Breaking News! The DOL Fiduciary Rule is Now Officially Dead

The Department of Labor’s (DOL) controversial and short-lived fiduciary rule is now deceased, and, as expected, there are few mourners in the financial services industry. The rule, which was conceived by the Obama administration, went into effect on June 9, 2017, and officially flatlined on June 21, 2018, when the DOL failed to ask the Supreme Court to hear an appeal of a March appellate court ruling that voided the rule. The deadline for a petition was June 21st.  This has little effect on Self-Directed IRA investors because they choose their own investments.  It becomes important to all investors including Self-Directed IRA investors since a majority have investments in the stock market.

What was the fiduciary rule?

The rule compelled all investment professionals, who were offering advice on retirement accounts, to place their clients’ interests ahead of their own. Consumer advocates and groups such as AARP hailed the rule as a way of preventing financial representatives and brokers from foisting high-commission products on their clients. Critics, of which the U.S. Chamber of Commerce was one of the biggest, responded that the rule was overly burdensome, raised the costs of compliance, and made it too expensive for firms to carry some brokerage accounts.

The rule was on shaky ground after the election of President Trump, who has typically opposed financial regulations. Unsurprisingly, a mere two weeks into his presidency, he ordered a review of the rule, seeking “to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.”

What might replace it?

While the DOL’s fiduciary rule is gone, it does not mean that the idea of holding advisors accountable to retirement savers has vanished. The Securities and Exchange Commission (SEC) is looking into its own version of the fiduciary rule. Known as the best-interest rule, it is seen in the financial community as being less restrictive than the DOL rule. As such, it will probably generate complaints from congressional Democrats and consumer groups that it is too lenient. Here are some of the highlights of the SEC’s proposal:

  • The SEC’s version would not ban any single conflict of interest, such as sales contests that brokers run to beef up sales of particular products, but it would require brokers to disclose conflicts of interest and try to diminish their impact.
  • Brokers would generally need to disclose conflicts of interest to their clients. These conflicts would include receiving bonuses for selling certain products or fees they earn for guiding investors toward certain mutual funds or insurance products. Brokers would be required to lessen the impact of the conflicts or eliminate them completely.
  • The SEC’s best-interest rule does not establish a new basis for investors to sue their brokers for violating the best-interest standard. So, investor complaints will still be decided in arbitration hearings. The financial industry was in revolt over the DOL’s rule because it allowed clients to sue their brokers in class-action lawsuits.
  • The SEC’s proposal would require brokers and advisors to produce a brochure explaining their various legal duties and the fees they charge.
  • The SEC also proposed banning brokers from using titles–“financial advisor,” for example–that might blur the line between their business model and the fiduciary duty that binds investment advisers.

The proposal’s 90-day public comment period ended on August 7th and now awaits an SEC vote to finalize it.

What about those firms who have already spent millions to comply with the DOL rule?

Wall Street spent time and money preparing to comply with the DOL’s fiduciary rule. Estimates for the total cost of preparation to banks and investment advisors ranged from $3 to $5 billion.

One industry giant, Merrill Lynch, was among several financial companies that started moving toward fee-based advisory models in response to the new Labor Department rule, and they continued moving forward with it even after President Trump ordered his review of the rule back in early 2017.

The financial industry is in a kind of limbo, left with a lot of unanswered questions. What about those financial firms and advisors who have already changed their policies and procedures, so they would comply? Will they be returning to previous policies and procedures, or will they be modifying the new ones?

How those questions are answered is still uncertain. But one thing is for sure: The Department of Labor’s fiduciary rule is dead and gone.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at www.AmericanIRA.com.

Estate Planning with Self-Directed Solo 401Ks and Self-Directed IRAs

If you are like most retirement investors, your accounts— Self-Directed IRAs and Self-Directed Solo 401Ks—make up a large part of your overall savings. Statistically, they make up over a third of all investments in the U.S. After your death, distributions from those accounts will be required, and transferring the assets to your heirs could be a thorny issue if you have not designated your beneficiaries properly.

