Top Ten Things You Need to Know

Learn the top ten things you need to know about IRAs, investing in Real Estate Notes and more. We provide you the resources to make the most of your IRAs.

  • Possible Advantages Of Having More Than One Self-Directed IRA

    You’ll often hear the financial advice that you can save time and money by rolling over your various IRAs and 401(k)s from previous employers into a single self-directed IRA. Doing so can help you better manage your retirement nest egg, potentially save on expenses, and provide you with the opportunity to invest in high-priced assets. And there’s certainly a great deal of truth to that advice. It can often seem difficult to stay completely on top of a single retirement account, let alone multiple accounts. But that doesn’t mean that there aren’t circumstances in which you can gain an advantage for yourself by having multiple self-directed IRAs. Let’s take a look at some of those potential advantages. Better Management of Individual Assets Because having a self-directed IRA with a custodian such as Quest Trust Company permits you to invest in unique individual assets such as real estate and private equity and debt instruments, there may be instances where you want to hold such assets in a separate account. For example, if you own a multi-family apartment complex in a self-directed IRA, it might be easier to monitor or evaluate investment performance of that asset if there are no other holdings in the account. After all, ...

  • How to Decide Between a Traditional Account or Roth Account For Your Self-Directed IRA

    Deciding to open a self-directed IRA with a custodian such as Quest Trust Company is a prudent financial choice. With the expanded range of investment choices that you have with a self-directed IRA (as compared to an IRA with a traditional custodian or a 401(k) at work), you’ll have the greatest opportunity to invest in the precise asset types you desire. But even after you’ve decided to open a self-directed account, you still have another choice to make – whether to form that account as a traditional IRA or as a Roth IRA. It’s a bit of an oversimplification, but essentially you’re faced with a choice. You can choose to save taxes now, or potentially save much more money later. With respect to traditional IRAs, many retirement savers are initially drawn to them because they can provide a current year tax deduction for the contributions you make, depending on your income level and whether you’re covered by a retirement plan at work. For example, if you’re a single taxpayer and you are covered by an employer retirement plan, then you’ll have a full or partial deduction based on your contribution if your modified adjusted gross income is $71,000 or less. A married taxpayer will ...

  • Important criteria to consider when hiring an IRA custodian

    If you are considering setting up an IRA, it is essential that you discuss significant criteria with an IRA specialist to determine whether a potential custodian is right for you.  Here is some advice to help you have the most productive discussion: Qualification status  To set up an IRA, you are required by law to use a qualified custodian.  It is therefore essential to check that the potential IRA custodian is certified, and you should ask to see some evidence of this status. Experience  You may have determined that the potential IRA custodian has the correct qualifications, but you should also find out how much experience they have.  Newly qualified custodians will not have the same expertise as custodians who have dealt with numerous clients over a long-term period.  Ask the potential custodian about their previous work to help decide whether they are the best fit for you. Options for investment  Custodians will offer different options for investment, so you must decide whether you want to invest using stocks and bonds or use alternative assets.  This decision will affect the IRA custodian that you can choose, as not all will be confident with alternative investments. Insurance  Any financial account which you open must be insured to protect your money.  Every company has a different ...

  • Characteristics of the best IRA custodian

    The internal revenue service (IRS) decree holds that Individual Retirement Accounts (IRAs) should have a custodian. The custodian is a financial institution that holds the account’s investments just for preservation. The custodian also ensures that all the government and IRS regulations are honored accordingly. While custodians are very easy to find, the problem is how to make the best choice. First, you have to decide the type of IRA you need and the type of investments you need to make with it.  Traditional vs. Roth IRA  Both accounts allow the money to grow free of income tax. The difference between the two is:  In Traditional IRA, a tax deduction is made on the contributions from that year; this defers any tax payments until withdrawals are made years later.  Whereas for Roth IRA, there is no tax break on the amount of money invested. In a nutshell, there are no taxes owed on the amount earned.  Self-directed IRA Whether Traditional or Roth, as an investor, you can choose to have your custodian manage the investments for you entirely or be self-directed.  A self-directed IRA allows for expanded investment options. Although the name self-directed makes it seem like the owner has all the control, that’s not how it is. ...

  • How does a Solo 401k Work?

    Solo 401k plans are employer-sponsored retirement accounts that offer self employed individuals with no common law employees other than a spouse the opportunity to establish a Profit Sharing Plan.  Many companies offer solo 401k accounts to their employees, but not many people understand exactly how they work.  Here’s what you need to know about your solo 401k before you get started: You are the Employer and Employee of the Account Although your solo 401k is an employer plan, it allows the business owner to be the Trustee of the plan, granting them access to make fiduciary decisions. The Trustee will work with a financial institution to set up the account, and they will determine where to hold the funds, how much you contribute to the plan, and what investment to partake in.  Rollover of previous accounts into the Solo 401k You may have pre-existing 401k plans or IRA’s that you may want to consolidate inside of your Solo 401k. As long as those funds are pre-tax they can be rolled into the plan.   If you are looking for a Roth Solo 401k, you may conduct “in plan Roth conversions” to convert your pre-tax funds to Roth.  You are not able to move Roth IRA’s or previous Roth 401k’s into ...

