Diversify Your Retirement IRA Beyond Tradition
When it comes to planning for your retirement, the last thing you want to do to is leave the most important decisions about your retirement up to a brokerage where the primary interest of the brokers is to get a commission from recommended securities.
Whether you open an IRA directly or have rolled over your 401K from a previous employer, it’s essential that you have the liberty to decide exactly how you will invest your retirement funds. With a truly self-directed account, you will have this freedom, and this latitude will give you the power to decide on the best strategies to pursue in order to build your retirement portfolio.
Instead of leaving your financial fate up to the whim of just a financial advisor who may only be interested in pushing investment choices that offer him or her a commission, you can also choose your own investments and focus on the asset classes that can offer you a solid plan for your retirement years.
Limitations of a Standard IRA
Although billed as an improvement on the conventional IRA, the standard self directed setup is only slightly better. While you do have access to a few more investment options, the difference is not significant, and it’s certainly not significant enough for you to consider it a special retirement account. Most of the limitations of the conventional account still remain. You will have just as much bureaucracy and ancillary costs. Additionally, you will still need to ask a custodian for permission for every transaction you hope to make. How to invest your own money will depend on what your custodian will approve. But that’s not all. The bureaucratic process will force you to wait sometime before your request is either approved or denied. This is more than just an inconvenience. It can actually cost you money since some of the best bargains usually go to the investor who can make quick decisions and act on them rapidly. The red tape associated with a standard arrangement may cause you to miss out on some potentially lucrative time-sensitive investments opportunities.
Why a Checkbook IRA is Refreshingly Different?
A checkbook IRA allows you to have a specially designed retirement arrangement that will permit you to write checks for any investments that you like. Checkbook control will give you the power to decide where and when to invest your money. Provided you remain within the guidelines stipulated by the IRS, you can invest in an amazing variety of investments. For example, you will have the freedom to invest in precious metals like gold or silver, traditionally promising markets like real estate as well as within traditional financial markets like stocks and bonds. Yet, bear in mind, these are only just a few examples in the broader world of investments options available to you. Moreover, unlike a conventional retirement account, you do not need explicit permission to make these investments, and there is no loss in time between making a decision to invest and taking action to secure an investment. In addition, you will be able to allocate the money in your account for investment purposes because you will not have to lose some of it paying administrative fees for the privilege of investing your own money.
In a truly self directed arrangement, your account owns a special LLC, which allows you to steer the investments yourself directly. This gives you the same range of services that you would get with a regular business bank account. Moreover, you only have to pay a nominal amount once a year to use this setup. The lower fees associated with type of account can have positive long-term consequences as compared to a standard arrangement, which is namely savings. You will be able to use your money and invest more of your own money rather than paying numerous bureaucratic fees just to maintain it.
Reasons To Consider A More Flexible Retirement Vehicle
A truly self directed arrangement will offer you an amazing range of benefits. Here, for example, are a dozen good reasons why you may want to consider this diversified option:
1. You will have limited liability and complete asset protection in your setup account.
2. You will have full checkbook control and can choose to invest in just about anything that will provide a good return. Again, this operates under the assumption that you invest within the IRS rules.
3. You will have flow-through taxation, which will give you tax-free and tax-deferred benefits depending on how your retirement account is setup.
4. You will have a clear competitive edge to move swiftly on time-sensitive bargains when you’re competing for a time sensitive investment.
5. You will be free of the high volume of red tape associated with standard accounts. This will mean less paperwork and faster processing of your investments.
6. You will have considerably less custodial interactions, interference and delays. In fact, the main role of your custodian will be to help you with end-of-year IRS reporting and other routine administrative functions. Interference in your financial affairs will be at a minimum, only occurring should you violate IRA rules like self-dealing investments.
7. You will be able to choose the types of investments that will yield the highest level of profits. Many excellent investments are not possible with a standard custodian because of their self-imposed in-house rules. You will be free to focus on only those investments that you have gained knowledge and expertise in over the years because your investments will no longer be restricted to custodian-approved securities or other limited investments that benefit the brokerage more than they benefit you. In fact, you’ll be able to move in and out of multiple investment markets.
