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Self-Directed IRA

Updated November 2019–

Welcome to Self Directed Retirement Plans LLC– let us teach you about The true Self Directed IRA.

What is a Self-Directed IRA?

Self-directed IRAs are the best way to plan for retirement at your own pace, with the freedom and flexibility to choose where your money goes and how it will grow. Instead of being restricted to the handful of investment options suggested by your broker or banker, you choose where and how to invest your savings, and reap the maximum benefit. BUT even so, you are generally limited to the choices provided by the particular custodian. While these IRA’s are self-directed, the situation is similar to going to a Ford dealership and making a decision from the choices available. At the end of the day though, you still are forced to buy a Ford.

A true self-directed IRA allows the client to “step outside the box” and invest in all the asset classes that are legally available. Now you can look at commercial and residential real estate, tax liens, loans – both hard money and regular, private placements, Trust Deeds, and precious metals just to name a few. At Self-Directed Retirement Plans LLC, we specialize in these types of self directed IRA’s. Every IRA has to have a custodian, so the choice of custodians is very important. We use a “passive” custodian, they don’t have products to sell and realize their clients wish to be in the “alternative investment world”, thus allowing check-book control.

Checkbook Control

What is checkbook control? Simply stated; checkbook control allows the IRA holder to make investment decisions, write a check and take charge. Checkbook control eliminates the need for a Third Party Administrator or TPA. Most custodians adhere to the TPA model because it is very profitable. Imagine having to “ask” a custodian permission to invest your own money. Not only is it expensive but very time consuming. Compare that with the ability to immediately make a decision, write a check and adding assets to the self directed IRA!

Why let someone else behind the wheel when you can handle your retirement planning the way you want? With a self-directed IRA, you’re in complete control. At the same time, you still enjoy the tax breaks, asset protection and other advantages of government-sponsored retirement plans, for an all-round “win-win”.

You can decide whether to invest in stocks, bonds and mutual funds (the traditional options), or opt for real estate, promissory notes, tax liens, annuities, private businesses, currency and other asset classes in the modern investment market. The options are almost unlimited!

Let us teach you about The TRUTH about IRAs and how you can maximize your returns!

How does a Self Directed-IRA work?

There are two main ways to employ a self-directed IRA.

The first way is to send instructions to the custodian to send a check or wire and purchase the investments in the name of the IRA. This is how most custodians prefer because it allows them to continuously charge for activity fees etc.

The second and most preferred way is to use an underlying LLC. At Self Directed Retirement Plans LLC, we establish state approved LLC’s for each client. The LLC’s are “owned” by the self-directed IRA and become the investment arm for the IRA. Our clients open a checking account for the LLC at a bank of their choice. We assist them in transferring the funds from the IRA (custodian) to the new self-directed IRA LLC checking account.

Now they have a truly self-directed IRA with checkbook control. When an investment opportunity arises, they simply write a check and immediately take advantage. There isn’t any waiting for permission etc.

IRA Contribution Limits for 2019-2020

In 2019 and 2020, the annual contribution limit for Roth and traditional IRAs is:

2020 2019
Annual contributions for those younger than age 50 $6,000 $6,000
Annual contributions for those who are 50 or older $7,000 $7,000

Traditional and Roth IRA’s have certain restrictions. Generally, contributions must come from earned income and can be limited or eliminated depending upon a client’s AGI – adjusted gross income and/or contributions to company-sponsored retirement plans.

Traditional IRA income limits for 2019 and 2020

Filing status 2020 Full deduction if modified AGI is … 2020 Partial deduction if modified AGI is … 2020 No deduction if modified AGI is … 2019 Full deduction if modified AGI is … 2019 Partial deduction if modified AGI is … 2019 No deduction if modified AGI is …
Married filing jointly and you’re covered by retirement plan at work $104,000 or less More than $104,000 but less than $124,000 $124,000 or more $103,000 or less More than $103,000 but less than $123,000 $123,000 or more
Married filing jointly and your spouse is covered by a retirement plan at work $196,000 or less More than $196,000 but less than $206,000 $206,000 or more $193,000 or less More than $193,000 but less than $203,000 $203,000 or more
Single or head of household and you are covered by a retirement plan at work $65,000 or less More than $65,000 but less than $75,000 $75,000 or more $64,000 or less More than $64,000 but less than $74,000 $74,000 or more
Married filing separately and you or your spouse is covered by a retirement plan at work The full deduction isn’t available Less than $10,000 $10,000 or more A full deduction is not available Less than $10,000 $10,000 or more
Single, head of household, qualifying widow(er), married filing jointly or separately and neither spouse is covered by a plan at work Any amount