Those designations are an important part of your estate plan, so you want to make sure you get them right, or your heirs could end up paying more income and estate taxes than necessary. You can adapt your designations to match your wishes. The most frequent beneficiaries are:

  • Spouse
  • Children
  • Grandchildren
  • Other loved ones
  • Trust
  • Charity
  • Almost any combination of these

With all these choices, it is not surprising that Self-Directed IRA and Self-Directed Solo 401K owners often make mistakes–some of them are errors of omission–when designating their beneficiaries. These mistakes can be costly to your heirs since they could receive less (possibly nothing), and much of the money you worked a lifetime to save might not end up with the people you love.

Here are some of the most frequent mistakes and tips for avoiding a future nightmare for your heirs:

Not naming a beneficiary

This mistake is first on the list because it is probably the biggest blunder you can make on your retirement accounts. When you die without designating beneficiaries, those accounts will go through probate, an expensive and time-consuming process. The person who becomes beneficiary might not be someone you would have chosen, and even if they are, they will not be able to stretch the benefits over their lifetime because the account would need to be liquidated within five years.

Not having contingent beneficiaries

It is not unusual for Self-Directed IRA and Self-Directed Solo 401K owners to designate their spouse as a beneficiary and leave it at that. But what if something happens to both of you. Once again, your accounts would end up in court. It is much better to have designated contingent beneficiaries. If something like that happens, your accounts will avoid probate.

Not using a trust to protect assets

Designating a beneficiary will ensure that your assets are transferred properly, but some financial planners advise that you place those assets in trusts to protect them from an ex-spouse or creditors. You can even protect the beneficiary from his or her careless spending habits by using a “spendthrift” restriction on the assets.

Trusts are complex. Make sure you have experienced, professional help in setting them up.

Naming the wrong contingent beneficiaries

You can run into potential problems by naming a contingent beneficiary with a short life expectancy. For example, you name your children as beneficiaries. If they die before you, your grandchildren are next in line, and if they should all die, your brother is next.

Even though your brother will probably never inherit your assets, he has the shortest life expectancy, and his age will determine how quickly the assets must be withdrawn. It is critical to have an estate attorney look at your designations to avoid potential problems like this.

Not checking and updating the beneficiaries regularly

If you have an ex-spouse, here is an unsettling thought: If you neglected to update your beneficiaries after the break-up, guess who’s in line to receive your retirement assets when you die? Do you really want your current spouse to have the hassle of going to court to try to get your assets?

You need to check and update your beneficiaries regularly. Some of them might not be alive any longer, and some might not have been born when you last updated them. Make sure your retirement assets are going where you want them to by confirming that your designated beneficiaries are current.

Missing out on the “stretch”

Younger beneficiaries can “stretch” mandatory withdrawals over many decades, keeping their assets’ tax-deferred status in place and allowing the account to grow. As mentioned previously, choosing an older beneficiary could reduce the stretch considerably and increases taxes for your heirs as funds are withdrawn sooner and in larger chunks.

Not coordinating estate and retirement planning

When estate planners and investment advisors do not work together, the chances that your assets will end up where you hoped they would are reduced quite a bit. It is crucial that you set up your Self-Directed IRA and Self-Directed Solo 401K beneficiaries and work closely with estate planning professionals, so problems can be spotted early enough to take care of them.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at www.AmericanIRA.com.

 

Early Distribution from Your Self-Directed IRA

Life happens. A big expense you had not planned comes along, and you need more money than is readily available. It could be a job loss, major medical expense, tuition, or mounting interest charges adding to a large debt. While it may be a temporary need, borrowing the money with interest charges and a payback program may not be a viable solution either.  This is where a Self-Directed IRA may come into play.

Depending upon your circumstances, your IRA or Self-Directed IRA could provide the help you need, although there are several important points to consider before making your important decisions.

Taking funds or assets from your Self-Directed IRA (or qualified plan) is known as a Distribution. When taken prior to age 59 1/2 it becomes an “Early Distribution”. (There is an RMD, which stands for Required Minimum Distribution, which you must take on a yearly basis once you reach age 70 1/2 which only applies to a Traditional IRA and not a Self-Directed Roth IRA.)

If you elect to take an Early Distribution, the IRS implements a 10% early distribution tax (except for a Roth IRA which has different rules). In addition, the IRS classifies your withdrawn amount as income. This means that you would be responsible for paying tax on the full amount distributed (in addition to the 10% early distribution tax) from a Traditional IRA or Self-Directed SEP IRA. For those over age 59 1/2, the amount is still considered taxable income, although you would not be subject to the 10% Early Distribution cost.

