Frequently Asked Questions (FAQ's) on Self-Directed IRA's:
1) What is a "truly" Self-Directed IRA?
A "truly" Self-Directed IRA is when YOU (with the advice of your chosen professionals) choose your IRA's assets, allowing you to invest in both "traditional" investments such as stocks, bonds and mutual funds, as well as non-traditional investments like real estate, mortgages/deeds of trust, private placements, tax liens, notes and limited partnerships.
2) What can and can't I invest in with a Self-Directed IRA?
The IRS only defines the following assets as prohibited:
- Life Insurance (e.g. a life insurance policy on the life of the IRA owner)
- Collectibles (e.g. antiques, art, cars, stamps, etc.)
- Capital stock in an "S" Corporation
Examples of allowed investments:
- All forms of real estate
- Raw Land
- Rental Properties
- Commercial properties
- Real estate related private entities such as limited liability companies that invest in real estate
- Starting your own or investing in a business
3) How do I know its legal?
The fact is -- you have been able to buy real estate and invest in other assets since IRA's were created. Check out IRS Publication 590 for yourself (see page 40-41 to see what you can and can't do) and come to one of our seminars to learn even more. It is amazing that there are still professionals out there that claim that "you cannot do that" when questioned about Self-Directed IRA's. Traditional IRA providers still control about 97% of the industry but the word is getting out about the Self-Directed IRA!
4) What types of retirement funds am I able to use?
- Traditional IRA
- Roth IRA
- SEP IRA
- Keogh
- 401)k)
- 403(b)
- And more!
5) How do I start a Self-Directed IRA?
Starting a Self-Directed IRA account can be much like opening a bank account - the good folks at Pensco Trust Company will assist you with any questions you may have - just click on the link and you can actually open your SDI account online!
Articles of Interest:
Self Directing Your IRA to Real Estate
Top Do's and Don'ts of IRA Investing
Tom Anderson's Self-Directed IRA Blog
Retirement Plan FAQ's regarding IRA's
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Please be aware that this website is solely for informational purposes. The views expressed are our opinions only and do not constitute legal, tax or investment advice. Any person considering investments in, or changes to an IRA should obtain advice from independent legal, tax, investment and real estate professionals.
