This Picture Proves That Self-Directed IRAs Are Legit

The self-directed IRA gives you the freedom to invest in non-traditional assets such

as single family and multi-unit homes, apartment buildings, condominiums, co-ops,

commercial property and more.

In the first installment of our series about self-directed IRAs, the requirement of

using a qualified administrator to facilitate your self-directed

investments was explained.

Why Your Investment Advisor Avoids Self-Directed IRAs

During a consultation with your preferred wealth advisor at Ameriprise, Charles

Schwab, Fidelity or other company, they are unlikely to mention all the investment

opportunities that are you can consider. Self-directed IRAs open the door to more

options than just your typical mutual funds, stocks and bonds. So why won't you hear

about them from investment advisors? 

Are they avoiding the conversation because they think it's too exotic and risky for

you? Absolutely not! The dirty secret is that they do not talk to you about investing in

real estate through self-directed IRAs because: 

a) Their firm doesn't offer the service.

b) The advisor can't earn commission from it.


"Americans planning for retirement should realize that there are a lot more options for 

investing than just the products they see offered by their investment advisors and

in their 401k and other traditional retirement accounts," says IRACheckbook Managing 

Director, C. Jeff Beall. 

Are Self-Directed IRAs Legitimate?

By not including self-directed IRAs in their conversation with you, investment firms

have caused some people to think that the self-directed IRA product is not

legitimate. This could not be further from the truth.

In fact, although the Internal Revenue Service (IRS) does not require investment

companies to offer self-directed IRA services, there is a whole section of the IRS

Code dedicated to it. Yes, there are IRS rules to follow but that's what your

administrator will help you with. Just take a look at the image below.

The Proof Is In The Public Records

The screen shot above is from the property appraiser's website in Lee County, Florida.

One of the popular self-directed IRA administrators in that market is AdvantaIRA.

We conducted a property search using the keyword "Advanta."

As you can see, there are 369 properties in Lee County that are owned within the

self-directed IRA account of investors using Advanta as their administrator. In other

words, the self-directed IRA takes ownership on the deed to the property. For

example, a typical titling of the account would be "AdvantaIRA Trust For Benefit Of

John Doe account 123456," where John Doe is the name of the investor.

If it is good enough that the County Clerk will record the transction into public

records, then it should be proof enough for you that self-directed IRAs are an

untapped potential for tax free growth of real estate investments.

Account Titling On Checkbook Controlled Self-Directed IRAs

Self-directed IRA administrators, such as IRACheckbook, can also offer a different

type of account structure that gives the investor even more control over their

account. Checkbook controlled self-directed IRAs are a good fit for investors that

often purchase real estate at auction and need fast access to their retirement funds

to fund their purchase.

In this scenario, the investor sets up a single-member limited liability company (LLC)

and opens a checking account in the name of the LLC. The self-directed IRA

account becomes the sole member of the LLC. The operating agreement of the

LLC references the sole member as "{name of member} for benefit of {name of IRA

holder}." The manager of the LLC is the investor. "The manager of the LLC has all

authority and decision power and checkbook control," adds Beall.

Be Aware of All Your Retirement Options

Next time you review your retirement portfolio, remember to consider the

opportunities associated with self-directed IRAs, not just the traditional stocks,

bonds and mutual funds that your investment advisor likes to talk about. Remember,

any dollars not under their management are dollars they can't claim commission on.

There are plenty of self-directed IRA administrators to choose from throughout the

United States. For example, Charleston, South Carolina-based IRA Checkbook is

just one of several qualified administrators in the United States. Download their

guide to 5 Things You Need To Know About the Self-Directed IRA to learn more.