There are several exceptions allowed by the IRS on the 10% Early Distribution penalty. We suggest you verify with the IRS or a tax professional.

One exception is for a Self-Directed Roth IRA, which has been open for a minimum of five years, from which you are eligible to distribute any of your original contributions tax free and without any penalties.

Other possible exceptions include certain medical related circumstances. This includes if you have unreimbursed medical expenses which are at least 7.5% of your adjusted gross income if you are under the age of 65 (at which it becomes 10% of adjusted gross income) or become totally and permanently disabled. Exceptions also apply if the amount is not more than the cost of your medical insurance due to unemployment.

Non-medical exceptions could include if you are using the distribution(s) to buy or build a first home, if the distributions are less than your qualified higher education expenses, or if you have a Self-Directed Inherited IRA as beneficiary of a deceased Self-Directed IRA owner.

Please keep in mind that any tax penalties you may incur are imposed directly from the IRS and not through your Self-Directed IRA administrator or custodian. This is another reason why you need to be aware of any and all exceptions prior to the actual distribution of funds. The administrator or custodian has the responsibility of reporting an Early Distribution to the IRS, which will then issue you a 1099R form for any and all taxable amount(s).

When requesting a distribution specifically from your Self-Directed IRA, you begin by completing a Distribution Form. Accuracy is of the utmost importance so as not to cause a delay in receiving the funds you need.

One question that comes up is whether or not needing the funds on a short-term basis has an impact on your cost. The answer depends on how short of a term you need, with the magic number being 60 days. If you are able to replace your Distribution funds in full within 60 days of the effective date of the original distribution, the IRS would consider this a “Rollover”. You would not be subjected to the entire tax amount. Depending upon the circumstances and type of Self-Directed IRA involved, you may not be subject to any taxes under this 60-day circumstance. (Your tax professional can advise.) The IRS does allow individuals to complete one rollover every 12 months.

This scenario could be helpful to you in the event of expecting a tax refund, inheritance, or legal settlement within 60 days, but needing funds prior to its arrival.

Overall, it is wise to compare all of the options available to you when faced with a financial challenge. This information gives you the ability to compare your cost of a distribution against a conventional loan, credit cards with low interest rates, a home equity loan, or other possibilities available to you.

Be sure to have all of the facts before you make your final decision.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at www.AmericanIRA.com.

Buying Florida Properties in your Self-Directed Real Estate IRA

A recent article in the Sarasota Post features the basics of investing in Florida properties using your Self-Directed Real Estate IRA. Of course, the principles are the same everywhere: The laws governing IRAs, including Self-Directed Real Estate IRAs and the broader category of Self-Directed IRAs, are federal. They are the same in every state. But there are a few considerations that make Florida unique.

Booms and Busts

Florida has been attracting real estate speculators for decades – and is famous for big Florida land booms followed by devastating busts. Many have gotten wealthy from Florida real estate investing, and if you time things well and get in while one of the great Florida land booms has some room to run, you can do extremely well indeed.

On the other hand, many have bought into Florida property at the top of the market and been devastated by one of the big real estate crashes that seem to happen in Florida from time to time.

Those who have been investing in real estate for a while will easily recall that Miami, Fort Lauderdale and Palm Beach real estate investors were all seriously hurt by the 2008 market crash. But they have also done very well in the recovery.

Be Patient

So, Florida is a market that is best for Self-Directed Real Estate IRA investors who plan to buy and hold, or who have a number of years before they expect to need to cash out. Meanwhile, the great thing about real estate is that thanks to the generous and increasing rental income yields available on real estate, Self-Directed Real Estate IRA owners can get paid very handsomely to wait.

No State Income Taxes

Florida is an ideal home for Self-Directed Real Estate IRA investors because it is one of a handful of states that do not have a state income tax. This means that rental income from your Self-Directed Real Estate IRA is only taxed at the Federal level, and if you own the property in a Roth IRA, it is not taxed at the federal level, either.

The lack of state income tax goes a long way to helping make a Self-Directed Real Estate IRA a compelling value proposition, and it makes Florida a great destination for retirees who expect to rely on taxable income from an IRA, 401(K), or real estate portfolio.

