IRA investments do not just have to be about stocks, bonds and mutual funds. If you open a self directed IRA account with an appropriate self directed IRA trustee, as its owner you are entitled to make your own investment choices, including investing in business or real estate opportunities.
Why hasn't your financial planner told you about this? Financial planners will advise on opening self directed IRAs and other self direct retirement plans, but normally use banks and institutions that tend to limit clients to investing in their own product range. However, if you have experience in investing, or an entrepreneurial flare, you will realize how limiting this can be. A self directed IRA with an independent IRA trustee can open up a vast range of prospective investment opportunities to you.
For example, if you choose to self direct your IRA with a non-traditional IRA trustee, then you can buy a real estate investment property with your IRA funds. Not only can you purchase a real estate, but also you can also purchase a business. Using your funds to buy real estate or having IRA real estate holdings enables you to use the gains, both profits and capital, as part of your IRA and enjoy the tax advantages. It is important to get professional advice on how to set up your Real Estate IRA so that your funds can be legally invested through your IRA and used to build up your retirement funds, otherwise you could be found to have made early distributions from your IRA and be subject to severe IRS penalties. A self-directed IRA expert can show you how to run transactions through your IRA so that your retirement funds remain in compliance with IRS Regulations and so you can avoid prohibitive transactions.
Excerpt from the IRS flagship website www.irs.gov:
Are there any restrictions on the things I can invest my IRA in?
The law does not permit IRA funds to be invested in collectibles.
If your IRA invests in collectibles, the amount invested is considered distributed to you in the year invested. You may have to pay a 10% additional tax on early distributions.
Here are some examples of collectibles:
Artwork, Rugs, Antiques, Metals - there are exceptions for certain kinds of bullion, Gems, Stamps, Coins - there are exceptions for certain coins minted by the U.S. Treasury, Alcoholic beverages, and certain other tangible personal property.
Check Publication 590, Individual Retirement Arrangements (IRAs), for more information on collectibles...
Finally, IRA trustees are permitted to impose additional restrictions on investments. For example, because of administrative burdens, many IRA trustees do not permit IRA owners to invest IRA funds in real estate. IRA law does not prohibit investing in real estate, but trustees are not required to offer real estate as an option.
(Excerpt taken from http://www.irs.gov/retirement/article/0
There are many different kinds of real estate opportunities available nowadays to the prospective investor. Examples include -
* Commercial Real Estate
* Tax Certificates
* Discounted Real Estate Paper
* Other real estate like products
In all of these areas, a competent and experienced Self Directed IRA Specialist can show you how to set up an investment strategy to legally avoid the common pitfalls of investing in non-traditional assets with an IRA. Your investment future depends on it.