Plan Types and Information

  • Coming up With a Savings Plan to Fully Fund Your IRA Each and Every Year

    Given how valuable IRAs can be to your retirement – largely because of the tax-deferred (and in the case of Roth IRAs tax-free) investment growth that can occur for many decades – it’s absolutely essential that every taxpayer trying to fully fund their IRA each and every year. But even as many of us understand the concept that saving for retirement is important, we don’t always do a good idea of maxing out our annual contributions. Other things always seem to find a way of competing for our financial resources. Simply put, the best way to guarantee our ability to contribute is to plan for it. Here are some tips for coming up with just such a savings plan. Make an Honest Financial Self-Assessment. You can’t build a savings plan unless you know exactly what financial resources you have to work with. The most direct and easily understandable way to do this is to conduct a personal cash flow analysis. Over a period of several months, make a record of everything you spend your money on, what categories of expenses may be increasing, and what categories of expense you may be able to reduce. Make every attempt to record every dollar that ...

  • Five Steps for Using Your Self-Directed IRA to Buy Your Future Retirement Home Today

    One reason self-directed IRAs are becoming more common is that individuals are using them as a way to buy their future retirement homes. This lets them have a productive investment now, and also have a place to live in once they enter retirement. Here are five steps for turning that into a reality. 1. Evaluate Your Current Self-Directed IRA. The first step is to take a look at what your self-directed IRA currently looks like. How much do you have available to invest in a piece of real estate? What would owning real estate in your account do to your overall diversification and investment mix? Evaluate not just what your account looks like today, but what you think it’s going to look like in the near future. 2. Prepare Your Purchase Plan. The next step is to prepare your plan for purchasing your future retirement home. With the information you collected in step one, decide how much you can afford. Unless you are able to pay for the property and cash, you may find that having to take out a loan can reduce some of the tax benefits you’d otherwise receive. Also be sure to plan for whatever maintenance or carrying costs ...

  • Is Your Nest Egg Large Enough for a Self-Directed IRA?

    Self-directed IRAs are great foundation for your long term retirement planning. But because self-directed IRAs are not offered by more familiar discount brokerage custodians, some potential account holders may be intimidated at the prospect of paying for services on a different fee structure. This is true regardless of the fact that those fees are reasonable for the services that the individual receives when they invest in more complicated assets such as real estate and private equity. Furthermore, some individuals may assume that their account balances simply aren’t large enough to effectively invest in a self-directed IRA. This simply isn’t the case. Regardless of the size of your nest egg, you can benefit from having a self-directed IRA. You Probably Have More Options Than You Think First of all, let’s be clear that you probably don’t need as large of an account balance as you might think in order to leverage the power of a self-directed IRA. While it’s true that having a modest account might preclude you from purchasing large real estate investments such as multi-family units or apartment buildings (or at least doing so without having to borrow with your account and incur unrelated business taxable income), you’re certainly not frozen out ...

  • Don’t Count on Working For the Rest of Your Life (and Why Your Self-Directed IRA is Therefore So Important)

    We’re all aware of the fact that many (if not most) Americans haven’t saved enough money toward their retirements. One common response to the anticipated gap between anticipated living expenses during retirement and the amount a person has saved is for that person to delay the date upon which they anticipate being able to retire. The reasoning is certainly clear; by working longer a person will be able to both save more money for retirement, and to delay the date upon which they’ll have to begin living off the funds in their nest egg. Unfortunately, the statistics indicate that this isn’t always possible. A recent study by the Employee Benefit Research Institute found that while a full one third of workers planned to retire after the reached age 65, less than half of those individuals actually remained in the workforce that long. On the flip side of the coin, while less than 10% of workers indicated that they planned to retire before they reached age 60, approximately 35% of individuals had actually left the workforce by the time they turned 60. While some of these individuals may simply have been fortunate enough to accumulate much more than they originally planned to, that same ...

