Private Equity In Your Self-Directed IRA

Own tomorrow’s Dow components today! Or we hope, anyway. But you did not have to invest with Steve Jobs while he was still running Apple out of a garage in the 1970s to do well with private equity or private placements in a Self-Directed IRA.

Just invest in solid, well-managed companies with good accounting and controls, who have a viable business that provides a good value and you can do just fine – and even get better returns over the long run, in many cases by taking advantage of the tax benefits of a Self-Directed IRA.

What is private equity?

When a small company wants to raise capital, it can borrow the money, or it can sell off a piece of itself to investors, who are then entitled to a share of all future dividends the company issues. If the company is publicly traded, it can sell shares over the stock market. But if the company is not publicly traded, it will seek out investors anywhere it can, and negotiate a share price privately.

Many companies do not want to go through the time and expense of issuing a publicly-traded security. Just maintaining a listing on boards like Nasdaq or the NYSE can cost tens of thousands of dollars per year. Unless they are getting major investment bank support to help them place their shares, it is just not worth it to these smaller companies.

Many smaller companies with no regular earnings cannot get traditional lender financing, either. Most traditional lenders just are not equipped to serve this market, as borrowers typically do not meet the lending criteria for the banks’ backers. They do not have the regular earnings to support income-based underwriting, and they may not have real estate or other kinds of readily marketable collateral that most banks rely on to justify a loan.

But Self-Directed IRA owners are not limited by these criteria. Moreover, Self-Directed IRA owners also frequently have the long time horizons that companies seeking investment need. For example, if you lend to or invest in a real estate developer, it may be years from the time you provide the financing to the time the real estate developer has a property completely built and sold off so that it has some cash to pay lenders and investors with!

Meanwhile, private equity seekers have to sweeten the deal, to compensate the Real Estate IRA investor for the cost of tying up their money for a long time. That usually means better terms, and better long-run expected returns. That is, private equity seekers (and private debt seekers as well) have to discount their offerings to attract investors.

Qualifying for Private Equity Placements for your Self-Directed IRA

Not just anybody can be a private equity investor and be eligible for direct placements. In order to invest in a direct placement of private equity, you must meet the definition of an accredited investor, according to Rule 105(a) of the SEC’s Regulation D.

Specifically, you must have a net worth of at least $1 million (not including your primary residence), OR;

You must have an income of at least $200,000 in the last two years if single OR;

Have an income of at least $300,000 in the last two years if married.

Reputable brokers or sellers will have you submit proof of your status as an accredited investor before selling you the shares or bonds, if it is a private debt placement.

Because of the substantial returns available in private equity (the potential is virtually unlimited), and the long time horizons involved, private equity placements can make excellent candidates for Self-Directed IRA investment.

Before you invest, though, understand that these investments, like many popular Self-Directed IRA assets, are frequently not registered securities, and are exempt from a number of SEC regulations and reporting requirements.

They also tend to be very early stage companies, subject to substantial economic risks. They may have unproven products, service offerings, inexperienced management teams, difficulty securing follow-on funding, and they could even be fraudsters. It is, therefore important to engage in a thorough due diligence process before you invest in any private placement offering within a Self-Directed IRA.

Want to Save on Fees with a Self-Directed IRA?

At American IRA, LLC, many of our clients are long-term buy-and-holders. They may hold real estate holdings, gold, or other assets for many years, with relatively few transactions. For that reason, many Self-Directed IRA owners and other investors stand to realize significant savings from declaring independence from Wall Street and their many high-commission products, wrap fees, surrender charges, 12-b-1 fees, and high expense ratios on products that usually fail to beat their index benchmarks net of their costs.

For example, many mutual funds come not only with a front-end sales load, but a 25-basis point ongoing fee to support the marketing expenses for the brokerage company. Not for you. You get no benefit whatsoever for this fee. Claiming your freedom to invest in what you know and understand with a Self-Directed IRA is a much better option.

It makes little sense to pay expense ratios and/or wrap fees of 1 percent each or more on assets that aren’t even being traded much.

Are you getting anything for the wrap fee?

