Blog

How Small Business Owners Can Benefit From SEP IRA

Posted by on Nov 6, 2017 in Blog | 0 comments

Do you as a small business owner find the process of choosing a retirement plan expensive and confusing? A Simplified Employee Pension IRA or SEP IRA might be the perfect option for you. Do you as a small business owner find the process of choosing a retirement plan expensive and confusing? A Simplified Employee Pension IRA or SEP IRA might be the perfect option for you.

SEP IRA

A wide-array of small businesses, ranging from partnerships, LLCs, S-Corporations, C-Corporations to sole proprietorships can benefit from the powerful features of SEP IRA accounts. These accounts were created so as to provide a tax-advantaged retirement plan for small businesses.

A SEP IRA can simply be set up by executing a written agreement, or setting up the SEP plan with a qualified financial institution (such as a mutual fund company, a bank, a brokerage firm or through a financial advisor), or by opening a SEP IRA for each eligible employee.

Let’s take a look at 7 ways in which small businesses can benefit by choosing a SEP IRA: 

  1. A major advantage of an SEP IRA account is its high yearly maximum contribution limit. Hence, you may contribute more to a SEP IRA as compared to traditional IRA or Roth IRAs as long as you make more than $22,000 approximately.
  2. As with a traditional IRA or 401(k), contributions to a SEP IRA account are not taxed in the year they are made. Instead, until the withdrawals are made, the taxes are deferred. This allows the money to compound tax-deferred for long periods of time.
  3. Employers can reduce the tax bite on the contributions they make to the SEP IRA account of their employees as these contributions are tax-deductible for the employer.
  4. With an SEP IRA, an employer is not required to make contributions each year. Also, the amount of contribution that you can make as a percentage of an income can vary from year to year.
  5. In case of a 401(k) plan, it is mandatory to fill out an annual form 5500. But this is not the case with an SEP IRA. There is no requirement to fill out excess tax forms.
  6. Every participant has immediate and complete ownership of the money contributed by you to his or her SEP IRA accounts. This means the employer is not responsible for the investments within the employees’ accounts. Also, the employer does not have to set up a schedule for vesting or to track service requirements. Each employee is responsible for choosing his or her investments inside this account.
  7. With SEP IRA, employers can take advantage of the flexible funding feature. This means the employers can take the decision every year regarding the amount to be contributed to this account. The amount can vary and the employers can even skip contributing any amount altogether.
  8. Apart from all the features listed above, small business owners can also benefit from the fact that along with contributing for an SEP IRA, they can also contribute to a Roth or a traditional IRA. Also, SEP IRAs are easy to set up, have no initial setup or annual maintenance fees, come with low administrative costs and are easily available through most online investment firms.

If you too are interested in learning more about how an SEP IRA can be beneficial for your business, get in touch with our expert IRA advisors at SD Retirement Plans LLC today.

How Can an SEP IRA Help You Save on Your Tax Bill?

Posted by on Oct 16, 2017 in Blog | 0 comments

A Simplified Employee Pension or SEP plan lets small business owners make tax-free contributions toward their employees’ retirement plan, but SEP IRA accounts can also offer significant tax savings on income. A Simplified Employee Pension or SEP plan lets small business owners make tax-free contributions toward their employees’ retirement plan, but SEP IRA accounts can also offer significant tax savings on income.

Tax bill

If you’re self-employed, running a small business, or making money aside from regular income at work, a SEP IRA can help you increase your tax-deferred retirement savings. Reducing your tax bill and maxing out your contributions every year can help you build larger nest egg by the time you retire.


Here’s how a SEP IRA can help you save on taxes and boost your retirement savings:


1. Tax-Deferred Retirement Savings –
Since a SEP IRA is funded with pre-tax dollars, investment income is tax-deferred. Interest, dividends and capital gains from funds held within the account are not included in your annual taxable income, and you only pay taxes on distributions.