Roth IRA income limits for 2019 and 2020

Filing status

Modified AGI

Maximum Contribution

Modified AGI

Maximum Contribution

Married filing jointly or qualifying widow(er) Less than $196,000 $6,000 ($7,000 if 50 or older) Less than $193,000 $6,000 ($7,000 if 50 or older)
$196,000 to $205,999 Contribution is reduced $193,000 to $202,999 Contribution is reduced
$206,000 or more Not eligible $203,000 or more Not eligible
Single, head of household or married filing separately (if you did not live with spouse during year) Less than $124,000 $6,000 ($7,000 if 50 or older) Less than $122,000 $6,000 ($7,000 if 50 or older)
$124,000 to $138,999 Contribution is reduced $122,000 to $136,999 Contribution is reduced
$139,000 or more Not eligible $137,000 or more Not eligible
Married filing separately (if you lived with spouse at any time during year) Less than $10,000 Contribution is reduced Less than $10,000 Contribution is reduced
$10,000 or more Not eligible $10,000 or more Not eligible

If you exceed the AGI limit but still want to contribute towards your retirement savings, an easy way to get around it is by contributing to a non-deductable IRA.

Take an active role in planning your future and get started with a self-directed IRA today. It has more profit potential as compared to other retirement savings plans and gives a huge payoff with an early start. Expand your investments beyond conventional options with a self-directed IRA and grow your retirement savings exponentially while you can.

Funding of Self-Directed IRA’s

Transfers and new contributions are the main funding vehicles for self-directed IRA’s.

Transfers can come from the following:

Traditional IRA’s Roth IRA’s SEP IRA’s
401k’s 403b’s Qualified Annuities
Coverdell Education Acct’s Profit Sharing Plans Keoghs
Money Purchase Plans Gov’t Eligible Deferred Compensation Plans

Self Directed IRA Investments

A true self directed IRA can invest in a myriad of allowable asset classes outside of the normal traditional investments.

Some of the allowable alternative investments are but not limited to:

  • Real Estate – residential and commercial – condos, mobile homes foreign
  • Raw Land
  • Trust Deeds/Mortgage and Mortgage Pools
  • Private Notes and Loans – e.g. Loans to a non-disqualified person for a car etc.
  • Private Stock Offerings – also referred to as PPM’s
  • Limited Liability Companies – LLC’s
  • Limited Partnerships – LP’s
  • Tax Certificates – Tax Liens
  • Annuities
  • Options
  • Currency
  • Futures
  • Commercial Paper
  • And MANY other investments

Did You Know You Can Invest in Real Estate with Your IRA?

Everyone wants to invest in real estate. We have all seen our IRAs and 401Ks drop as the stock market continues it’s roller-coaster ride. How many of us would invest our retirement funds in real estate if we could? The answer; a lot!

What if you could get bank financing on those real estate purchases? Then it’s even more likely that you would want to buy real estate with your IRA.

Now, you can tap into that $3 Trillion retirement market and see your retirement income and your investment capital soar. Would you like to take advantage of investments like rental properties, lease to purchase transactions, fix-up real estate, or even commercial property? You may even be able to have YOUR OWN IRA purchase your dream retirement home right now!

It is a little-known fact that if you structure your IRA correctly, you can have 100% control and checkbook access to your assets to make the investments that are important to you; including real estate.

What Rules affect a Self-Directed IRA?

Generally, as long as you don’t violate the prohibited transaction rules and the disqualified person rules, you should be on the safe side of the IRS. We ask our clients to always call or email if they have any questions about these rules.

Prohibited Investments are but not limited to:

  • Collectibles – Artwork, Rugs, Antiques, Metals, Gems, Stamps, Collectible Coins
  • Stock in a S-Corporation

Disqualified Persons to a Self-Directed IRA are:

  • The IRA holder and his or her spouse, ancestors, lineal descendants and their spouses.
  • Investment Advisors and managers.
  • Any corporation, partnership, trust or estate in which the IRA holder has a 50% or greater interest.
  • Anyone providing services to the IRA such as a trustee of custodian.