Many times, the answer for our Self-Directed IRA customers in the past was no – they received little or no value for the ongoing wrap fees they were paying to Wall Street firms in perpetuity. This is why they became American IRA customers!

In some cases, these individuals were not even aware of how much they were paying out in needless fees every year until they called us and we walked them through the benefits of a flat fee schedule for services. Larger accounts are saving tens of thousands of dollars in fees just from switching from an expense-ratio and wrap-fee based fee structure.

Yes, these plans are suitable for some investors. But for our independent-minded, experienced investors that make up the bulk of our clientele, we found the were much better off using our flat rate per transaction fee schedule, available here.

Primarily, we offer one set annual administration fee. And it stays the same, no matter how large your account becomes. There are also smaller charges for specific transactions that simply reflect the costs of physically processing and mailing or wiring, as necessary. You would have to pay them with any firm.

With wrap accounts and expense ratios, the larger your account grows, the larger your fees become. With American IRA’s unique fee structure, as the value of your assets in your portfolio increase, your transaction costs and basic fees remain the same. So the larger your portfolio, the more sense a flat rate fee structure like American IRA makes for many investors.

After all, it’s not what you have so much that matters – it’s what you can keep. A Self-Directed IRA with American IRA can help you keep more of your money to fund your retirement lifestyle and financial security.

If you are tired of paying needless fees, commissions and expenses and receiving little value for your money? If so, we’d like to work with you.

Visit American IRA, LLC today at, or call us today at 866-7500-IRA(472).

3 Stubborn Myths About Self-Directed IRA

We’re constantly coming up against myths and misconceptions people have about Self-Directed IRAs, or IRAs in general. So it’s time to clear the air and put to rest some of the most common Self-Directed IRA myths we come across.

  • Self-Directed IRAs are risky. Well, this one can be true, and in practice, it often is true. But it doesn’t have to be – and it also depends on how the investor defines risk. But the Self-Directed IRA is just a type of account, that comes with a certain type of taxation and a few rules on the kinds of investments you can make within them and who the IRA can transact business with. You are perfectly free to create a Self-Directed IRA that is essentially risk free, for as long as you like. For example, you can create an account with American IRA, LLC, and fund it entirely with FDIC insured CDs, with no market risk whatsoever (though you have some inflation risk, so you can’t avoid risk altogether!

Your Self-Directed IRA is always as safe or as risky as you decide to make it. That’s the whole point: You can decide your own risk exposure. No outside money manager needs to be in a position to do that for you.

So, yes, you can dial the risk level way up, if you like, leveraging volatile investments, buying into venture capital funds or making big, concentrated bets on individual and speculative securities in emerging markets if you like. Or you can have one entirely stuffed with CDs, money market funds and fixed annuities. It’s entirely up to you.

  • I don’t need to name a beneficiary. You may not care about it personally. But chances are the people you do care about have a lot riding on that named beneficiary form, and Self-Directed IRAs and 401(k)s are no different. Failure to designate a named beneficiary in writing can have devastating consequences for loved ones. If you fail to name the beneficiary, then you are handing the keys to your life’s savings to probate lawyers, not to your family members and loved ones, who may really need quick access to that money.

You also wind up taking options away from loved ones, and effectively passing more money to the IRS, rather than your loved ones, than is necessary. For example, failing to name a beneficiary could force heirs to liquidate the entire account within five years, rather than spreading the benefit of tax free deferral or tax free growth over their lifetime – a much more tax-efficient solution.

  • I don’t need to roll old 401(k) balances to an IRA. Well, maybe you don’t. If your account balance is under about $5,000 or so, your old employer may keep it on the books. But you may run into problems if you need to access the money. 401(k) plans don’t have to honor the same emergency hardship withdrawal provisions that your Self-Directed IRA and conventional IRA accounts enjoy.

Plus, if you do cash out part or all of an existing 401(k), the plan sponsor will withhold 20 percent of the balance and forward that to the IRS against taxes. With an IRA, you control that process, not your former employer and the IRS.

That said, if you have substantial unrealized appreciation in assets within your 401(k) (for example, employer stock), then speak with a tax advisor before blindly doing a rollover.

