West Virginia Self-Directed IRA

West Virginia Self-Directed IRA

West Virginia Overview

Nothing beats the breathtaking Blue Ridge Mountains and the history-rich Shenandoah Valley, running through the heart of West Virginia. The rugged, mountainous state offers beautiful scenery, small-town living, Americana culture and some of the best hiking and fresh water fishing in the country. And thanks to the low cost of living, it is still possible to pick up rental properties for a West Virignia Self-Directed Real Estate IRA at very low prices – making it easier for those with modest retirement account balances to diversify across multiple real estate properties.

With a real median household income of $43,336 compared to the U.S. median of $60,336, household incomes in West Virginia are at or near the lowest in the country, according to the 2018 Census. This low income contributes to the low cost of living there, but also restricts how much your average West Virginia renter can pay in rent.

Per capita income is also low – about a third lower than the U.S. median, at $24,478 compared to the U.S. median per capita income of $32,397, according to the U.S. Census ACS 1-year survey in 2017 and has been declining. It fell 3.26 percent in 2017, even as the average real per capita income in the U.S. overall increased by 1.88 percent.

Some communities dependent on coal or textile manufacturing are prone to mass layoffs and have stubbornly high unemployment. But West Virginia officials and commerce leaders have been making progress in bringing at least some economic diversity to these communities.

Why a West Virginia 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 West Virginia Self-Directed IRA means freedom, opportunity, and self-determination. It means not being satisfied that the “market” is the only market that exists. It doesn’t mean you have to switch away all of your old investments. But if you want to invest in real estate or gold to help ensure a secure retirement, those options are indeed open…

And, like other IRA types, West Virginia Self-Directed IRAs come with all sorts of investment protections.

Understand Your West Virginia 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 West Virginia 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 West Virginia 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 West Virginia Self-Directed IRA

As fun as it is to talk about the various options you can have with a self-directed retirement account, it should be noted that there are certain limits, as well. You cannot self-direct a retirement account to invest in life insurance, collectibles like art, gems/jewelry, coins, alcoholic beverages, and tangible personal property. As enticing as it might be to put that wine cellar under a Self-Directed IRA protection, it is simply prohibited–so look for your protected retirement investments elsewhere.

Who You Cannot Do Business With

A disqualified person is anyone the Self-Directed IRA has decided is not “arm’s length” from the IRA.  Your IRA cannot engage in any transactions with these individuals or you risk the tax-status of your IRA.

A Disqualified Person is:

  • You
  • Your spouse
  • Any of your lineal ascendants or descendants (parents, children, grandchildren, and the spouses of children, grandchildren, etc. – including legally adopted children).
  • Any investment providers or fiduciaries of the IRA.
  • Any entity (a corporation, LLC, trust, etc.) where a disqualified person owns more than 50%.
  • Any entity (like previously listed) where the IRA account holder is an officer, director, a 10% or more shareholder, or a highly compensated employee.

Getting Started with American IRA

Although we have thrown a lot of abbreviations and words at you, you should know that self-directing your retirement is not as complicated as it might sound. The steps are very simple:

  • Open a West Virginia 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 West Virginia Self-Directed IRA Owners

The cost of living in “The Mountain State” is more than 16 percent below the average cost of living in the rest of the country, according to Sperling’s Best Places. That ranks it among the most affordable states in the country and an ideal fit for those living on a tight budget or who want their retirement money to go a long way.

State income taxes on West Virginia Self-Directed IRA Income

West Virginia does have a state income tax with marginal rates running from 3 percent on the first $10,000 of taxable income up to 6.5 percent on any income over $60,000 as of December 2018. For married filing separately, the 3 percent rate applies to all taxable income under $5,000, up to 6.5 percent on all income over $30,000 per year, again, as of December 2018. For an up-to-date tax rate schedule from the West Virginia Department of Revenue, click here.

There’s no deduction available for medical or dental expenses, and federal income taxes are not deductible. Retirement income is generally taxable, but there’s a tax deduction of up to $8,000 per person age 65 or older available to use against it. This enhances West Virginia’s affordability for retirees on relatively low incomes, or for whom Roth IRAs are a significant part of their retirement income.

Retirement military pay is exempt from state income taxes in West Virginia.

Additionally, the state also allows a deduction of $2,000 for all government pensions. There’s no age limit for this $2,000 deduction. But it applies only to pensions from government agencies, not to private 401(K) or other non-government sources of income.

Social Security income is taxable to the extent that it’s taxable under federal law. So up to half of your Social Security income may be subject to state income tax, depending on your income.

West Virginia sales taxes

Currently, West Virginia levies a state sales tax of 6 percent, with prescription drugs exempt. Food is taxed at a 1 percent rate. Some municipalities have income taxes up to 1 percent, so the highest sales tax you can expect to pay is 7 percent on non-exempt items.

West Virginia residents age 60 and older can get a discount card, called the Golden Mountaineer Card, that entitles them to a variety of discounts from participating retailers, pharmacies and medical/professional service providers.

West Virginia Self-Directed Real Estate IRAs

West Virginia is very attractive to Self-Directed Real Estate IRA owners thanks to a very low effective property tax rate. The average tax rate paid on West Virginia properties is just 0.59 percent.

West Virginia senior citizens eligible for the Homestead Exemption Program may be entitled to a Senior Citizen Tax credit. This credit is based on the amount of property taxes paid on the first $20,000, or portion thereof, of the taxable assessed value over the $20,000 Homestead Exemption.

West Virginia Estate and Inheritance Taxes

West Virginia imposes no taxes on estates or inheritances.

Other West Virginia Taxes

West Virginia imposes gasoline taxes at a rate of 54.1 cents per gallon and a tax on diesel fuel at 60.1 cents per gallon. They also impose a cigarette tax of $1.20 per pack of 20.

Benefits of Retiring in West Virginia

If you are interested in seeking retirement in West Virginia, or if you simply want to think about it as a long-term option, you might consider a Self-Directed IRA. A West Virginia 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 West Virginia? 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 West Virginia 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 West Virginia Self-Directed IRAs, Self-Directed Roth IRAs, Self-Directed SEP IRAs, Self-Directed SIMPLE IRAs and even Self-Directed CESAs and Self-Directed HSAs.

An West Virginia 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 an West Virginia 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 West Virginia Self-Directed IRA solutions, talk to our valued partner TurnKey IRA.