Contrary to what most financial brokers will tell you, stocks and bonds aren’t the only investment vehicles that can provide lucrative long-term returns. In 1975, as part of the Employee Retirement Income Security Act of 1974 (ERISA) and the creation of IRAs, self-directed IRAs were also permitted. At that time, qualified plans, such as Defined Benefit, Profit Sharing and Money Purchase Pension Plans, were self-directed. The investments of choice were most commonly real estate and notes.
The term “self-directed” simply means that you, as an individual, you have complete control over selecting and directing your own IRA or 401(k) investments. Once established, your account can buy real estate, notes, limited partnerships, gold, and many other types of assets. With a self directed IRA, you make all of the decisions regarding your investments. The self-directed IRA custodian completes the documents required to establish your account and purchase your investment.
If you’ve had success investing in things other than stocks and bonds, you’ve probably wished that you could include these investments in your IRA, 401(k) or other tax-deferred retirement plans. Though not many people realize it, it’s entirely possible to have retirement dollars in vehicles such as:
- Real Estate
- Trust Deeds and Mortgage Notes
- Limited Liability Corporations
- Private Stock Offerings
- Leases and Lease Options
- Joint Ventures
- Business receivables
- Mobile homes / notes / parks
- Raw land etc
If you’re anything like us, you’d be most comfortable investing your IRA in what you know. We can make that happen with relatively little effort on your behalf. In addition to educating investors about the process, Adelphi Retirement provides administration and record keeping for non-traditional retirement investments.
IRA Step-by-Step General Guide
You have heard about self-directed IRAs, but you have questions about the process. This is an overview step-by-step process to help you understand how your account can acquire these assets that you want it to hold.
- STEP 1: OPEN AN ACCOUNT
- The first step is to complete an application. Select from Traditional IRA, Roth IRA, SIMPLE, SEP, or Individual(k).
- STEP 2: FUND THE ACCOUNT
- The second step is to fund your account. Make a contribution and/or transfer or rollover funds from existing IRA or an old 401(k) account.
- STEP 3: SELECT AND PURCHASE THE INVESTMENT
- The third step is to select and purchase an investment you desire. You research and choose your own asset from a wider range of investment possibilities like the above examples.
- STEP 4: IRA OWNS THE ASSET
- Under your IRA LLC, this account will pay all bills and expenses associated with this investment.