South Carolina Self-Directed IRA

South Carolina Self-Directed IRA

South Carolina Overview

South Carolina is perhaps the best bargain for retirees on the Eastern Seaboard – especially for price-conscious retirees who need to make their dollars stretch. For this reason, South Carolina is attracting tens of thousands of new retirees from outside the state every year.

South Carolina’s mild climate and pleasant winters mean plenty of options for outdoor activities all year round. There’s great deep water fishing off the coast, fantastic bass fishing inland throughout the state, and excellent golf courses.

Some of the best golfing in the southeast can be had at the Ocean House on Kiawah Island, Yeamans Hall Club in Charleston, Sage Valley Golf Club in Graniteville, Harbour Town Golf Links on Hilton Head Island, Kiawah Island Club (Cassique), Secession Golf Club in Beaufort, Greenville Country Club in Chanticleer, Musgrove Mill Golf Club in Clinton, and the Dunes Golf & Beach Club in Myrtle Beach.

And speaking of beaches, South Carolina can boast some of the most beautiful and cleanest beaches in the Southeast.

History buffs will enjoy South Carolina, which has done a great job protecting its historic buildings. Many historical areas of Charleston and other important South Carolina cities remain surprisingly intact. Visit Kings Mountain National Military Park, which features the significant role South Carolina played in defeating the British in the Revolutionary War.

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

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

  • Open a South Carolina 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 South Carolina Self-Directed IRA Owners

South Carolina’s cost of living is quite low compared to northern states and is probably the lowest-cost state along the Eastern Seaboard. The low cost of living and the milder winters make South Carolina a popular retirement destination for people from New York and New England.

The median home price in South Carolina as of April 2019 is $159,700, which is much lower than the national average of $219,700.

Health care costs – a critical factor for retirement age people – are also below the national average.

The combination of low property taxes, the low cost of living, and the full exemption of Social Security taxes means that South Carolina is one of the few areas left where it’s possible to live comfortably on Social Security alone.

Those retiring in South Carolina should be aware that the state is one of a handful of states that taxes capital gains. If much of your income is going to come from investments held outside of retirement accounts, this could be a significant planning factor – especially if you have held the assets for a long time and they have appreciated quite a bit since you bought them.

If a South Carolina retirement is in your future, you may want to sell these off when you are not domiciled in South Carolina, sidestep the state income tax before moving.

Long-term capital gains are 44% exempt.

Taxes on the whole are quite low in South Carolina – especially for seniors. However, pressure is building in the state legislature for some significant tax reforms, so those thinking of retiring in South Carolina should monitor developments carefully.

State income taxes on South Carolina Self-Directed IRAs

South Carolina has an income tax with brackets ranging from 3% to 7%. The first $2970 is exempt (in the 0% tax bracket) with the top bracket applying to everything above $14,860. The same brackets and income levels apply to both single and married filers, so there’s a significant marriage penalty when it comes to South Carolina income taxes.

Social Security income is fully exempt from state income taxes in South Carolina. Additionally, there’s a $15,000 deduction available on other forms of retirement for seniors age 65 and older. If you are receiving retirement income and you are under 65, there’s still a $3,000 deduction available for retirement income.

The deduction applies to 401(k)s, IRAs, SEPs, SIMPLE IRAs and both public and private pensions, from inside or outside the state.

South Carolina taxes on military retirement pay

Military retirement pay in South Carolina is taxable, but if you have 20 years of service then at least $3,000 of that military retirement pay is exempt from South Carolina income taxes. If you are age 65 and older you may qualify for a $10,000 deduction.

South Carolina Sales Taxes

South Carolina’s statewide sales tax rate is 6%. Local governments may add up to 2.5% in additional taxes. The highest taxes are in Charleston County. Prescription drugs are fully exempt, as are unprepared groceries.

South Carolina Self-Directed Real Estate IRAs and Property Taxes

South Carolina is a very friendly environment for real estate investors, including Self-Directed Real Estate IRA investors, thanks to its extremely low property taxes. The effective property tax rate in South Carolina is 0.57%.

Additionally, South Carolina has a homestead exemption that exempts the first $50,000 in property value for those age 65 and older.

South Carolina inheritance and estate taxes

South Carolina does not tax estates or inheritances.

Other South Carolina Taxes

South Carolina’s fuel tax is 35.15 cents per gallon of gasoline and 41.15 cents per gallon for diesel. There’s a tax of 57 cents per pack of 20 cigarettes.

Benefits of Retiring in South Carolina

If you are interested in seeking retirement in South Carolina, or if you simply want to think about it as a long-term option, you might consider a Self-Directed IRA. A South Carolina 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 South Carolina? 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 South Carolina 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 South Carolina 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 South Carolina 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 South Carolina 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 South Carolina Self-Directed IRA solutions, talk to our valued partner TurnKey IRA.