Self-Directed Real Estate IRA financing

Because Florida real estate prices so historically volatile, lenders may be more careful about lending to Florida Self-Directed Real Estate IRA investors. For example, in most markets nationwide, it is pretty easy to find financing from a Self-Directed Real Estate IRA lending company for about 65 percent of the value of the property securing the loan. However, some of these Self-Directed Real Estate IRA lenders will not lend on Florida properties. The ones that do may require a 50 percent down payment rather than the 35 percent standard elsewhere in the country.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at www.AmericanIRA.com.

Combining Roth and Traditional Accounts in Your Self-Directed IRA

Lots has been written on the advantages and disadvantages of Self-Directed Roth IRAs and Solo 401(K) accounts versus their traditional pre-tax counterparts. And no one knows for sure what tax rates will be in effect in five years, much less 25 years from now, when many of our Self-Directed IRA and Solo 401(K) owning clients will be drawing down their accounts in retirement.

Fortunately, it is not an ‘either/or’ proposition: You can have both! And given the uncertainty about future tax rates, it may be a very good idea to hold both types of accounts, side-by-side!

Let’s review the differences:

With Traditional IRA and 401(K) accounts, contributions are not included in your income, provided your income falls under the income limits in the case of Traditional IRAs. There are no income requirements in effect to qualify for pre-tax 401(K) contributions. However, even if your income is high, you can still contribute to a Traditional IRA on a non-deductible basis – up to $5,500 per year ($6,500 for those ages 50 and older). You will still get the benefit of tax deferral and substantial protection against creditors on non-inherited IRA assets.

Moreover, if the income limit for Traditional IRA is a problem for you, you may also be able to contribute to a simplified employee pension, or Self-Directed SEP IRA, depending on your circumstances. This may be a good option if you have self-employment income or if you own your own business and have no or few full-time employees.

All these options provide the benefit of pre-tax contributions and tax-deferred growth. They also support self-directed retirement investing techniques such as Self-Directed Real Estate IRAs, Self-Directed Gold IRAs and Self-Directed IRAs and other retirement accounts that hold alternative asset classes.

You pay income taxes as you take the money out in retirement, though non-hardship withdrawals and 72(t) withdrawals in substantially equal periodic payments are assessed a 10 percent excise tax penalty.

Furthermore, there is a limit to how long you can defer taxes on these accounts: You must begin taking money out not later than April 1st of the year after the year in which you turn age 70½, and make similar withdrawals thereafter, spread out over your actuarial life expectancy. These mandatory withdrawals are referred to as required minimum distributions, or RMDs. Call us for details, if you are not familiar with these.

With Roth accounts, including Self-Directed Roth IRAs and Self-Directed Roth 401(K)s, the taxation is reversed: You do not get a tax break on contributions. But all growth in the accounts are tax-free, as long as the moneys stays in the account for at least five years. The 10 percent penalty on non-hardship distributions still applies, but only on earnings, if the assets you are taking as a distribution have stayed in the account at least five years.

Withdrawals in retirement are generally tax-free, however – and not subject to required minimum distributions. You can let these assets grow indefinitely.

The income limit for the Roth IRA – including the Self-Directed Roth IRA – is $5,500 per year, or $6,500 for those age 50 and older. You can contribute up to $18,500 per year in employee salary deferrals to a 401(K), including Self-Directed IRA and Roth 401(K) accounts, However, with Roth account contributions, you will still have to pay income taxes on amounts contributed.

If your employer contributes or matches, those matched funds are not taxable in the year contributed but will still grow tax-deferred. They will generally be taxed similarly to

Traditional 401(K) contributions – the tax-free treatment of withdrawals only applies to assets you contributed to a Roth 401(K) and growth attributable to those amounts.

Owning both kinds of retirement assets can help you diversify against legislative risk: The risk that future Congresses may impose a higher tax on income, or otherwise limit the benefits of retirement accounts.

It may benefit you to emphasize Roth accounts while you are younger and have not reached your peak earning years. As you get older and earn more and find yourself in a higher tax bracket, you may consider leaning towards traditional tax deferred accounts.

Meanwhile, when you own both Roth and traditional accounts together, you are less exposed to the risk that Congress may suddenly increase income taxes, leaving you with less after-tax retirement income from your Traditional IRA and 401(K) accounts.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at www.AmericanIRA.com.