With tax-protected reinvestment and compound interest, your retirement fund can grow much larger in the long run. This is especially important when you’re self-employed or don’t have an employer-sponsored pension plan at work.

2. Business Expense Deductions – Contributions to a SEP IRA count as business expenses, which helps to reduce net profit and taxable income for the business:

  • For self-employed professionals and business owners contributing to their own SEP IRA, adjusted gross income and federal income tax are lower.
  • For self-employed individuals or small business owners contributing to their employees’ SEP IRA, both self-employment tax and income tax are reduced.
  • For corporations contributing to employee SEP IRAs, income tax is lower and contributions are exempt from Medicare and Social Security taxes.

3. Setup and Funding Dates – Unlike a traditional IRA and other retirement plans, an SEP IRA can be adopted and funded after the close of the tax year, right up to the tax return due date and any extensions that apply.

The current year’s business expenses can be included in the previous year’s tax return if needed. This helps you decide how much to contribute based on your current financial condition, as well as spread out contributions over a longer period for more effective budgeting.

Since a SEP IRA boosts business deductions and reduces taxable income, it can help small businesses, freelancers and self-employed professionals lower their tax bills significantly. To get expert investment advice and learn more about tax savings with various retirement plans, contact Self Directed Retirement Plans today!

Catch-Up Contributions: A Guide to Boost Your Retirement Savings

Posted by on Oct 9, 2017 in Blog | 0 comments

Most of us are guilty of not contributing regularly to our retirement fund. So as we grow older, retirement feels like a fast approaching deadline. Are my investments on track? Have I saved enough for retirement? Questions like this loom large especially if you are 50 or older. Most of us are guilty of not contributing regularly to our retirement fund. So as we grow older, retirement feels like a fast approaching deadline. Are my investments on track? Have I saved enough for retirement? Questions like this loom large especially if you are 50 or older.

Catch-Up Contributions

If you are at least 50 years old and are wondering if you have stashed enough for your retirement fund or not, here’s the good news. Catch-up contributions enable you to make additional savings to your IRA and 401(k) as you near retirement.

Most of the people are either unaware of this provision or they think that they cannot afford it. Hence, they are unable to take advantage of it to boost their retirement savings.

Here’s what you need to know about catch-up contributions to make the most of them for your retired life:

What Are the Catch-Up Contribution Amounts?

Like most of the tax-favored retirement accounts which have IRS limits on their contributions, there are certain limits on the catch-up contributions also.

  • If you own a Roth IRA or a traditional IRA, the amount which you can contribute if you are 50 years or older, increases by $1,000. The maximum limit for contribution for both these IRAs is $6,500 in 2017.
  • If you have a 401(k) plan, you can usually contribute as much as $18,000 to your retirement plan in 2017.
  • If you have a Simple IRA, you can generally contribute as much as $12,500 in 2017. If you are 50 years or older and your employer also allows catch-up contributions, your contribution limit raises by $3,000.
  • If you are 50 years or older and your employer allows catch-up contributions, your limit is raised by $6,000. This holds true for a Roth 401(k) or Roth 403(b) also. The total elective contribution limit in 2017 is $24,000.
  • SEP IRAs don’t allow catch-up contributions. However, if you have a plan called SARSEP – a plan in which a small business employer contributes to your SEP IRA, you may be able to contribute an additional $6,000 in 2017. The contribution rules for these plans are complicated so it is better to consult an IRA advisor for a better understanding.

What Are the Advantages of Catch-Up Contributions?

