Is anyone working with Self Directed IRAs? I took a seminar and I was told that putting your properties under IRA SD, SOLO, Goldern, HSA, and Coverdell and that this provides great protection for your assets and limits the taxes that you pay. I want to hear from people who are using this strategy and any recommendations on companies who do this. Thank you.
@Dmitriy Fomichenko perhaps they meant to put the income from these properties into these accounts?
I don't know what they meant... but you can contribute to an IRA from your earned income. If you buy rentals inside of your IRA - all the income must go into the IRA.
@Dmitriy Fomichenko is correct you can convert your current IRA to a SD401K, check book controlled trust account and use those funds to invest in real estate, syndications, as well as gold, notes, and tons of other investments. But all returns must go back in to your SD 401K. The beauty is you have control of your investments. Your returns are tax deferred, and you can keep reinvesting. Its a beautiful thing.
I don't think there is "protection" of assets however as you mention above.
Using the accounts you mention is a great wealth builder. You can reinvest all earnings without paying taxes which is a big advantage. True diversity can be achieved and control is yours to do as your experience and knowledge dictates.
Yes there is asset protection for assets in qualified plans in many cases. Reference OJ Simpson’s 401k- it could not be touched even though the goldbergs had the civil lien against OJ. However your plan (401k, Ira, Hsa, etc) can also be brought into a law suit with an asset such as house that has some liability but insurance should limit a lot of exposure. The government encourages you to save for retirement because they don’t want to take care of you -so they help you protect qualified plans in a lot of cases.
I liked using qualified plans for alternative investments and feel it is one of the best ways to control your financial future. I’ve helped thousands of smart people with there accounts and love how much I have learned by helping others
I also agree with @Dmitriy Fomichenko remarks and am not sure where the disconnect was with what you heard and what was said.
Thank you all, so here is my confusion. So you are all saying that you can't put a property on these accounts but you can buy investment property with these accounts? So who owns the property and who owns the account? Or do you just put these in an LLC?
Please note that while there is certainly asset protection for 401k plans at the federal level generally, please note that for individual Solo 401k plans (as opposed to a 401k plan that you might have through a day job) the federal protection outside of bankruptcy does not apply such that one must look to the state level where the creditor protection may not be as robust.
@Klodian H. Hi Klodian, SDIRA's are certainly an option for REI, but they come with their disadvantages as well. Most importantly, they don't let you reap the fruit of your work until retirement age without a stiff penalty(unless you do a Roth SDIRA in limited circumstances). Are you aiming to save the income from your REI for that long? If not, there are corporate structures that can provide the same level of protection for the same cost(but give you a lot more immediate and direct control of both your properties and the income from them).
if you plan in advance you can gain access to your retirement funds without penalties. One option would be Roth conversion and another via Internal Revenue Code §72(t)(1):