  • Retiring on a Self-Directed IRA

    Saving for retirement is one of the most important actions one can take to secure their future. Sadly, many Americans haven’t saved a single dollar, or are grossly behind in their yearly savings goals. If this describes you, don’t worry. There are ways to jumpstart your retirement savings and catch up to where you need to be to live comfortably in retirement. One way to do this is with a self-directed IRA. What is a Self-Directed IRA? These types of accounts are just like traditional retirement savings accounts but include many more options for the investment savvy. Usually, Traditional and Roth IRAs, as well as 401ks, offer a few investment options to choose from—mostly stocks, mutual funds, and bonds. These accounts rarely allow investors to invest outside of what the various plans offer. Self-directed IRAs allow open investing in real estate, gold, private placements, trust deeds, and single-member LLCs. This gives savers more flexibility with their investments, which can help increase their funds more rapidly depending on the type of investment. Benefits of a Self-Directed IRA Besides offering more investments for savers to choose from, self-directed IRAs are also great vehicles for people to invest in what they know. If a saver has ...

  • Buying Real Estate in an IRA: Understanding Why and How

    As Americans have become more interested and involved in their retirement options, Self-Directed IRAs and the opportunity to invest in non-traditional assets have been gaining popularity. One of the more common alternative investment opportunities inside of a Self-Directed IRA are Real Estate assets.  Many people are looking to diversify their retirement portfolios with tangible assets like Real Estate, after dealing with the often uncertain public stock market. With Self-Directed IRAs, you have the option to invest in all sorts of Real Estate assets such as single-family homes, multifamily and commercial properties, mobile homes, land, and so much more. Real Estate in an IRA Holding Real Estate assets in your Self-Directed IRA has many benefits. Many investors enjoy the freedom and security that comes with knowing all of your ‘nest eggs’ so to speak, are not sitting in one basket. Diversifying your portfolio with tangible and non-tangible assets is a great way to give yourself financial security, no matter what the markets may look like in the future.  Self-Directed IRAs also allow you to hold assets with notably high returns on investments. Real Estate investments have been shown to produce results that are double and sometimes even triple the original price. When these transactions are ...

  • How to Get Ready for Tax Season

    The tax filing deadline is still a few months away, but if you’ve ever stressed about or struggled through the process of trying to beat that deadline, you know that putting in a little time and effort before the big day rolls around can pay off handsomely. Here are some steps for getting ready for the upcoming tax season. Start Collecting All Relevant (and Potentially Relevant) Documentation. Sometime in mid to late January the financial institutions you do business with will start to send you various types of tax forms (the most common of which are likely to be a various types of 1099 Forms and the Form 1098 Mortgage Interest Statement). If you haven’t done so already, create a separate file or folder for your tax records once you receive your very first form. Whenever you have a little time, start collecting additional financial and tax records to place in that same folder. Collect all receipts for business related expenses, educational and job training expenses, any year-end credit card or brokerage account statements (these can often help you identify certain tax relevant expenses and gains), and any other types of forms or records that relate to transactions with tax implications. Err ...

  • Use Your Self-Directed IRA as a Supplemental College Fund for Your Children (or Grandchildren)

    Soon after a child is born, many parents follow a predictable set of steps. After all the birth certificate and Social Security paperwork is completed, and the health insurance and life insurance beneficiary information is updated, many new parents will take steps to start a college fund for their child. Apart from specialized (a little used) accounts offered by some state agencies, there’s really nothing that specifically or uniquely a “college fund.” Your college fund is whatever you find to be the most effective method for accumulating funds that you used to pay for your child’s higher education expenses. But even though we have almost 20 years to save for each of our children’s college expenses, it’s not uncommon to come up short. It may be due to competing financial obligations, changes to a person’s financial situation, or simple procrastination. The all too common result is that parents can find themselves with a child heading off to college soon, but not a large enough college fund to pay for tuition and other expenses. Some parents begin to get creative in trying to come up with ways to fund their child’s college education, and will consider dipping into their own retirement nest egg to ...