American IRA, LLC is a third party administration firm specializing in Self-Directed IRAs, 401(k)s, SEPs, SIMPLE IRAs and other tax advantaged accounts. Our offices are in Charlotte and Asheville, North Carolina. But we are happy to work with investors anywhere in the country who are successful, open-minded, entrepreneurially minded, or just plain interested in controlling their own retirement assets rather than delegating that vital function to Wall Street advisors.

For a free consultation or for more information, call us today at 866-7500-IRA(472), or visit us on the Web at

Self-Directed Real Estate IRA Update: Alternatives to Eviction

Eviction is a time-consuming and expensive process – best avoided if you and the tenant can manage it. You don’t want the legal expenses and court hassles involved with the legal eviction process, which can take weeks or months. That’s not good for your Real Estate IRA, and it’s not good for you.

Moreoever, your Real Estate IRA tenant doesn’t want an eviction on his or her record, either,  which can impact their credit and make it even more difficult for them to find a new place to live.

In some cases it’s unavoidable. The tenant either isn’t listening or is actively destructive to the property and is trying to abuse the process, at your expense. But there are alternative paths to resolution that work out much better for both you and the renter, short of eviction, that you can explore.

Here are some things you can do.

  • Identify temporary problems. Sometimes an inability to pay rent or comply with some other critical part of the lease agreement is temporary. For example, say you have a rental property in your Real Estate IRA and the tenant is late on the rent. If you’re able to speak to them, though, you may find that the tenant lost her job last month. But she’s actually working again, and making even more money, but won’t receive a paycheck again for another week and a half or two weeks. After that she’ll be even more financially qualified to rent the property. This is a classic case where it’s much better to work with a tenant who is otherwise good, but is going through a temporary cash crunch. It’s much easier to wait two weeks ad collect in full, rather than play hardball with a slow-payer.
  • Don’t paint your tenant into a corner. Remember: The second you evict, the tenant loses all incentive to pay you, and instead must focus on coming up with money for first and last or a security deposit at the new place.

You can get a judgment for the outstanding rent, minus the deposit – but good look collecting on it. If collecting it were that easy, you’d have the rent already.

  • Consider a referral to a charity or outside agency. There are a number of charities that provide short-term housing loans or grants to individuals facing eviction or foreclosure. Catholic Charities and the Red Cross both do so, as do the military relief societies for members of the Armed Forces. These organizations could provide a bridge loan or some other assistance to help a struggling tenant stay current, and buy both you and them some time to work out a more lasting solution.

Sometimes you may have elderly individuals renting from you who just need some social services support to help them remember to pay bills, clean, take their medications, etc. You may help them contact family or other sources of support to help keep them current on the rent. With a little support, these individuals can be very successful tenants for many years. They are worth keeping.

  • Offer an incentive to move. It’s a fact of life that evicted renters don’t clean up very well – and occasionally vandalize their units outright. Evicting causes a lot of hard feelings. But what if you provided an incentive for a successful move-out within a certain amount of time? Getting the place re-rented that much sooner can put more money back in your Real Estate IRA, and you save hundreds of dollars or more in court fees/eviction costs. You also reduce the risk of vandalism. Provide a cash incentive or a forgiveness of part of a months’ rent in exchange for the tenant’s moving out by a certain date.

Note: Remember to pay all legal expenses using funds from your Real Estate IRA. You cannot pay attorney’s or court filing fees for evicting a tenant from your Real Estate IRA owned property.

American IRA, LLC is experienced at working with Real Estate IRA investors, as well as investors who hold real estate within other retirement accounts. With offices in Asheville and Charlotte, North Carolina, we work with Real Estate IRA owners in all 50 states.

For more information, or to schedule a free consultation, call us at 866-7500-IRA(472), or visit our extensive online library of information at


Self-Directed IRA Update: Want To Live Longer? Keep Working

A lot of our Self-Directed IRA clients are very successful. They are attracted to the Self-Directed IRA precisely because they have achieved success and specialized knowledge in specific industries. Many, if not most of them, are professionals or own their own companies.

