer Lodge, the Stock Farm Club in Hamilton, the Wilderness Club in Eureka, the Yellowstone Club in Big Sky, The Reserve at Moonlight Basin in Big Sky, the Iron Horse Golf Club in Whitefish, Black Bull Golf Club in Bozeman, and Northern Pines Golf Club in Kalispell.

Why a Montana 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 Montana 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, Montana Self-Directed IRAs come with all sorts of investment protections.

Understand Your Montana 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 Montana 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 Montana 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 a Montana 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 Montana 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.

Tax and Financial Considerations for Montana Self-Directed IRA Owners

Montana’s cost of living is slightly above the national average, according to Sperling’s Best Places. That’s entirely because of the cost of groceries and housing. The median home cost in Montana is $227,400 – slightly more than the national average of $219,700 as of April 2019.

However, you can get much more affordable homes if you are willing to get a few miles outside of Billings and Bozeman.

State income taxes on Montana Self-Directed IRA Income

Montana has a state income tax that ranges from 1% up to 6.9%. The top bracket kicks in at an income of $17,900, which is pretty low compared to other states.

There’s no exemption for retirement income from retirement accounts or private or public pensions, but Tier 1 and Tier 2 Railroad Retirement is exempt.

Montana does have a partial deduction for Social Security income. If you are a single filer with an adjusted gross income (AGI) of $25,000 or less, or a married filer with an AGI of $32,000 or less, Social Security income is fully exempt as of 2019. Above that level the Social Security deduction begins to phase out up until limits of $35,000 for single filers and $44,000 for married couples. Above those limits, 15% of Social Security income is exempt. The remaining 85% is taxable.

In April of 2019, Governor Bullock vetoed a bill that would have reduced the income taxes on Social Security.

Additionally, Montana is one of the few states that taxes capital gains as ordinary income.

Put it all together and for single filers and those whose incomes are greater than $35,000 married filers whose incomes are above $44,000, Montana is not a very friendly jurisdiction when it comes to income taxes.

Montana sales taxes

Montana has no sales tax.

Montana Self-Directed Real Estate IRAs

Montana’s property tax burden is relatively low – an average of 0.87 percent, which is favorable for Montana Self-Directed Real Estate IRA investors. And real estate trends in Montana have been strongly positive, with plenty of headroom for further gains.

Those over age 62 who meet certain income limits can apply for the Montana Elderly Homeowner/Renter Credit, which provides a refundable property tax credit of up to $1,000.

To be eligible you must live in Montana for at least 9 months, and you must pay the property taxes for a home you occupy or rent. Total household income must be less than $45,000, though your credit will be phased out beginning at an AGI of $35,000.

It’s refundable, so you do not even have to file a Montana tax return to qualify, if you meet the age, income and residency requirements.

Montana Estate and Inheritance Taxes

Montana has no estate or inheritance taxes.

Other Montana Taxes

Montana levies a 3% tax on accommodations and a 4% tax on rental vehicles.

Additionally, there’s a gasoline tax of 46.15 cents per gallon on gasoline and 52.9 cents per gallon on diesel fuel.

Montana has a cigarette tax of $1.70 cents per pack of 20.

Benefits of Retiring in Montana

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