Things You Need to Know About a Self-Directed Inherited IRA

It is estimated that $30 trillion of intergenerational wealth will be passed down over the next decades, creating both opportunities and risks those inheriting these potentially large sums of money. Some of these transfers will come in the form of a Self-Directed Inherited IRA (a.k.a. a Beneficiary IRA), which will allow inheritors/beneficiaries to manage these inheritances that are passed down to them in the form of a retirement account.

Self-Directed Inherited IRAs allow the deceased account holders to pass along tax-advantaged savings to their heirs. Unfortunately, the first time most recipients become aware of a Self-Directed Beneficiary IRA is when they suddenly inherit a retirement account. Since it is someone else’s retirement plan, a Self-Directed Inherited IRA can be confusing to those who receive it, and it can generate many questions: What are my options with this account? What about taxes? How can I merge this inheritance into my own financial plan?

As baby-boomer heirs participate in the largest wealth transfer in history, it is more important than ever that they understand the details of the Self-Directed Inherited IRA. First of all, you will need to distinguish between a Self-Directed IRA you inherit from your spouse and one you inherit from a parent, sibling or someone else.

Here is what you need to know:

Inheriting a Traditional IRA from your spouse

Inheriting a Self-Directed IRA from your spouse is the simplest and most pain-free scenario. You can roll over the Self-Directed Inherited IRA into your existing IRA, and the earnings will continue to grow tax-deferred. You will pay no income taxes unless you take a distribution, and if you are older than 59 ½, you won’t owe the 10% tax penalty on early withdrawals.

Rolling over a Self-Directed Inherited IRA is attractive because you immediately gain control over the distributions. A word of caution, however: If you are at least 70 ½, make sure you adjust the amount of your annual Required Minimum Distribution (RMD) to include the amount from the Inherited IRA. Some special RMD rules apply to Self-Directed Inherited IRAs, and there are steep penalties for not following them!

Also, remember that if you do decide to take a Self-Directed Inherited IRA distribution, it could send you into a higher tax bracket because the money will now be earned income. If you would rather invest the money, talk to your financial advisor about incorporating the inheritance into your overall financial plan.

If you are a non-spouse inheritor

You will need to pay income taxes on distributions from the Inherited Traditional IRA. But you may not roll the Self-Directed Inherited IRA into an existing Self-Directed IRA, and you must begin withdrawing the assets no later than December 31st of the year after the account holder passed away.

Once again, these distributions are considered to be part of your annual income and could put you into a higher tax bracket. And if you do not take the necessary distributions, you will suffer a 50% tax penalty on the amount taken out below the RMD!

Self-Directed Inherited IRA distribution rules

Beneficiaries of Self-Directed Inherited IRAs can choose distributions from three options:

  1. Take distributions as an RMD over the course of their lifetime (life expectancy method)
  2. Take them over a five-year period
  3. Receive a lump sum.

The life expectancy option means an RMD will be set each year by the IRS, and you must make them to avoid the penalty.

The five-year option allows you to withdraw the funds over five years. There are no RMDs, and there is no early withdrawal penalty. After five years, all remaining funds must be withdrawn.

The lump sum distribution means a full payout of the account immediately after inheriting the Self-Directed IRA. While there is no 10% early withdrawal penalty, you will still owe income taxes.

What are the rules for Self-Directed Roth IRAs?

Since the Self-Directed Roth IRA was funded with post-tax income, the inheritor will not pay income tax on distributions, and the distributions will not count as taxable income when determining your tax bracket.

If you elect to take the life expectancy method, however, any distributions that fall below the RMD will still be subject to the 50% penalty.

Turn to the pros when you are ready to invest your Self-Directed Inherited IRA

At American IRA, we believe that Self-Directed IRAs are the best vehicles for growing your retirement account. And we have the experience to help you with your transactions.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at www.AmericanIRA.com.

Private Equity Real Estate in a Self-Directed IRA: A Better Alternative to Bonds

There is little doubt that bonds have lost their luster over the past several years. Once an integral part of a balanced portfolio, they have become riskier than many investors realize. Low interest rates and inflation have combined to result in a negative real return on bonds. And in some parts of Europe and Japan interest rates have fallen below zero percent!  A Self-Directed IRA could be your answer.