Self-Directed IRA investors tend to be a special breed of investor: They didn’t get where they are because they don’t like to work.

If that describes you, we have some good news: People who stay in the work force even one year later than people who retire as soon as they can get a Social Security check have lower mortality rates than those who don’t.

Simply put: People who work into their retirement years live longer.

That’s according to a recent study from the Journal of Epidemiology and Community Health.

Now, the obvious criticism, at least on the surface, is this: Of course they do, because healthy people can work longer. Sick people self-select to retire as soon as eligible because they have to.

But if that criticism is so obvious that we could think of it, it was obvious enough for the study’s authors to think of it as well. And so they took steps to control for health factors.

Even then, the message is clear: Even accounting for the tendency of sick people to retire or leave the work force at an earlier age, people who retired later tended to have much lower mortality rates than individuals who retired at the first opportunity.

Specifically, over the period studied, researchers found that working into retirement years improved mortality by 11 percent for healthy people and 9 percent of unhealthy people. That is, on average, people who were working were about 11 percent less likely to die in a given year if they were healthy, and 9 percent less likely to die if they were unhealthy.

That’s not just good for your health, it’s good for your Self-Directed IRA, because the more years you can stay in the work force, the more years you have to contribute up to $6,500 to your Self-Directed IRA (including your catch-up contribution, available to those aged 50 or older), but the more years of tax-deferred or tax-free growth is available.

You may also benefit in another way: When you can stay working, you can afford to make more aggressive investments in hopes of achieving higher returns in the long run. As long as you are working, you can afford to take more risks.

This comports well with another recent study finding that people engaged in ‘meaningful work’ enjoyed a number of health benefits compared to those who did not.

Advantages included lower blood pressure, better musculoskeletal agility, lower rates of depression, higher cognitive function compared to those not engaged in meaningful work.

The health effects were roughly equivalent to those that would be gained from exercising three days per week.

So good news for workaholics: If you can manage the stress, so that you don’t have a stressed induced hypertension or stress-related cardio issue, you may well be able to live a longer, healthier life than your couch potato peers.

If you’re one of those investors who likes to work, and you’re interested in Self-Directed IRA investing, we’d like to work with you. Call us today at 866-7500-IRA(472) for a no-obligation consultation. Or visit us online at

Thank you very much for your time. We look forward to working with you.



Self-Directed IRA – Learn How It Can Help You Secure a Happy Retirement

Self-Directed IRA - Happy RetirementIf you want to retire happy, what’s your number one financial goal? Stability, of course. You want to know that your wealth isn’t only well taken care of, but that it’s steadily growing so that you can have it to count on in the future as well. The problem? Not everyone knows how to achieve this kind of stable wealth. They want to diversify their portfolio, but they don’t know the best strategies for doing that. Well, we have a suggestion for you: a Self-Directed IRA.

A Self-Directed IRA is simple: it’s a retirement account that you guide yourself. And because you guide it yourself, you’re free to choose from a whole range of retirement options, from gold and silver to real estate to tax liens.

But if you’re still unsure about how these types of investments—and indeed, this type of retirement account—can help you secure a happy retirement, keep reading.

Building a Portfolio You Can Believe in With Self-Directed IRA

We’re not against the stock market. We think you’ll find few investors who really are, at the heart of it. The stock market is full of fantastic companies working hard to increase their value. And they do, over time. In fact, on the long term scale, the stock market is one of the most stable investments you can make. And it’s possible to diversify your investments within the stock market, too, which means buying different types of stocks, different sizes of companies, and different industries.

But that’s not all there is to investing.

Investing is also about leveraging your own skills and experience to identify value when you see it and get in early. Investing also includes private companies, precious metals, real estate, tax liens, private loans, and more. And if you want your retirement portfolio to look a little more diversified than the traditional retirement portfolio, you’re going to have to use a retirement account that you can guide yourself so you can make these investments.

That’s where the Self-Directed IRA comes in. Guiding your own destiny within an IRA (which includes everything from a Solo 401(k) to a Roth IRA) means being able to pick your winners based on your experience and your skills. It helps you better get a hold of where your money is and where it will be come retirement time.

