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

Posted on Aug 21, 2017

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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!

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