  • Changing Jobs? Now Might Be The Time For A Self-Directed IRA

    A recent study by the Bureau of Labor Statistics found that the average younger baby boomer (individuals born between 1957 and 1964) held more than 11 jobs when they were between the ages of 18 to 46. With the job market in much greater flux today, and more people working well into their 60’s (and beyond), it’s probably safe to assume that the number of jobs the average worker holds throughout their career is more likely to increase rather than decrease in the coming years. Changing jobs can often be an exciting occurrence, but it’s also likely to involve some challenges as well. One of the administrative hassles of changing jobs is managing the employer-sponsored benefit plans that you may have been participating in when you were at those prior jobs. Most often these take the form of 401(k) plans, but they can include other types as well. Managing all of these different accounts can take a significant amount of your time, and it can be difficult to do so in the most efficient and financially productive manner. That means that for most, they can greatly improve their retirement future by consolidating these various accounts into a single self-directed IRA. Why choose to ...

  • Is Now a Good Time to Invest in Real Estate With Your Self-Directed IRA?

    In most parts of the United States, the real estate market has recovered from its down period in 2007-2008. And in many cases, the growth has resumed at an impressive pace. This leads many retirement savers to ask themselves whether now is a good time to invest in real estate with their self-directed IRAs. The short answer is that it’s almost always a good time to invest in real estate, or any other asset for that matter, depending on how and where you invest. For example, if you look to invest in a part of the nation that might not be close to you, or even to invest abroad, or perhaps even to invest in a type of property that you hadn’t previously considered, then you’re likely to find a number of opportunities. But the more important set of questions you need to ask yourself prior to making any real estate investment related more to your investment outlook, tolerance for risk, and other issues. How Will You Manage the Property? One important factor in your investment decision-making process should be how you plan to manage any properties you purchase. For example, do you intend to manage them yourself, or will you hire a professional ...

  • 2021 Contribution Limits: IRAs and Beyond

    Self-Directed IRAs (SDIRAs) are some of the best vehicles when it comes to receiving tax benefits when we use them to invest. Common ways to fund an IRA are by using methods such as rollovers from previous employers or transfers from other IRA accounts, but personal contributions may also be another way to help these accounts grow.  Although it would be nice to contribute as much as we wanted, every year specific limitations are set by the IRS on how much money individuals can contribute to their IRAs and other tax advantaged retirement accounts. Now that the 2021 contribution limits have been announced, we’ve listed those limits here for you.   Personal Plans Traditional and Roth IRAs are both considered personal plans, and often follow similar guidelines on their limits. For 2021, the contribution limits for Traditional and Roth IRAs remained the same as 2020, but some other accounts did see an increase.  The 2021 contribution limit for Traditional and Roth IRAs is $6,000, with a catch –up contribution of $1,000 ($7,000 total) if you’re age 50 or older. In order to make a contribution to these two accounts, one must have “earned income”. Earned income includes money such as wages, salaries, bonuses, commissions and ...

  • The Pros and Cons of Opening Multiple IRAs

    IRAs incentivize retirement preparations with tax advantages for investors. Most people are at least passingly familiar with some of the major IRA options, like Roth and Traditional IRAs or Individual 401ks, and each type offers different flexibilities and advantages. And while the average portfolio may only be stocked with an IRA provided by an employer, many smart investors have more than one IRA.  The usual sweet spot is one IRA from an employer, and one additional Roth or Traditional IRA. But is this the right choice for everyone? Let’s explore some of the advantages and disadvantages of opening multiple IRAs.  PROS  Tax Diversification  Different types of IRAs are taxed differently. By diversifying your portfolio with different types of IRAs, you can strategically increase your control over your finances.  For example, Traditional IRAs can provide immediate tax deductions.  This immediate deduction is often a great incentive for increased contribution to your IRA, which in turn can increase your earnings.  Traditional IRAs also taxes investors on income used to fund the IRA only when they start withdrawing in retirement; this means that overall Traditional IRAs delay taxation on the investor.  In contrast, Roth IRAs do not provide immediate tax deductions on income funding the IRA, but investors pay no taxes ...