Setting up a Self-Directed IRA

At Self Directed Retirement Plans LLC, we assist and guide the client through every phase of establishing a true self-directed IRA. Educating the client is a large part of our service. In many cases this is a new and sometimes scary world the client is entering and we do our best to inform the client and make them comfortable with their decision.

Below is a brief description of the steps we take to establish a self-directed IRA.

  1. Establish the new self directed IRA account.
  2. Assist the client to transfer their funds.
  3. Create a new state LLC that becomes the investment arm for the SD IRA.
  4. Using a SS4 IRS form, we obtain a new EIN for the LLC.
  5. We create a proprietary operating agreement for the LLC.
  6. We co-ordinate with the custodian all the required documents, such as transfer requests, Direction of Investment Letters (used to fund the LLC), LLC operating agreement, banking instructions etc.

One of the most important things we do is make ourselves available to answer all the client’s questions along the way and especially down the road. Nothing beats years and years of experience.

IRA Rollover Process

Funds can be rolled over or transferred from a previous custodian to a new self directed IRA. Although they accomplish the same goals, they have different rules.

A client cannot rollover funds if he has done so in the previous twelve months. Not knowing this rule could be disastrous. Transfers do not have that restriction.

We help the client fund their new self directed IRA using traditional rollover or direct transfer.

4 Reasons That Make Self-Directed IRA the Key to Your Financial Freedom

  1. The Flexibility to Truly Diversify
    A self-directed IRA brings you the freedom to diversify your financial portfolio into lucrative assets like property, mortgage notes, foreign currency, annuities, raw land, limited liability companies and many other investments. If you have the required knowledge and expertise to succeed with a certain investment type, you can leverage the asset to secure your financial future.
  2. The Power to Take Control
    Certain self-directed IRAs facilitate the inheritance of your assets to your designated beneficiaries after your death without inviting any tax implications. So, if you plan to stretch your property and assets over future generations, do it with a self-directed IRA.
  3. Excellent Tax Advantages
    Being a tax-advantaged account, a self-directed IRA brings you the benefit of large tax deductions which help you create lasting wealth. You can combine these tax-free profits with investing diversity for lasting financial freedom.
  4. More Savings
    With several investment options, account holders can make the most of profitable investment opportunities available to them. Unlike traditional and Roth IRA that come with limited investment options that offer limited returns, a self-directed IRA brings you the freedom to invest beyond stocks and bonds to build a bigger nest egg in the same timeframe. With a self-directed IRA, account holders can take advantage of lucrative investment alternatives like precious metals, real estate properties, and shares to maximize their savings and enjoy exponential returns in the long-term. Depending on the variety of investments, account holders can build a sizable nest egg and generate a steady stream of income during retirement.

Self-Directed IRA Facts and Secrets

Fact – Ten thousand Americans are turning 60 EACH day. Many of them are eager to take control of their retirement dollars but don’t know where to turn.
Fact – Only 3 percent of retirement accounts are invested in real estate! Why?
Fact – Over 80% of retirement accounts are invested in the traditional market!

Secret – is your stockbroker going to take the time to educate you about true self directed IRA’s? Does he or his firm want assets walking out the door?
Secret – Whose ads do you see when you read through financial magazines?
Answer – traditional investment firms and mutual fund companies
Secret – Self-Directed IRA profits are UNLIMITED

Too Good to Be True?

Sounds too good to be true? That’s only because these options aren’t well-known. The San Francisco Chronicle put it best when they said, “The reason you haven’t heard about them [these investment alternatives] is that there is little profit incentive for financial institutions, which primarily sell stocks and bonds to IRA accounts.” [Source: San Francisco Chronicle, January 6, 2003]

Any pros and Cons of a Self-Directed IRA?

The pros certainly outweigh the cons. The pros of course are the ability to have total checkbook control and take immediate action when an investment becomes available. The con would simply be – you are now your own “investment” advisor and decision maker, but that’s where .

This is one of the little-known insider’s secrets that only a few of the Top Professionals across various financial professions have known for years. But it’s not enough to know this secret – the real impact comes from working with a qualified professional who knows how to grow your IRA or 401(k) assets by leveraging these secrets to make money for you by rapidly growing your asset base. And that’s why Self Directed Retirement Plans can serve as a tremendous asset to you. So, if you want to gain complete check-book control of your IRA, call us at (866) 639-0066 today!