Here’s why you should not miss out on catch-up contributions:

  • While taxes aren’t the primary reason for you to take advantage of catch-up contributions for your 401(k) plan, that incentive can help you save a lot of money. Employees can make a contribution of $18,000 per year to their 401(k) tax deferred. Those over the age of 50 can contribute an additional amount of $6,000. This brings the tax deferred income to $24,000 a year. Hence, the more you contribute and move in to a higher tax bracket, the more you can benefit from the catch-up contributions for your 401(k).
  • Usually most employers provide some kind of match to your retirement plan such as a 401(k). For e.g., an employer may offer a match of up to 6% for employee contributions. While not every company practices the same policy when it comes to matching the catch-up contributions, a lot of companies do. As per the Plan Sponsor Council of America, catch-up contributions are permitted for 97.1% of all 401(k) plans and 36% of plans match the contributions.
  • Also, the catch-up contributions for a Roth IRA allow the investors to boost their after-tax investment. The investors thus end up with a larger account balance in their retirement when they can withdraw the principal, earnings and interest tax-free. If you expect your tax rate to increase as you grow older, maximizing your catch-up contributions and your Roth IRA can be a perfect and cost-effective way for investing for your retirements.

If you want to learn more about how you can use catch-up contributions to boost your retirement savings, get in touch with our expert IRA advisors at SD Retirement LLC today.

How to Invest So That Your Self-Directed Roth IRA LLC Grows Tax-Free

Posted by on Oct 2, 2017 in Blog | 0 comments

Self-directed Roth IRAs expand your investment options massively. However, to ensure that you gain maximum tax benefits and investment returns, you need to know about the types of investments you can and cannot make using your self-directed Roth IRA LLC. Self-directed Roth IRAs expand your investment options massively. However, to ensure that you gain maximum tax benefits and investment returns, you need to know about the types of investments you can and cannot make using your self-directed Roth IRA LLC.

tax free

Type of Investments You Can Make With Self-Directed Roth IRAs LLC

  • Stocks, Mutual Funds and Bonds 
    These are the most standard investment choices for your self-directed Roth IRA, when it comes to investing tax-free. Your self-directed Roth IRA LLC puts you in complete control so you can open an account with any financial institution for trading in stocks. All the income and gains from this investment will flow through tax-free to your Roth IRA nest. There are infinite investment opportunities to explore through stocks, mutual funds and bonds.
  • Real Estate
    One of the most popular investment choices with self-directed Roth IRA is real estate. The biggest advantage this investment strategy offers is that all your gains are tax-free and will not be subjected to tax in case of withdrawal or distribution. For instance, if you purchased a property for $50,000 and later sold it for $100,000, your gain of $50,000 would usually be tax-free. But, if you purchased the property with your personal or non-retirement funds, the gain would be subjected to federal income taxes and state income tax in most of the cases.
  • Precious Metals & Coins 
    A major advantage of purchasing precious metals and/or coins using your self-directed Roth IRA LLC is that the values of these precious metals and/or coins usually keep up with or exceed the inflation rates better than other investments. Besides, you can hold these metals and/or coins in the name of the LLC at any local bank’s safe deposit box and eliminate depository fees also. Under the Technical and Miscellaneous Revenue Act of 1998, Roth IRA owners can invest their Roth IRA assets in certain gold, platinum, silver or palladium bullion as well as in certain platinum coins, provided that the coins are held in a financial organization.
  • Private Businesses 
    You can also purchase an interest in a privately held business. But you need to ensure that the business is not established as an S Corporation. You can choose from businesses which are established as C Corporation, Limited Liability Company, partnership etc. It is also important that you remember the rules regarding the Unrelated Business Taxable Income under IRC 512, and the ‘Prohibited Transaction’ and ‘Disqualified Person’ rules under IRC 4975.
  • Foreign Currencies
    Most of the people believe that investing in foreign currency can offer liquidity benefits to the stock market and other significant opportunities for investment as well. The Internal Revenue Service (IRS) does not prevent the purchase of foreign currencies such as Iraqi Dinars through your self-directed Roth IRA. You can hold these foreign currency notes in the name of the LLC at any local bank in a safe deposit box. This will also save you the depository fees. The foreign currency gains thus generated would be tax-free!

