Is it possible to have multiple self directed IRA?

Question

I'm soon will purchase a mortgage note, and for tax purposes and I think Self -direct IRA is a better choice for me and my wife. Now the question is, can an individual/couplehave multiple Self-Directed IRA? because I believe 1 account max is $5500/year and couple is $11000/year, because we dont want to wait for 2 years or more just to purchase 1 note.

So, does anybody familiar or have similar experience that you could share for us to make a better decision, I'd call few companies too but I'd figure to drop in BP a line cuz I know some experts are here too.

thanks all

Mark Nolan · Answer

@Franky Juwana

Following are the similarities and differences between the solo 401k and the self-directed IRA.

The Self-Directed IRA and Solo 401k Similarities

• Both were created by congress for individuals to save for retirement;
• Both may be invested in alternative investments such as real estate,  precious metals tax liens, promissory notes, private company shares,  and stocks and mutual funds, to name a few;
• Both allow for Roth contributions;
• Both are subject to prohibited transaction rules;
• Both are subject to federal taxes at time of distribution;
• Both allow for checkbook control for placing alternative investments;
• Both may be invested in annuities;
• Both are protected from creditors;
• Both allow for nondeductible contributions;
• Both are prohibited from investing in assets listed under I.R.C. 408(m); and
• Neither may be invested in your own business.

The Self-Directed IRA and Solo 401k Differences

• In order to open a solo 401k, self-employment, whether on a part-time or full-time basis, is required;
• To open a self-directed IRA, self-employment income is not required;
• In order to gain IRA checkbook control over the self-directed IRA funds, a limited liability company  (IRA LLC)  must be utilized;
• The solo 401k allows for checkbook control from the onset;
• The solo 401k allows for personal loan known as a solo 401k loan;
• It is prohibited to borrow from your IRA;
• The Solo 401k may be invested in life insurance;
• The self-directed IRA may not be invested in life insurance;
• The solo 401k allow for high contribution amounts (for 2016, the  solo 401k contribution limit is $53,000, whereas the self-directed IRA  contribution limit is $5,500);
• The solo 401k business owner can serve as trustee of the solo 401k;
• The self-directed IRA participant/owner may not serve as trustee or  custodian of her IRA; instead, a trust company or bank institution is  required;
• When distributions commence from the solo 401k a mandatory 20% of  federal taxes must be withheld from each distribution and submitted  electronically to the IRS by the 15th of the month following the date of  each distribution;
• Rollovers and/or transfers from IRAs or qualified plans (e.g.,  former employer 401k) to a solo 401k are not reported on Form 5498, but  rather on Form 5500-EZ, but only if the air market value of the solo  401k exceeds $250K as of the end of the plan year (generally 12/31);
• When funds are rolled over or transferred from an IRA or 401k to a  self-directed IRA, the amount deposited into the self-directed IRA is  reported on Form 5498 by the receiving self-directed IRA custodian by  May of the year following the rollover/transfer.
• Rollovers (provided the 60 day rollover window is satisfied) from an  IRA to a Solo 401k or self-directed IRA are reported on lines 15a and  15b of Form 1040;
• Pre-tax IRA contributions on reported on line 32 of Form 1040;
• Pre-tax solo 401k contributions are reported on line 28 of Form 1040;
• Roth solo 401k funds are subject to RMDs;
• A Roth 401k may be transferred to a Roth IRA (Note that from a  planning perspective, it may be advantageous to transfer Roth Solo 401k  funds to a Roth IRA before turning age 70 ½ in order to escape the Roth  RMD requirement applicable to Roth 401k contributions including Roth  Solo 401k contributions and earnings.);
• Roth IRA funds are not subject to requirement minimum distributions (RMDs);
• The fair market value (FMV) of assets held in a self-directed IRA is reported on form 5498;
• The fair market value of assets held in a solo 401k are reported on Form 5500-EZ;
• At termination, the solo 401k is required to file a final Form 5500-EZ and 1099-R; and
• At termination, the self-directed IRA is only required to file a form 1099-R.

Mark Nolan · Answer

@Franky Juwana

While the rules allow for multiple IRAs, they also allow for spousal IRAs.

The Tax Reform Act of 1976 created spousal IRA contributions under IRC Sec. 219(c). This option simply allows individuals who have little or no eligible compensation to make Traditional or Roth IRA contributions to their own IRAs based on their spouses’ income. All regular contribution rules apply (e.g., contribution limit per IRA owner, Traditional and Roth IRA aggregation, Traditional IRA deductions, Roth IRA MAGI limits). To be eligible, the following requirements must be met.

The couple must be married.

One spouse must have eligible compensation.

A joint federal tax return must be filed.

The spouse receiving the contribution must be under age 70½.

Dmitriy Fomichenko · Answer

Franky, if she does not have any full time employees working for her (FT is someone working over 1000 hours per year) then her business can adopt Solo 401k plan.

Franky Juwana · Answer

thank you @Dmitriy Fomichenko for the reply, I might've read somewhere about joint IRA account, anyways...  I no longer an agent but my wife has a business on her own, does she qualify for the self directed solo 401k ?

Dmitriy Fomichenko · Answer

Franky, you as individual can have multiple self directed IRAs, but your contributions limit will still be the same. There is no such things as joint IRA, each spouse has to have his/her own IRA. If you have one of each then each one of you can contribute up to $5,500/yr into your own IRA.

In your profile it says that you are a real estate agent, if that is the case then you can qualify for a Truly self-directed Solo 401k plan which would allow you to contribute up to $54,000 per year (almost 10 times higher than an IRA).