Defining Your Goals for a “Happy Retirement”

If you want to define happiness, you’ll have to go elsewhere. But if you want to define a happy retirement, you have to know what your financial goals are. What’s most important to you? Then you’ll have to take a look at some of the strategies you can use to achieve these important milestones.

Your priorities are what’s important here. So ask yourself the following questions:

  • What is more important to you: rapid growth or the confidence that your money will be there when you reach retirement?
  • Do you want more options or are you happy with sticking to the stock market, bonds, and funds?
  • Do you believe that diversification lends itself to other investment vehicles, not simply diversifying within one investment vehicle (the stock market)?

Understanding what you want is important, as it will help you define the strategies you need to get there. If you want to cut through the clutter of noise about retirement, continue reading our posts here at or simply give us a call at 1-866-7500-IRA(472) to learn more about how to utilize a Self-Directed IRA. We can help you with learning how to fund these investment accounts to get started on the next step of your retirement journey.




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Real Estate IRA: Tools for Building Wealth with One

When many people think about building wealth, they picture one thing: investments in the stock market. Mutual funds, individual stocks, index funds—the list goes on and on, but ultimately, they fall under one asset class. What more future retirees need to remember is that there are other ways of building wealth that can be just as effective—if not more effective—than the stock market. One such way is through a Real Estate IRA.

Real estate is an entirely different asset class from stocks. But the difference goes even deeper. Real estate is an entirely different type of retirement investment as well. That’s why it’s important for anyone considering building up wealth for retirement to at least consider the benefits of using a Real Estate IRA. And along the way, you should learn the tools within a Real Estate IRA that help you build this wealth consistently and safely over time.

Real Estate IRA Tax Protections

Perhaps the most obvious tool for building wealth with a Real Estate IRA is the fact that it’s still an IRA. With IRAs come certain rules—but also certain protections. The most powerful protections here are usually focused on taxes. With IRAs, you can often grow wealth either tax-free or tax-deferred so that your money is as optimized as possible when providing you with the returns you seek.

For example, consider the following potential protections:

  • Owning real estate within a Roth IRA allows the collection of real estate income, tax-free. This is because with a Roth IRA, you’re investing taxable money while the value of the investment is allowed to grow tax-free.
  • You can sell within your Real Estate IRA and not have to worry about capital gains taxes. If you’re a frequent property flipper who often makes sales at a profit, you might want to consider the Real Estate IRA as a tool for building long-term retirement wealth.
  • You can use the tax-deferred exchange within your Real Estate IRA to defer the UDIT tax, which helps you save some money.

It’s important to know these protections in order to get the most out of every real estate investment.

Utilizing the Power of Loans and Leverage in a Real Estate IRA

Perhaps the most powerful thing about investing in real estate is that you don’t have to pay it all in cash. Buying real estate with debt is not only easy in some cases, but often necessary. Using a Real Estate IRA means there are some limitations on the kinds of loans you can take out—they have to be non-recourse loans—but these non-recourse loans also come packaged with certain protections, such as the fact that the lender can only come after the value of the loan itself.

This protection, used in symmetry with your leverage, allows you to make big real estate transactions while still remaining comfortable in your financial position.

You can also use the power of partnering up in real estate—and the same is true within a Self-Directed IRA. You can buy part of a piece of real estate and hold it within your IRA, just as you would own a portion of a mutual fund.

Understanding these tools is the first step toward finding the right solution for your individual retirement plans. Whether or not those plans involve real estate may still remain to be seen—but you should at least know the tools at your disposal. For more information, view our real estate resources or simply call us at 866-7500-IRA. When it comes to retirement wealth, the most important tool is always knowledge.

Make Your Retirement Savings Last

Retirement Nest Egg, Self-Directed IRALife expectancies, thankfully, are going up. That’s a great thing, thanks to the miracles of modern medicine and improvements in the distribution of health care and improved nutrition.

But that means retirement nest eggs have to last longer, too, as Americans live longer and longer past their retirement age.