Type of Investments You Cannot Make With Self-Directed Roth IRAs LLC For both types of Self-Directed IRA accounts – traditional and Roth, the Internal Revenue Service prohibits the account holders from holding certain investments. These include S Corporations, life insurance contracts and collectibles. Collectibles comprise jewelry, baseball cards, artwork, memorabilia and other objects which are considered as collectibles and are bought and sold. It should be noted here that this affects the kind of gold that your self-directed Roth IRA can hold.

If you want to learn more about tax-free investment strategies for your Self-Directed Roth IRA LLC, get in touch with our experts at Self Directed Retirement Plans today.

What You Need to Do Before Purchasing a Foreclosure Property with Your IRA

Posted by on Sep 28, 2017 in Blog | 0 comments

Buying a foreclosed property is very different from buying a property through normal channels and thus requires a deeper understanding of the subject matter. If you are looking to invest in a foreclosure property through your IRA, then here’s what you need to do: Buying a foreclosed property is very different from buying a property through normal channels and thus requires a deeper understanding of the subject matter. If you are looking to invest in a foreclosure property through your IRA, then here’s what you need to do:

1. Convert Your IRA into a Self-Directed IRA Having your IRA plan in place puts you in the ideal position to get a good deal on a foreclosure purchase. First, you need to convert your traditional IRA to a self-directed IRA as it gives you the freedom to invest in non-traditional investments like real estate, business, mortgage notes, tax lien, private note, etc. Purchasing real estate through your IRA can prove to be beneficial as it gives you the ability to react to property offers immediately, as opposed to waiting on a third party for a loan approval.

Consider this – If you plan to buy a property through regular channels and require a loan to purchase it, you must be able to meet the eligibility criteria set by the governing bodies. This means that if you want to avail for a loan to purchase a property, you are required to have an excellent credit score, funds to make at least 50% of the down payments and a high income to debt ratio before the loan is approved.

Since distressed properties like foreclosures require immediate bids, your IRA provides you with the necessary funds to put down an offer on the property. Another benefit of using your IRA funds to purchase property is the flexibility it provides in terms of payment options. You can choose to pay for the property partly in cash or you can even co-invest with your non disqualified family members, partners or friends using your respective IRA funds. This also helps you avoid relying on money lenders or loans to purchase your property!

 2. Consult a Foreclosure Specialist The foreclosure laws and regulations vary from state to state and can be extremely complicated, so you consider enlisting the help of a professional before investing in properties. Do your research before choosing your consultant, talk to various IRA advisors, look for information pertaining to the number of short sales or foreclosures have they have consulted over before making your decision. You can also approach a realtor or a real estate attorney who is certified in foreclosure sales to guide you through the process.

3. Be Realistic About the time frame you must factor in the time it takes to complete the purchase process since buying foreclosed properties have certain waiting period requirements. You need to ensure that the timeframe of the purchasing process suits your investment goals and financial needs. Think of the various aspects of the sale, for instance, how you would handle a purchase if the value of the property declines in value? Would you be able to afford to wait for it even so? Will you be able to see some ROI in 5 or ten years? Will you be able to receive a decent sum of money if you rent it out? Be sure to work out the numbers, before jumping headlong into any investment!

4. Analyze the Property Based on Previous Land RatesBefore you make an offer on a property, do your research; try to find more details about the neighborhood, land value as well as the property rates in the previous years to ensure you make a well-informed decision. If there are multiple properties available, compare them and see which option will prove to be a good investment. Pro Tip – Ask your real estate consultant to provide you with the absorption rate of the area to help gain a clearer picture of the real estate situation in the concerned area.  A slower absorption projects a lower value for the property, while an increase in the absorption rate means the projected value of the property will most likely increase as well.

If you are venturing into real estate investments by way of foreclosure purchases for the very first time, and are looking for professional help to oversee the management and allocation of your IRA, contact SD Retirement Plans LLC today. Our IRA advisors will assess the property’s financial requirements as well as your IRA funds in order to provide the most feasible investment solution for you. Call us on (866) 639-0066 to book an appointment today!

