Self-directed IRAs are becoming more widely known throughout the retirement planning crowd. In fact, their use has grown by 21% over the past few years and that number is expected to continue to rise as more individuals discover the power these plans provide. The checkbook IRA offers a unique account structure that makes a self-directed plan even more powerful and flexible in acquiring and managing assets to build retirement income.
Self-directed retirement plans are growing more popular as individuals discover they can choose their own investments and manage their own retirement plans. Doing so allows a great amount of freedom to invest in things you know and understand. This eliminates the third party broker who makes those choices for you, and typically invests your funds in traditional assets, like stocks and bonds. Self-directed retirement plans are a cut above the norm, giving those who self-direct the chance to use alternative assets to build wealth for retirement.
A checkbook IRA is a retirement plan structure that allows account owners to write checks directly from their retirement funds, providing immediate access to capital to easily and quickly acquire desired investments.
In October the IRS released the contribution limits for 2016—such as they are because not much changed. Why? The cost-of-living index did not meet the requirements needed for a change in limits, meaning that inflation this year was low. (Sigh.)
Self-directed IRAs are becoming well known and are widely used by investors seeking greater control of their own retirement funds and investing decisions. However, this account structure has actually been in place since 1974—the year IRAs were created. One reason self-direction goes largely unrecognized by the average investor is because typical IRA custodians (banks, brokerages) only offer traditional investments (such as stocks, bonds, and mutual funds) to their clients.
Also known as an individual(k) or solo 401(k) plan, this retirement account is designed for small businesses where the only employees are the business owners and/or their spouses. Examples for qualifying businesses could be sole proprietorships, partnerships, LLCs, and corporations, so long as you do not have any employees who work more than 1,000 hours a year and are over the age of 21.
Energy. We need it. We use it. It’s certainly not going away. In fact, according to a report published in 2013 by the Energy Information Administration (EIA), energy consumption across the globe is on the rise and is demand is expected to increase by 56 percent between 2010 and 2040. Specifically, the article states:
Forming a limited liability company (LLC) with your self-directed IRA is just another example of how these retirement accounts give owners greater control over their own investment funds and decisions. Also known as a single-member LLC, the checkbook IRA account structure can be beneficial as account owners have immediate access to funds for making purchases in the competitive world of real estate investing.
Many people have great success purchasing real estate in self-directed IRAs. Real estate is the most popular asset in these accounts as the potential gains can be somewhat greater than traditional bonds or mutual funds, and the right investment is considered a bit safer than betting on the stock market. In addition to simply using your IRA to acquire real estate, you can also use a limited liability company (LLC) owned by your IRA to do so. There are a few reasons why sophisticated investors do just that.
There is plenty of good news for many retirement and other savings plan holders regarding 2015 contribution limits. While traditional and Roth IRAs contributions remain the same as 2014, other plans see an increase in limits—and every little bit counts!
Topics: Educational Savings Accounts (ESA), Health Savings Account (HSA), Roth IRAs, Self-Directed IRA, SEP IRA, SIMPLE IRA, Single Member LLC / Checkbook IRA, Contributions & Distributions, Traditional IRA