  • Take Charge of Your Holiday Spending and Max Out Your Annual IRA Contributions

    For many individuals, the end of the calendar year has a number of different financial implications. With the holidays come family traditions, which quite often include giving gifts, as well as vacations and trips to see family members. It’s also the beginning of tax season, which means that we need to pay attention to lowering our annual tax bills. Most taxpayers find that one of the best ways to reduce their short-term (as well as their long-term) tax burden is to maximize their annual contributions to their individual retirement accounts. Here are some tips for taking charge of your holiday spending in order to make it most likely that you’ll be able to max out your IRA contributions this year. Avoid Buying Gifts on Credit As with virtually any other type of personal consumption, it’s better to buy your holiday gifts with cash rather than paying by credit. It’s worth noting that this doesn’t mean you shouldn’t use your credit card. Some credit card companies provide you with additional warranties and or rewards points or airline mileage for purchases you make. By using a credit card you’ll actually come out ahead, provided that you pay your bill in full each month. Have a Budget ...

  • Smart Ways to Give to Charity

    For many individuals, the end of the year personal-finance routine includes not only beginning to collect receipts and financial statements to prepare their tax returns, it also means that it’s time to write checks and make donations to their preferred charities. These charities might be ones that the individual has had a relationship with for years, or an organization they’ve only recently become interested in, or perhaps even one that helps assist in recovery from a recent natural disaster. But there are smart ways to donate, and not so smart ways to donate. Here are some pointers to make sure that you’re getting the most from whatever charitable donations you choose to make. Donate Directly. It’s important to make sure that whenever you choose to make a charitable donation you make sure to do so directly to the charity itself, and not to any type of middleman or intermediary. Unfortunately, there are scam artists who use natural disasters and other tragedies as an opportunity to use telephone and online solicitations to target generous individuals. Instead of taking a chance that the person who’s asking you for money doesn’t actually represent the charity they claim to, send your checks directly to the charity ...

  • Tips for Using Your Self-Directed IRA to Invest Internationally

    Seasoned investors often look to make investments wherever they feel gives them the best opportunity for the highest return. In some cases this may lead them to invest outside of the U.S. And individuals who have a self-directed IRA may also be interested in using that account to make international investments. Identifying International Investments. Your first line of research should be to investigate relatively straightforward investments such as stocks, mutual funds and exchange-traded funds to see if you can find investments that have appropriate international exposure. Keep in mind that not everyone who is interested in international exposure will want to embrace that exposure to the exclusion of other markets. For example, did you know that a significant portion of the revenues from one of the most iconic American brands – McDonald’s – comes from their international territories? You may be able to find a number of different options with your research that can provide you with the level international exposure you are looking for. Have a Trusted Advisor. If you are interested in other types of international investments, including those that are “on the ground” outside of the U.S., then make sure that you always have expert assistance and advice to help you understand ...

  • Now Is The Time To Investigate Oil And Gas Investments With Your Self-Directed IRA

    From a consumer perspective, one of the biggest stories from the latter parts of 2014 and early parts of 2015 is the drop in gasoline prices. While this seems to suggest that making investments now in the oil or natural gas industries would be poorly timed, in fact the current state of the market might actually indicate that this is precisely the time to start investigating further. Low Prices for Some Assets. The sharp decline in oil and gas prices has resulted in what may be a good buying opportunity for related investments. You may wish to consider not only stock in publicly traded oil and gas exploration companies, but also private investments as well. Having a self-directed IRA with a company such as Quest Trust Company gives you the opportunity to use your retirement funds to make these types of investments. Because the laws relating to the exploration and development of natural resources are sometimes arcane and complicated, these investments can take many different forms – forms that may not be familiar to even relatively experienced investors. Seek Professional Assistance. If you don’t have familiarity investing in oil and gas companies, particularly private investments, you may wish to seek professional assistance before ...