4 Retirement Planning Tips for Young Singles

Posted by on Sep 25, 2017 in Blog | 0 comments

While you are young and single, enjoying your freedom from family obligations and spending on trips, movies, and parties, don’t forget to save for your own future self. Of course, you have a life to live and concert tickets to buy but then again life is too short and you need to strike a perfect balance between splurging on sojourns and saving for a financially secure future. While you are young and single, enjoying your freedom from family obligations and spending on trips, movies, and parties, don’t forget to save for your own future self. Of course, you have a life to live and concert tickets to buy but then again life is too short and you need to strike a perfect balance between splurging on sojourns and saving for a financially secure future.

Young Singles

If you don’t want to be among the 56% Americans who have less than $10,000 when they retire, put these 4 things on your retirement savings checklist now:

  1. Ditch Your Financial Follies for Good 46% of the U.S. adults fail to cover unexpected medical costs as low as $400 with cash, even if they have a self-directed IRA or 401(k). A recent report published by the ERBI revealed that single persons are twice as likely to have less than $10,000 in total retirement savings as compared to married workers who can lean on the income of a spouse. If you don’t want to wake up 25 years from now and realize that you lost some really big opportunities, then ditch debt and unfriend overspending right away. Loans, credit cards, and consumer debt can wreak havoc on retirement planning for singles so make retirement savings a habit and build your wealth.
  2. Double Your Money with the Magic of Compounding Interest As a young single, you have time on your side to enjoy the magic of compounding growth. The sooner you start, the more you can save and take advantage of compound interest to enjoy the retirement of your dreams. Let’s say you graduated debt-free and your first job is making you $50,000 a year. At this stage, if you spend your money on a car, exotic vacations, and expensive gadgets and start your retirement savings with $2,000 a year around your 30s, by retirement you would have around $593,000 in 35 years. This is great but if you would have started investing the same amount of $2,000 at the age of 24, you would end up with more than $1 million in your retirement savings.
  3. Build a Safety Net and Invest for the Long-Term Singles persons do not have the earnings of a spouse to lean on so they have less discretionary income to put towards their retirement accounts. Making retirement savings a habit will keep you covered during adversities like loss of a job or accidental injury. Start with an emergency fund for crisis and keep 9-12 months’ worth of your living expenses in a short-term fund that is easily accessible. Invest at least 15% of your income, contribute to your employer’s 401(k) plan and control impulsive purchases. Finally, build a safety net by making provisions for both long-term care insurance and disability. Investing from the beginning will ensure that you have enough money to retire especially if you are flying solo.
  4. Enjoy the Benefits of Buying a Home Just because you do not intend to marry and start a family any sooner does not mean you rule out buying a home for yourself. While owning a house comes with a baggage of liabilities (mortgage payments and maintenance) it also gives you total control over your living space while taking you out of the circle of steadily rising rents.

If you can’t establish your own retirement savings plan, you can hire a financial advisor to help you spend, save, and invest as you stay focused on building a financially secure future.

Why the Self-Directed IRA Beats Other Investing Vehicles for Millennials

Posted by on Aug 28, 2017 in Blog | 0 comments

An IRA or Individual Retirement Account forms the backbone of retirement savings for most of us. A self-directed IRA is quite similar to regular IRAs, but along with tax-deferred gains and income, it also allows you to choose where retirement funds are invested.

Here are 5 ways to make better investment decisions when you’re just starting out:

  • Begin Now – Don’t avoid retirement planning or investment opportunities till you’re earning more. The sooner you start, the more you’ll save.
  • Don’t “Play” – Playing the stock market or choosing asset classes you don’t understand is a bad idea. Start with safe, long-term investments.
  • Get Help – Consult experienced financial advisors for investment advice and recommendations. As you learn, you can start exploring.
  • Stay Safe – Avoid placing all your savings into a single stock, especially if you’re investing with your retirement accounts and don’t have a safety net.
  • Diversify – Invest in precious metals, real estate and other alternative investments in addition to traditional stocks, bonds and mutual funds.