If you are hoping for reliable income, less volatility, and inflation protection from your Self-Directed IRA portfolio, you should be looking beyond bonds to an investment that offers all of these advantages—private equity real estate, particularly commercial real estate.

Shielded from global risk and protected from inflation, commercial real estate investments can provide cash flow quickly and give you the security of a tangible asset, not merely a piece of paper but something (land and buildings) that you can see and touch. And real estate has shown amazing resilience, recovering quickly (and even increasing in value) after taking a stunning blow in the 2007-2009 recession that left other investments reeling for several years.

But don’t bonds provide “safety”?

Bonds have been the hallmark of safety for many years. You could put your money into Treasuries or Investment-Grade Corporate Bonds and feel safe and secure knowing that your principle will always be there. But there is a flaw in that “zero-risk” mindset: Bonds have an array of risks that many investors—both neophytes and the sophisticated—fail or choose not to acknowledge. Here are just some of them:

Interest rate risk: When interest rates rise, bond prices typically go down.

Inflation risk: If the cost of living rises suddenly, the rate of inflation could match or eclipse the interest rate on your bond, leaving you with little or no true return on your investment.

Credit risk: Corporate bonds depend on the company’s ability to repay their debt. There are no guarantees they will be able to do that.

Liquidity risk: While there is almost always a market for government bonds, corporate bonds can be hard to sell in a thin market, forcing you to take a lower price than you were expecting.

There can also be the risk that your callable bond will be called, causing you to reinvest at lower rates or that your bond may be downgraded, making it harder for you to sell it.

The case for commercial real estate 

Before making a case for commercial properties, here are some examples of them:

  • Office buildings
  • Warehouses
  • Retail buildings
  • Apartments (multifamily buildings)
  • Industrial buildings
  • Mixed-use buildings, which could be a combination of any of the above

Like bonds, there are certain risks associated with real estate investing, but commercial real estate typically offers more financial rewards than bonds. Real estate also comes with the benefit of less volatility, holding it in stark contrast to those investments that have fallen prey to illogical buying and selling patterns and unfounded valuations.

Investors have always been counseled on the importance of having safer investments as part of a well-diversified Self-Directed IRA portfolio. That advice becomes even more critical as we get older. Typically, bonds were touted as that “prudent” investment. But modern investors realize that they can invest in commercial real estate as an alternative to bonds, thus adding diversity and spreading out the amount of risk they are taking on.

The philosophy of keeping a portion of your portfolio in lower-risk investments remains appropriate today. But the method for achieving that is now up for debate, and commercial real estate as a vehicle for safe and diverse investing is winning the debate handily.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at www.AmericanIRA.com.

Why Technology is Important in Growing Your Self-Directed IRA

We understand that many people nearing or already at retirement age often do not have or do not rely on new technology within their everyday existence. If all you want to do is make a phone call, your phone could be just the thing. However, simple use of available technology could make a big difference in the value of your Self-Directed IRA whether you like it or not.

If, for example, you are devoting your Self-Directed IRA to real estate, you can benefit greatly by knowing how a few relatively simple steps can make a big difference with your retirement fund.

Chances are you are not going to find a buyer, rental candidates, or someone selling an ideal property for your plan by making a couple of phone calls or going through the local newspaper. Your best possible real estate investment may not be in your neighborhood.

Since you generally cannot live in or manage properties purchased or owned by a Self-Directed IRA, your best deal or buyer could be hundreds of miles away. This is where technology becomes a factor.

The National Association of Realtors reports that more than 70% of property searches around the country begin online. As a result of this, going online is the best resource of finding the right property for purchase based on your investing criteria. If you are ready to sell, or even rent out, a property you currently own, the most efficient way to attract your buyer or renter(s) is to showcase it on the internet.

Property information on the internet is updated constantly every day around the world. When someone lists their home for sale through a real estate agent, it appears on their listing service literally within minutes.

Thus, by the time the weekend newspaper or weekly magazine comes out (like we relied on years ago), many of the new listings may already have been sold.

When you have a Self-Directed IRA and are ready to buy, sell, or rent out, you want to be able to have access to any and all possible deals. You need to be able to make inquiries and responses as soon as possible in today’s world. It is your hard-earned money at stake.