  • Important Factors To Consider When Choosing A Roth IRA

    Image Credit: ccPixs.com If you are beginning to plan for your retirement or want to change your retirement savings account, you may be intrigued by a Roth IRA. Roth IRAs are popular retirement savings accounts, although contributions to Roth IRAs are not tax-deductible, any withdrawals from the account are tax-free. There are, however, some important factors to consider when choosing a Roth IRA which we will outline below: Distribution Rules With a Roth IRA you will make after tax contributions and ideally grow them tax free. This is different from a traditional IRA where you make pre tax contributions (or receive tax deduction) and grow your funds tax deferred.  To receive tax free distributions from the Roth IRA you must meet certain requirements, such as having the Roth IRA open for at least 5 years and being over the age of 59.5. If you have a pre tax account currently you may convert them into a Roth IRA, however please consult with a CPA to determine if this strategy will be wise for your personal situation.  Roth Conversion Timing Deciding whether a Roth IRA, rather than a traditional IRA, is right for you may depend on what life stage you are currently at.  For example, if you are a ...

  • Know the Difference: IRA Transfer vs. Rollover

    In order to live comfortably during retirement, you’ll need to start saving as soon as you can. Opening an IRA account is widely known as one of the most reliable ways to invest in your future. There are two major ways to fund your IRA: transfers and rollovers. Not everyone understands the difference between the two, though. Not sure where to start? Don’t worry, we’ve got you covered. Let’s take a look at everything you need to know about IRA transfer vs rollover. An IRA Transfer When you move money from one IRA account to another, it’s known as a transfer. The same concept applies as when you move money between two separate checking accounts at different banks. When you move funds from an IRA at one firm to an IRA account managed by another firm, the transfer isn’t reported to the IRS and no taxes are incurred. This is due to the fact that the money in the original IRA account never actually reached the account owner. If the owner were to instead withdraw the funds and then reinvest them into another account, they would incur taxes upon withdrawal. There may even be tax penalties depending on why the money was taken out of the account. An ...

  • How to Set Up a Self Directed IRA: A 5 Step Guide

    Investing for retirement is something worth beginning as early as possible. Current annual costs for someone over the age of 65 are approximately $50,000. So you’ll need a significant amount in your retirement account in order to live comfortably during this time. One of the best ways to begin saving is a self-directed IRA, but not everyone knows how to go about it. Not sure where to start? Don’t worry, we’ve got you covered. Let’s take a look at everything you need to know about how to set up a self-directed IRA. 1. Select a Provider In order to get started, you’ll need to work with a financial institution or firm that facilitates the opening of IRA accounts. When searching, though, there are some things you’ll want to keep in mind. A provider with plenty of experience in this area that also offers a large range of investment opportunities is one you should prioritize. Additionally, your provider should also have experts willing to help you make the right investment decisions for your situation. 2. Choose What Type of IRA You Want to Open Although you’ll be opening a self-directed IRA, you’ll still need to decide between a Roth IRA or traditional IRA. Both allow you to invest in your retirement, but they have ...

  • What Common Mistakes Can I Avoid When Setting up a Self-Directed IRA?

    Do you want to take more control over your retirement investment accounts? Have you been considering a self-directed IRA but worried about the rules? You want to diversify your portfolio – outside of the traditional investment markets such as stocks and bonds. That’s where a self-directed IRA comes into play. It allows you to diversify while also keeping control of your investments yourself. However, you need to make sure to avoid some common mistakes and pitfalls that plague many investors. Read on to make sure that you don’t fall into these common pitfall traps. A self-directed IRA allows you to invest in alternative financial investments. These can include real estate, promissory notes, oil, and gas, tax lien certificates and more. However, instead of being administered by a bank or brokerage you instead manage the fund yourself. Take Control Yourself You know you need to save your money for your retirement. But it can be daunting, to say the least when you are responsible for it yourself.  When it comes to your retirement, the only person most invested in your success is yourself. Therefore, it stands to reason that you should be the one to make the final decisions regarding your investments. However, without the correct information, you can ...

  • Top Ten Things You Need to Know When Investing in Real Estate Notes with Your IRA

    Investing in real estate notes with your IRA is one of the most popular self-directed IRA investments available. But with this popularity comes common mistakes when people lend their IRA (and non-IRA) money out, secured by liens on real estate. Follow these 10 tips to avoid potentially costly mistakes when choosing real estate as an IRA self-directed investment. 1) You may end up owning this piece of real estate if your borrower defaults. Never loan on something you wouldn’t want your IRA to own. The risk of loaning your IRA investments toward real estate notes is matched by the reward: I routinely see yields from these loans at 12% and higher; however, borrowers can default and you may be left with the property in foreclosure. If you would be upset by the potential of taking over this property in foreclosure, you probably should not make the loan. 2) Do not advance IRA money for home repairs until the repairs are finished; then have the repairs inspected before advancing the money. This is one of the biggest mistakes that I see clients make with their IRAs. They fund the full loan amount expecting that the repairs will be done on the property, but ...

  • Top 10 Things You Need to Know About Self-Directed IRAs

    There is a lot of confusion over self-directed IRAs and what is and is not possible. In this article I will discuss some of the most important things you need to know about self-directed IRAs.   1) IRAs Can Purchase Almost Anything. A common misconception about IRAs is that purchasing anything other than CDs, stocks, mutual funds or annuities is illegal in an IRA. This is false. The only prohibitions contained in the Internal Revenue Code for IRAs are investments in life insurance contracts and in “collectibles.” Since there are so few restrictions contained in the law, almost anything else which can be documented can be purchased in your IRA. A “self­directed” IRA allows any investment not expressly prohibited by law. Common investment choices include real estate, both domestic and foreign, options, secured and unsecured notes, including first and second liens against real estate, C corporation stock, limited liability companies, limited partnerships, trusts and a whole lot more.   2) Seven Types of Accounts Can Be Self-Directed, Not Just Roth IRAs. There are seven different types of accounts which can be self-directed. They are the 1) Roth IRA, 2) the Traditional IRA, 3) the SEP IRA, 4) the SIMPLE IRA, 5) the Individual 401(k), ...

Read more