  • What are Your Options for Taking Early Distributions from an SDIRA?

    Let’s get one very important thing out of the way at the outset, and it’s that the money and investments in your IRA are always completely owned by you. You are never locked out from your account, and you’re not prohibited from withdrawing your money at any time. However, if you take a distribution from an IRA before you reach age 59½, then you’ll have to pay a financial penalty to the IRA for doing so. That’s one of the trade-offs for being able to make contributions for a tax-advantaged account in the first place. So one option for taking an early distribution from your account, albeit one that’s very expensive and potentially damaging to your retirement security, is simply to take the distribution and pay the 10% IRS penalty for doing so. This gives you access to your money, but permanently impacts the ability of your account to grow, because you’re not allowed to later replace the funds you take out of your account. However, if you need early access to your funds then you may be able to use one of the limited exceptions that allow certain types of penalty-free distributions. Just remember that if your IRA is set up ...

  • Tapping Into Trillions: Using Self-Directed IRAs for Private Funding

    Whether you’re a first time home buyer, an experienced fix and flipper, or an expert in rentals, one aspect will be present for almost everyone: funding. Investors will always need money for deals and sometimes the traditional bank loans aren’t possible for everyone. Others just prefer the flexibility of being able to work out a deal on their own terms.  There’s plenty of options available, but private lending by using self-directed IRAs has proven time and time again to be an option many investors seek out when it comes to their real estate or other alternative investments.  According to a recent study from the Investment Company Institute, $28 trillion dollars were in retirement assets, and of that, $9.2 trillion dollars was reported to be in IRAs alone. With that much money available for use in IRAs, it’s nearly impossible not to be curious about how to use those funds for private funding.  For lenders and borrowers alike, private loans with self-directed IRAs have provided opportunities for successful deals and have given investors the ability to have options. Whether you’re looking to borrow private funding or loan out your own, here is everything you need to consider when getting involved in a private loan! Why ...

  • How to roll over your 401k plan into a Self Directed IRA

    If there is one thing that 2020 has taught us, it is that nothing is as certain as it was before.  One of the biggest fears for many Americans right now is their job security.  Many people have already lost their jobs and are wondering what comes next for them.  A major effect of leaving a job, whether it be through retirement, layoffs or simply moving to a new company, is that your 401(k) from your previous employer becomes eligible to be rolled over to an IRA.   There are a variety of different options that become available to you with your previous employer 401(k) and we have listed the 3 most common options: 1) Moving the funds into an IRA  If you were a part of a 401(k) plan at your previous employer, one of the most common options available to you on what to do with the funds is being able to move the funds into an IRA at a new custodian. When you leave your job, you have the ability to continue investing those funds on your own in an IRA or Self-Directed IRA, and when moving those funds to another qualified retirement account, you don’t experience any tax hits.  One thing ...

  • Ways to Come up With Your Annual IRA

    Take a look at the budget that you follow for your personal finances; do you have a line item for making your annual IRA contribution (perhaps it’s understood to be part of the “savings” or “retirement savings” amount)? But do you always follow through and make sure that you’re contributing the maximum amount to your IRA each year? If not, then here are some tips to help you come up with new ways to make your annual IRA contributions. Use Last Year’s Tax Refund. Too many individuals have gotten into the habit of thinking of their tax refund as a windfall or “found money.” While there may be a certain degree of satisfaction and enjoyment that comes from using your tax return to treat yourself or your family to something nice, you should also consider what you could be doing with your tax reTake a look at the budget that you follow for your personal finances; do you have a line item for making your annual IRA contribution (perhaps it’s understood to be part of the “savings” or “retirement savings” amount)? But do you always follow through and make sure that you’re contributing the maximum amount to your IRA each year? ...

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