An IRA, or Individual Retirement Arrangement, allows individuals to save some of the money they earn every year without having to pay taxes. Taxes are applied to your savings either once you begin withdrawing your funds at the age of retirement, after 59 1/2 or at the age of 70 1/2 when Requirement Minimum Distributions (RMDs) are triggered. IRAs can be set up at a brokerage or bank. If you choose to self direct your IRA account, then you will be able to rent newly purchased properties and direct the rental income into your account. Note: You can’t transfer rental, investment or personal properties that you already own into your account.
Benefits of a Self Directed IRA LLC
A self directed IRA LLC, or Limited Liability Company, has more advantages than a standard, conventional IRA. This structure allows you to have ‘checkbook control’, meaning that you will be allowed to make just about any non-traditional investment you want (see note below). A standard IRA set up requires you to consult with the custodian before making any decisions regarding the investments you would like to make in your account. This can cost you the valuable asset of time. However, with an IRA owned LLC account, you can invest your funds and purchase an asset by simply writing a check for the investment you are interested in acquiring. Since you are handling part of the administrative process, you will also spend less on custodian fees. Check out our video below to learn more…
Another benefit of a self-directed IRA LLC is you typically only have to pay a set up fee and a nominal annual fee to the custodian in order to keep your account in good standing with them. A self directed IRA LLC can provide more savings than a regular IRA because you will be able to make all the decisions and investments, without paying the custodian or dealing with a custodian for every transaction. This means less money spent on fees, which in turn means more money is able to remain within your retirement account allowing it to work for you.
An IRA LLC allows an investor to invest in foreign real estate with an IRA, mortgages, commercial properties and foreclosures. For example, you are could try your hand at foreign real estate investing and purchase an investment property with your IRA, if you so choose. However, before we get to far ahead of ourselves, you should be made aware that you can’t vacation at your investment property even if you pay your IRA rent. Kind of does not see fair, huh?
Besides real estate, you may also invest in stocks, make loans to non-disqualified parties and purchase tax liens with your IRA. Additionally, you are also allowed to buy foreign currency, bonds, precious metals or mutual funds. You are truly only limited by the IRA prohibited transactions, so to preserve your hard earned money, make sure that you know the IRA rules put out by the IRS and speak to a knowledge IRA specialist. Also, if you are looking to purchase foreign real estate, as mentioned previously, then get to know the rules for purchasing real estate in whatever country you are looking to make an investment since every country plays by a differing set of rules.