Proposed changes to the Social Security program may affect retirement age, benefits and more, so it’s more important than ever to take retirement planning seriously!

How Does a Self-Directed IRA Help Your Retirement Portfolio?

Here’s why you should consider using a self-directed retirement account:

  1. Freedom from Stock Market Fluctuations – Potential changes to Social Security, market ups-and-downs, rising inflation and terrorism threats all contribute to economic uncertainty, and cause sleepless nights for the individual investor.
    Being restricted to investing vehicles that rely on stock market performance doesn’t help. Instead, you can secure retirement funds with self-directed IRA real estate purchases or investments in precious metals. These long-term alternative assets cannot be funded with a traditional IRA or Roth IRA.
  2. Variety of Alternative Investment Options – Millennials are drawn to alternative investments and want more options for IRA investing. In fact, almost 1 in 4 Millennial investors plan to try an alternative investment strategy within 5 years (Source).
    Self-directed IRA accounts give you this option. Real estate, precious metals, private equity and startups/businesses are all great investment options for self-directed retirement accounts. Just make sure you follow the IRS rules and stay away from prohibited transaction pitfalls.
  3. Greater Safety and Security for Investments – When you have the ability to invest IRA funds in a range of asset types, you retain control of your retirement savings. Choosing the right investment opportunities also improves your financial security.
    Investing in alternative asset types such as IRA real estate ensures a long-term income source for your retirement accounts, especially if you buy rental property. You can also opt for a self-directed IRA LLC, which shields your IRA assets from attack by creditors and provides additional protection through limited liability.
  4. A Perfect Fit for Millennials’ Investing Style – Despite common belief that they don’t know how to save, Millennials are more financially conservative than any other generation. They’ve had no choice!
    If you’re like most Millennials, you’ve already dealt with loss of job security and economic downturns. Self-directed IRA accounts can give you the control, security and flexibility you need, for making investment decisions based on your unique goals, investing style and experience.

To learn more about self-directed IRA basics, IRS rules and tax implications of investing in alternative assets, contact the experts at Self Directed Retirement Plans today!

Is a Self-Directed IRA LLC the Right Fit for You?

Posted by on Aug 21, 2017 in Blog | 0 comments

A Self-Directed IRA LLC could be exactly what you need if you want to diversify your retirement portfolio, especially for asset classes not included in traditional IRA investing.

Self-Directed IRA LLC

This is a good option to consider if you want:

  1. Tax-Deferred Growth – One of the biggest advantages of traditional IRAs is that your gains are tax-free until you make a withdrawal. You get the same benefit with a Self-Directed IRA LLC. Taxes will be deferred on any income or returns from investments through the account, and only distributions are liable for tax.
  2. More Investment Choices – Traditional or Roth IRA funds are usually invested in stocks, bonds and mutual funds. Unlike traditional investing vehicles, a Self Directed IRA LLC allows you to choose from a wider range of asset classes. You can use a self-directed IRA to invest in real estate, precious metals, tax liens or even an unrelated business.
  3. Portfolio Diversification – Choosing different types of investments is the best way to secure your retirement accounts, and a Self-Directed IRA LLC allows you to do that more effectively. With a larger variety of asset classes to pick from, you can allocate funds to IRA real estate, alternative investments and more.
  4. Greater Access to Funds – If you want to access traditional IRA accounts for an investment, you have to wait for the IRA custodian to approve your request. With time-sensitive investment opportunities, any delay in this process could mean losing out. However, a Self Directed IRA LLC offers you complete control.
  5. Convenience & Efficiency – You can make investment decisions faster and more efficiently with a Self-Directed IRA LLC. For instance, if you’re thinking of investing in real estate with your IRA funds, all you need to do is set up an electronic balance transfer or write a check from the IRA associated bank account.
  6. Limited Liability Protection – Your investments are protected from attack with a Self-Directed IRA LLC, since your liability is limited. For instance, if you invest in IRA real estate, the IRA assets held outside the LLC are shielded against claims resulting from design or construction defects in your real estate investment.
  7. Protection Against Creditors – If you’re filing for personal bankruptcy, your Self Directed IRA LLC will shield up to $1 million of your IRA assets. Your self-directed IRA LLC investments will also be protected against creditor attack outside of bankruptcy in most states, so you can safeguard your retirement.