8. You will be able to invest in foreign assets if you like. This will allow you to benefit from rapidly expanding economies in other countries. This option, it should be noted, will depend on your choice of custodian.
9. You will be able to better protect your money from creditors and litigators. The LLC will provide extra legal protections granted under state law and will prevent them from derailing your retirement plans.
10. You will be able to get a Roth plan and enjoy all the advantages a tax-free account since money contributed to these plans are saved as after tax dollars in the first place.
Over the centuries, financial experts have considered real estate as one of the best ways to grow your money. With an IRA built for real estate assets, you can invest in options like foreign real estate, commercial real estate, residential single homes, residential multi-family homes, rental property, raw land, mortgages, deeds of trust, partnerships, private development, REITS, foreclosures, and tax liens. In other words, a real estate IRA will open up the vast field of real estate for you.
Invest in Financial Markets
If you are not comfortable with real estate investments or you would like to expand your portfolio to include other asset classes, your self-directed IRA will allow you to invest in such things as discounted notes, mutual funds, precious metals, stocks, bonds, loans, foreign currency, Forex, and commodities. Of course, you are not limited to just these investments choices. You can truly diversify your assets in any way that does not violate rules established by the IRS tax codes.
Opening and Operating Your LLC
Here are a few important features on exactly how your self-directed account works:
• You will be able to write checks. This will be a similar procedure to transactions associated with a business checking account.
• Your open account will be owned by the IRA LLC. This affords you a high level of protection from creditors and litigators. Your IRA is a legal entity in its own right, separate from your other financial affairs.
• You will simply have to fill out a few forms and comply with a few legal necessities to open up this type of account.
• You will be able to access the funds for an investment whenever you like either through the account checkbook or a debit card.
• You will be able to balance your account in the same way that you would balance any regular bank account. Documentation associated with your account is fairly standard and will include a contract, a checkbook, bank statements, and settlement statements.
• Although there still is in most cases a single fee still required to the custodian, you will not have to pay a custodian a fee for managing your account or for permission to use the funds in your account. If you want to make an investment, all you have to do is use your debit card or write a check out to the seller of the investment.
• You will have lower custodial fees and red tape and bureaucracy with this truly self directed account. Moreover, you will only have to pay a small fee to the custodian to handle the administration of your account. This is usually less than $225 a year.
The Custodian’s Administrative Role
Unlike a traditional IRA, the custodian’s role will be minimal. A custodian for IRA will help you with setting up your IRA services and fulfilling the requirements of section 408 of the tax code. In other words, the custodian’s main role will be to help you hold your IRA and provide an annual IRS report. The custodian will not interfere with your transactions unless they violate IRS regulations, and you will not need special approval for any transactions.
Avoid Prohibited Transactions: Know The Rules Before Investing
Although you will have a lot of freedom in how you operate your account, you will still have to abide by the rules established by Congress. The custodian is experienced in helping you identify these rules and will help you from unknowingly violating them. Should you break the IRS rules, even if you do it unintentionally, then you will incur severe penalties, and these may even include invalidating your account.
Take Control of Your Future Today
After many years of working on accumulating enough funds to set aside for investments, you need to plan well for your retirement years. You have worked hard for your money from year to year and the last thing you want to do is to let so-called financial experts or custodians nickel and dime your retirement account with unnecessary fees. The sad truth is that many experts don’t represent your best interests but the best interests of their brokerage firms. This is why it is important not to hand over your hard-earned and carefully saved money to just anyone who claims to be a financial expert. You need to create the right team to help you build your portfolio and you also need to choose the best type of account in which to truly diversify your funds.
The IRALLCPartners.com specializes in setting up checkbook IRAs. Our team of experts will help to ensure that your entity is in compliance with parameters established by the custodians. We are also available for any other concerns that you may have associated with your account.
With our broad range of financial services, you will not only learn how to get control of your future investments, but you will also be able to receive ongoing support for any questions that will arise in the course of running your new account.
We cordially invite you to call and speak to one of our specialists today to learn exactly how we can help you with an alternative arrangement to plan for a retirement lifestyle that you truly deserve.