Assumptions about longevity and safe draw-down rates that seemed reasonable when we started investing in IRAs in the 70s and in 401(k)s in the 80s are no longer valid for two big reasons:

  • We’re living much longer.
  • Interest rates are a fraction of what they used to be.

So it’s more important than ever to stretch every retirement dollar you have to ensure you don’t run out of money before you run out of time!

Here are some ideas to consider:

Consider income-generating investments such as REITs and rental real estate. These offer certain tax advantages (avoidance of double taxation in most cases), enable investors to take advantage of leverage, have the built-in advantage of investing in real assets and not pieces of paper, and are IRA-friendly. You can even own rental real estate directly in your IRA or other retirement account through self-direction. Visit our free seminar to learn more.

Start withdrawals from tax-deferred retirement accounts early. Sure, you don’t have to make required minimum distributions until you turn 70. But if you take smaller distributions early and stuff them into a Roth IRA, if you’re eligible, you may be able to reduce your marginal tax rate on your withdrawals. That’s because your income in any given year after age 70 will be lower, since your balance for RMD calculation is lower, and withdrawals from Roths are generally tax-free.

Balance Social Security against taxable investment income. If you’re not careful, taking too much in investment income can cause half of your Social Security benefits to become taxable. Some investment income sources aren’t taxable, though – or are only partially taxable. Roth income is generally tax-free, as are withdrawals of dividends from participating life insurance policies. Proceeds on life insurance loans are tax-free, as long as you don’t surrender the policy, generating capital gains on any amount withdrawn over basis. Annuities, combine income with return of capital, so only a part of your annuity income is taxable. Some investments in limited partnerships, MLPs also generate some of your income in the form of return of capital, which are also non-taxable.

By maintaining tax diversity – that is, holding assets that are taxed in a variety of different ways – including inside and outside of retirement accounts, you increase your flexibility for tax management, while potentially realizing less income in higher marginal tax brackets over time.

Engage a life insurance strategy.

If you have some substantial free cash flow during the year and you want or need life insurance, you may consider overfunding a permanent life insurance policy to the maximum extent allowed by law (without turning the policy into a modified endowment contract).

That way, you get the benefit of a large tax-free payout to a beneficiary of your choice in the event of death, or the possibility of tax-free withdrawals of dividends and tax-free loans proceeds when the loan is secured by the death benefit or cash surrender value of the policy. In the end, accumulated cash values in permanent life insurance policies, including whole life, participating whole life and universal life policies – are generally treated similarly to Roth IRAs. However, you have much less flexibility in what you can invest in than you have with an IRA or Self-Directed IRA (see below).

Use a Self-Directed IRA

Your IRAs and similar accounts are not restricted to stocks, bonds, CDs, annuities, cash and mutual funds. You can potentially vastly increase your long-term returns and possibly reduce expenses by choosing use a Self-Directed IRA in almost any investment you feel comfortable in, or in which you feel you have a market-beating advantage. For an introduction to the Self-Directed IRA concept, please attend one of our free informational on-line seminars that we conduct several times per week. You can sign up here.

Use Annuities

A lifetime income annuity from a highly-rated insurance company is specifically designed to hedge against longevity risk – or the risk of living too long. Yes, part of the income coming back to you is taxable as ordinary income. But it is the only option that will provide income to you for as long as you live, in writing, guaranteed.

One strategy: Identify your very basic, minimum needs in retirement, and get a lifetime income annuity that pays this amount. That way, you know you have your basic needs covered. You also have the freedom to invest the rest of your portfolio for an even greater return than you would, otherwise.

Keep an emergency fund – outside of your retirement.

Don’t force yourself to make a taxable distribution or early distribution you don’t want to make. Keep an emergency fund in something reasonably liquid, though not necessarily all in cash. One idea: Keep 1 month worth of expenses in cash in the bank or a money market. Another six months in a longer term CD, and the rest in a short-term bond fund or other vehicle that pays a reasonable interest rate. The idea is to have as little money as possible earning a negative return after inflation.

We’d like to be a part of any long-term retirement strategies you do make. Please visit us at, or give us a call at 866-7500-IRA (472).

We look forward to serving you.


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