SELF DIRECTED IRA (SDIRA) EXPLAINED:
There is NO legal distinction between self directed IRAs and any other IRA except that a self directed IRA allows the broadest possible spectrum of investment choices.
SDIRAs have been around since the IRA was established in 1974.
When setup correctly or when using a proper SDIRA custodian you are allowed to invest not only in stocks and bonds, but also in real estate, notes, private placements, syndications and much more.
The potential benefits of a self directed IRA is that you are able to invest your tax-advantaged retirement dollars in investments you know and understand.
I love SDIRAs especially the ROTH SDIRA since there are many benefits like: 1) getting tax-free growth 2) you can take tax-free withdrawals in retirement 3) you decide when, if, and how to take withdrawals.
SDIRA RULES:
There are a few rules one has to follow when investing money from your IRA. We will talk briefly about prohibited investments and prohibited transactions. This is not an all inclusive list, but some of the main things to keep in mind. Read my book “IRA & 401K Income Builder” for more details and consult a SEC attorney and your tax advisor before investing.
Prohibited Investments
Can’t invest in collectibles such as antiques, cars, art, etc.
Can’t invest in life insurance.
Prohibited Transactions
Selling property to IRA you already own – self dealing
Buying property for personal use
Borrowing money from IRA
Can’t use IRA as collateral (i.e. security for loan)
No personal guarantee - for example, no signing personally for a loan
What Can You Invest In (some examples below)?
Single Family Homes
Apartments and Commercial RE
Raw Land
Tax Liens/Tax Deeds
Mortgage/Deed of Trust Notes
Private Equity
Precious Metals (Gold/Silver)
Commodities (Oil, Gas, Grains, etc)
LLCs and C Corporation
Car Notes
Commercial Notes
Private Placements and Stock Offerings
Equipment Leasing
Factoring
Structured Settlements
Stocks and Bonds…
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