Factors before Choosing a Self-Directed IRA LLC

These 3 factors will help you decide if a Self-directed IRA LLC is a good fit:

  • Types of Investments – If you’re planning to purchase real estate, tax liens or other time bound investment opportunities, a Self Directed IRA LLC is ideal. For long-term passive investments such as precious metals, a self-directed IRA may be better.
  • Transaction Frequency – If you will often be making investments or transactions for active assets such as auctions or hard money loans, a Self Directed IRA LLC will help you save money on transaction costs, review fees, and other expenses.
  • Account Setup Costs – Setup and transaction costs depend upon the self-directed IRA custodian handling the account. Remember, in addition to custodian fees and setup costs, you may also be charged for storage, insurance or wire fees.

If you aren’t sure whether a Self-Directed IRA LLC is the right way to meet your retirement goals or want to know about tax compliance, prohibited transaction types and other IRS rules, consult a financial advisor or tax professional.

At Self Directed Retirement Plans, our experts will be glad to answer your questions. Contact us now!

Make Your Retirement Portfolio Greener with a Self-Directed IRA

Posted by on Aug 17, 2017 in Blog | 0 comments

Make Your Retirement Portfolio Greener with a Self-Directed IRA – Green investment is becoming the next big thing for modern investors, who prefer to do whatever they can to help protect the environment while building their retirement income. Some examples of “green” investments include renewable energy, waste management, transportation, manufacturing, agriculture, advanced materials and clean technology.Green investment is becoming the next big thing for modern investors, who prefer to do whatever they can to help protect the environment while building their retirement income. Some examples of “green” investments include renewable energy, waste management, transportation, manufacturing, agriculture, advanced materials and clean technology.

Retirement Portfolio

A conventional IRA may not allow you to invest retirement funds in eco-friendly investment opportunities and alternative assets, but a self-directed IRA does. You still enjoy tax-deferred growth and income, but self-directed IRA accounts allow you to select exactly which types of investments are funded with your retirement savings.

Why is Green Investment becoming So Popular for Retirement Portfolio?

A large part of today’s workforce is composed of Millennials, who tend to be more aware of – and passionate about – environmental issues, sustainable living and business responsibility. This environmentally conscious attitude reflects in their investment decisions and style as well, leading them to choose green investments over traditional options.

Investing in Green Assets with a Self-Directed IRA

Here are 6 types of investments that will help you go green with your IRA investing strategy:

  1. Energy Efficient Real Estate – Look for commercial or residential structures with a low carbon footprint. These could be buildings powered with green energy, built with sustainable materials, or designed to reduce water consumption, heating and cooling costs, etc. Energy efficiency upgrades or redesigning projects can help boost the value of your existing IRA real estate as well.
  2. Green Energy Projects – Growing climate change concerns make renewable energy projects the ideal investment options for green investors. Consider biofuel, solar, offshore wind and water energy investments, as well as clean technologies for oil, gas and other natural resources. You could also make IRA investments in private capital for companies with good environmental practices.
  3. Clean Transportation Options – In developing markets as well as developed ones, the demand for greener transportation is on the rise. Investing in clean-emission public buses, light-rail vehicles, hybrid or electric vehicles, ride-share cars and even companies building carpooling or ride-sharing apps is a good way to promote clean transportation and diversify your retirement portfolio at the same time.
  4. Green Infrastructure Investments – Green bonds are a common investment vehicle used by cities and states for funding infrastructure upgrades, such as clean water, wastewater, waste and bioenergy systems, safer and more energy efficient public transportation, etc. Since they are backed by the local, state or federal government issuing them, green bonds are usually both tax-exempt and secure.
  5. Eco-Conscious Capital Markets – In addition to a wide range of conventional and alternative assets, you can also use a self-directed retirement account to buy private capital in companies that are environmentally conscious. Whether it’s a small business making eco-friendly beauty products or a startup manufacturing compostable bags, you can invest in green goods or services of your choice.
  6. Investment in Green Technology – If you’re looking for more ways to make a difference while setting up your retirement portfolio, consider investing in clean commodities that will help save energy or resources. These could include sustainable tree plantations, recycled construction material, solar power technology and more. You could also use IRA funds to buy a green business or set one up on your own.

If you want to explore other investment strategies that promote a greener and healthier environment, we’d love to help. Our retirement planning and tax professionals can also help you understand IRS rules that apply to self-directed IRAs, tax implications of alternative asset investments, and more. Contact us today!

How Can Self-Directed IRA Investing Help You Raise Capital for a Business?

Posted by on Aug 14, 2017 in Blog | 0 comments

Have you ever wanted to use your retirement portfolio for investments that really matter to you? For instance, you may be interested in an upcoming business or have one of your own that you want to invest in. However, all of your savings are sitting in your IRA!

Raise Capital for a Business

With a self directed IRA, you can choose where money from your retirement accounts is invested, and continue to enjoy tax-free or tax-deferred growth. Since these accounts offer more flexibility, they are a good option for those looking to fund a startup, grow their own business or buy a company.

Benefits of a Self Directed IRA

Here’s why you should consider using a self-directed IRA to invest in a business:

  • Tax-Advantaged Growth – A self-directed IRA offers either tax-free or tax-deferred growth. With a traditional IRA, income and gains will be tax-deferred since these accounts are funded with pre-tax dollars, while Roth IRAs give you tax-free gains since you’ve already paid income tax on contributions.
  • More Options & Control – Self-directed IRAs allow you to make investments in a wider range of asset types, since you aren’t limited to stocks, bonds and mutual funds. These accounts can be used to invest in everything from real estate, precious metals and tax-lien certificates to certain business types.

The main advantage isn’t just that you can invest retirement savings in your business, but that friends, colleagues and certain family members can invest in it with IRA savings as well.

Self-Directed IRA Investing: What Types of Investments Can You Make?

Since IRAs are primarily designed to help you save for retirement, you may be penalized if the IRS suspects you’re using retirement accounts for benefits in the present instead of the future, such as a salary paid to yourself.

You can use your self-directed IRA to invest in:

  • Private Businesses – Your retirement savings can help you set up a private business, or raise funds by suggesting that investors use self-directed IRAs.
  • Existing Companies – Self-directed IRAs can be used to buy existing companies. You will pay “unrelated business” income tax, but equity growth is tax-free.
  • Alternative Assets – Self-directed IRA owners can invest in a private company, franchise, closely-held enterprise or other allowable alternative investment.

Here are three basic situations to avoid:

  • General Partnership/S Corporations – These legal structures may seem the same as other companies, but they are governed by specific taxation rules.
  • Prohibited Transaction Types – Your spouse, children and parents cannot invest in your business with a self-directed IRA, but siblings, business associates and friends can.
  • Key Investor and Employee – If you own more than 50% of a business or have a controlling interest in it, you can’t use self-directed IRA funds to invest in it.

The bottom line is that you MUST check what’s allowed and what isn’t. Even a small error can lead to major penalties, so do your homework or consult an experienced financial advisor about applicable IRS rules and regulations.

At Self Directed Retirement Plans, we’re here to help. Get in touch with us today!