Wisconsin Self-Directed IRA

Wisconsin Self-Directed IRA

Wisconsin Overview

Wisconsin is a fairly retirement-friendly state. Culturally, there are really two Wisconsins: The progressive, urban enclaves around Madison and Milwaukee, and the more conservative rural areas that dominate the remainder of the state.

The state, of course, is known for its cheese. If Wisconsin were a country, it would be the third largest cheese producer in the world, behind only France and Germany.

Winters can be extremely cold, with mild summers.

Madison has a tremendous art and cultural scene and is the anchor of the state’s excellent state university system. Milwaukee is known for its excellent Irish festival every year.

Outdoorsmen will feel at home in Wisconsin, with plenty of land for game hunting and thousands of lakes and thousands of miles of stream available for fishing throughout the state.

Golfers will find excellent courses at The Whistling Straits (Sheboygan), Erin Hills (Erin), Blackwolf Run (The River), Sentry World (Stevens Point), Whistling Straits – The Irish (Sheboygan), Blackwolf Run – Meadow Valleys (Kohler) and Lawsonia Golf Course (Green Lake).

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

Understand Your Wisconsin 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 Wisconsin 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 Wisconsin 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 Wisconsin Self-Directed IRA

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

Who You Cannot Do Business With

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

A Disqualified Person is:

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

Getting Started with American IRA

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

  • Open a Wisconsin 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.

Financial Considerations for Wisconsin Self-Directed IRA Owners

The cost of living in Wisconsin is modest, currently averaging just 3 percent below the national average, according to Sperling’s Best Places.

Military Retirement Income


State income taxes on Wisconsin Self-Directed IRA Income

As of 2019, Wisconsin state income taxes ranged from 4 percent to 7.65 percent, with the top rate applicable to incomes over $252,150 per year. Medical and dental expenses are deductible on Wisconsin state income taxes to the extent they exceed 10 percent of income.

Wisconsin is one of the few states that tax all capital gains as ordinary income.

Pensions and annuities are taxed to the same extent they are under federal tax laws. But Social Security and Railroad Retirement Income is exempt from Wisconsin state income taxes, as is military retirement pay, Coast Guard retirement pay, NOAA retirement pay, and Public Health Service retirement pay.

Some state and local government retirees from Wisconsin public employers qualify for a pension exemption, but out-of-state public retirement benefits are fully taxable.

If you are turning age 65 or older during the tax year and you receive income from a qualified retirement plan or an Wisconsin Self-Directed IRA, you may be able to subtract up to $5,000 of pension income from your gross income, depending on your income, but the thresholds are quite low – 15,000 for single filers and heads of household, and $30,000 for married taxpayers filing jointly. You cannot claim this benefit based on military retirement benefits, however.

Wisconsin sales taxes

Wisconsin sales taxes are generally low. The state imposes a sales tax rate of 5 percent on most purchases. Food and food ingredients are usually exempt, but not candy, prepared foods or soft drinks. Prescription drugs and newspapers are also exempt from Wisconsin sales taxes. Electricity and natural gas are not taxed from November through April.

Local governments may impose an additional sales tax – usually 0.5 percent. However, groceries and prescription drugs are exempt. There’s also a baseball stadium tax of 0.1 percent, applicable in just a few counties – currently Brown, Milwaukee, Ozaukee, Racine, Washington and Waukesha counties.

Wisconsin Self-Directed Real Estate IRAs and property taxes.

Wisconsin imposes very high property taxes and is therefore a tough environment for Wisconsin Self-Directed Real Estate IRA investors. The average effective tax rate is 1.95 percent, which makes it the fifth highest-tax state in the country when it comes to residential property taxes.

Mobile homes receive a 35 percent tax exemption in Wisconsin, provided they are used as an actual residence and not unoccupied between road trips.

Wisconsin Estate and Inheritance Taxes


Other Wisconsin Taxes

Wisconsin imposes a tax of 49.3 cents per gallon on gasoline and 55.3 cents per gallon on diesel. Additionally, there’s a $2.52 cent tax per pack of 20 cigarettes.

This information is current as of February 2019. As always, tax rates are subject to change. You can get current information on Wisconsin Tax Rates from the Wisconsin Department of Revenue.

Benefits of Retiring in Wisconsin

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