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A self-directed IRA is a retirement account that allows the owner control over where their money performs. Being strategic within a self-directed IRA allows the investor many possibilities, but the IRS has strict regulations regarding how the funds are utilized.
On this episode, I’m welcoming back Scott Maurer of Advanta IRA. Scott is here to share the intricacies of using a self-directed IRA. We’ll discuss the do’s and don’ts of utilizing this investment type, and how you can use a self-directed IRA to make the most of your real estate business. Scott is our favorite expert on this topic; you won’t want to miss episode 347 of Investing in Real Estate!
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Instead of simply performing within the stock market, a self-directed IRA allows the investor to choose from investments permitted by the IRS. These regulations allow for a variety of investments, including real estate. But the IRS is incredibly strict about how these accounts work.
That’s where self-directed IRA administrators, such as Advanta IRA, come in. They educate investors on the details of IRAs, and offer tools to help investors understand how to reap the most benefits from their investments. For a competitively low fee, Advanta IRA will manage all of the financial transactions for a self-directed IRA.
On today’s show, Scott is laying out some do’s and don’ts for investing in a self-directed IRA.
DO: Think outside the box when it comes to retirement accounts. A self-directed IRA is an incredible investment vehicle which allows the investor so much more control and freedom, but it’s not something you’ll hear about from traditional brokerages. In fact, traditional retirement planning will often misuse the term self-directed. You have to work with a company like Advanta IRA to reap the benefits of a truly self-directed IRA.
DON’T: Deal with disqualified persons or try to find loopholes to the rules. The IRS has very strict regulations, as well as severe penalties. It’s not worth it to try to break the rules.
DO: Consider different types of accounts you can use. You can fund a self-directed IRA by transferring from a variety of accounts. Old IRAs and 401ks can be used by simply transferring the funds into a self-directed IRA.
DON’T: Think about investing with an IRA as a means to increase personal cash flow. All profit from the investment must be deposited directly into the IRA.
DO: Understand that purchasing real estate inside of an IRA is a cash transaction. The IRA pays for the property with cash, and then receives and distributes all monies related to the property.
DON’T: Limit yourself to one type of investment. Scott explains that many of his clients at Advanta IRA love investing in buy and hold properties, but an IRA can also create private notes, fund rehabs, and much more.
DO: Realize you can partner your IRA with other people or financing sources. If you identify a property, but are unable to purchase it outright within your account, the IRA can actually purchase a portion of the investment.
On today’s show, Scott is diving deep into all the details of self-directed IRAs. We’ll discuss different investment types, and how to transfer funds into a self-directed IRA. We’ll also explore the benefits of self-directed IRAs, as well as the tax implications. If you’re looking for a means to wisely invest, you won’t want to miss out on Scott’s wisdom!
If you’re ready to begin building a passive income through rental real estate, book a FREE call with my team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family. And if you want to use a retirement account to fund your investment, simply click the option to use retirement funds.
On this episode you’ll learn:
- What are the two prohibited investment types within a self-directed IRA?
- Can a previous 401k be rolled over into an IRA?
- How does private lending through self-directed IRAs work?
- Who are disqualified persons within an IRA transaction?
- And more about real estate investing!
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