There are ways to grow your Self-Directed IRA without owning a computer and/or a smart phone. You do not have to look at photos of your son-in-law’s dinner from last night or take a training course in operating a laptop from your downstairs desk.

Your local librarian, or a friend or family member with a computer or smart phone can help you with this. If you do have a computer or smart phone with online access, you can search for what you need on your own whenever you have the opportunity.

When you have the old-fashioned IRA which only pays a tiny percentage from fund investments, it is no problem for the originating company to mail out a mountain of paperwork containing a bunch of numbers you do not understand each month. There is rarely any major change from one quarter to next with your earnings.

However, if you are able to acquire a house for $100,000 and can sell it three months later for $125,000, you need to have the technology of reaching potential sellers and buyers available to you when you need it.

In addition to searching for what you need, this technology can also help you to find the buyer, seller, or renter you need.

You can use various real estate web sites, as well as social media, to get connected with buyers, sellers, renters, lenders, appraisers, home inspectors, real estate attorneys, and other related services. You might be able to connect with a partner you could invest your Self-Directed IRA funds with and who is able to help grow the property investment for you.

It does not matter if you have a computer in every room of the house or need to go to the local library once a month to use theirs and have the librarian help you. The key is to be able to leverage the technology which is available now to your advantage.

Using the selling a property for $125,000 three months later as an example, this likely would not happen if you did not use technology. You might not have found the discounted property and/or a buyer willing to pay the full price away from the internet. Without your own Self-Directed IRA, you could not take advantage of this opportunity without taxes getting in the way and possibly even killing the deal for you. A Traditional IRA or 401K is most likely not going to earn a full 25% total value within a 90-day period.

The more you embrace the technology, at any age, the better off you will be in terms of increasing the value of your retirement funds. Again, it is not a requirement that you own a computer or smart phone in order to do so.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at www.AmericanIRA.com.

Supercharge Your Self-Directed IRA Savings

It is one thing to open a Self-Directed IRA account. It is another thing to be diligent about funding it to the max, year in and year out. But every dollar you can sock away in a Self-Directed IRA account now increases your chances of achieving an economically secure retirement, sufficient to provide a reliable income for the remainder of your life and the life of your spouse.

How Much Do You Need to Save?

No one has a crystal ball, but the general rule among retirement professionals is that savers must sock away 15 to 20 dollars in retirement savings per dollar of annual income you need. That is in addition to any income you may expect from Social Security and pensions. For example, if you want to have a retirement income of $100,000 per year, and you expect a combined $50,000 in Social Security and pension income, your Self-Directed IRAs and other retirement savings will need to generate the other $50,000. That amounts to a target nest egg of between 750,000 to $1 million.

Looked at another way, unless your Self-Directed IRA is generating substantially above-market investment returns, for every $100,000 you want to generate in reasonably reliable income from your investments during your retirement years, plan on amassing a total nest egg of $1.5 million to $2 million.

It is doable – especially if you start saving aggressively while still relatively young. Consider:

Assuming you contribute the current maximum annual contribution to a Self-Directed IRA, and you are able to earn an average of 6 percent per year, it would take 42.51 years to save $1 million. If you can get an average return of 8 percent, it would take 35.65 years to save that amount, with an annual contribution of $5,500.

But you are not limited to that $5,500 per year ceiling on Self-Directed IRA contributions: If you are married, you can contribute another $5,500 per year to an IRA, in the form of a “Self-Directed Spousal IRA.” This is true even if your spouse does not work. So now you can contribute up to $11,000 per year to a traditional or – if you meet the income requirements, a Self-Directed Roth IRA.

But if you own your own corporation or LLC, or if you have self-employment income, you can turbo-charge your retirement savings even more. For example, you can start a Self-Directed Solo 401(K) plan for yourself or your small business (with only you or your spouse as full-time employees), or a simplified employee pension plan – both of which enable you to increase your contributions to more than $50,000, given enough income, though Self-Directed SEP IRAs limit your contributions to not more than 25 percent of compensation.

The combination of Self-Directed IRAs and small business retirement plans allow self-employed individuals and small business owners to boost tax-advantaged retirement savings to more than $65,000 per year – and potentially double that figure, in the case of high-earning couples who own their own businesses.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at www.AmericanIRA.com.