Frequently Asked Questions About Self-Directed IRAs

Why haven’t I heard of this before?
What types of accounts can I put in a Self-Directed IRA?
How can I use a Self-Directed IRA?
How do I invest in real estate with a Self-Directed IRA?
Can I purchase real estate that I already own with my Self-Directed IRA?
Can I get a mortgage to invest in a Self-Directed IRA?
What is a non-recourse loan?
Can I invest with my spouse or use my own funds not in a Self-Directed IRA too?
Is there a minimum investment amount to establish a Self-Directed IRA account?
Are there specific investments I cannot put in my IRA?
Can I buy a personal residence inside my IRA?
If I die, what happens to my Self-Directed IRA?

Q. Why haven’t I heard of this before?
A.   The "Good 'Ol Boys Network" – Advisors, Custodians, and Investment Companies only allowing account holders to hold investments their firm offers. Follow the money, traditional Stock Brokers, and Finacial Advisors only make money when you buy their investments so they will tend to tell you that you can't do a self directed IRA but what they really are saying is; "please don't do any more research and find out you can because I won't make any more fees from you".
      Market Share - Traditional investment community has had control of over 97% of retirement accounts.
      Lack Of Knowledge - Some traditional Stock Brokers, and Fiancial Advisors are not aware of and or educated about the potential benefits Self-Directed IRAs can provide.

Q. What types of accounts can I put in a Self-Directed IRA?
A. You can place the following accounts in a Self-Directed IRA:

Traditional IRA
Roth IRA
SEP IRA
SIMPLE IRA
Coverdell Education Savings Account (ESA)
Individual (k)
Health Savings Account (HSA)
Rollovers and transfers from retirement account

Q. How can I use a Self-Directed IRA?
A. Self-Directed IRA allows you to diversify from traditional investments to "non-traditional investments." This can be real estate, deeds of trust, notes, tax liens and other asset types. You can use your investment knowledge and proficiency to help you prepare for your retirement.

Q. How do I invest in real estate with a Self-Directed IRA?
A. First you must transfer your IRA, 401k, or other qualified funds to a Self-directed IRA custodian. Your Self-Directed IRA will allow you to buy almost any asset, including real estate. Next, find an asset to invest in. Be certain to investigate and perform your due diligence on any investment. Title to the asset is ABC Trust FBO Your Trust.

Q. Can I purchase real estate that I already own with my Self-Directed IRA?
A. No. This is a prohibited transaction per IRC 4975. You may not purchase a property or an interest in a property that is currently owned by any disqualified person. Per IRS Publication 590: disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant).

Q. Can I get a mortgage to invest in a Self-Directed IRA?
A. Yes, you may, but only with a non-recourse loan.

Q. What is a non-recourse loan?
A. With a non-recourse loan, the note can only be secured by the property itself. It cannot be personally secured. The lender can only use the property as collateral to secure the note. If your IRA fails to make the loan payments, the only collateral the lending institution can come after is the property itself, and not the IRA. Please consult your tax adviser about any Unrelated Business Taxable Income ("UBTI"), and any taxes that may be due. Non-recourse loans with your Self-Directed IRA are a great way to help you to be able to diversify.

Q. Can I invest with my spouse or use my own funds not in a Self-Directed IRA too?
A. Yes, you can form an LLC with other Self-Directed IRAs and your own funds and or other investor's funds as long as the other owners are not disqualified persons. This is a valuable resource for large investments.

Q. Is there a minimum investment amount to establish a Self-Directed IRA account?
A. No.

Q. Are there specific investments I cannot put in my IRA?
A. Life insurance, Sub-Chapter S Corporations, and Collectibles.

Q. Can I buy a personal residence inside my IRA?
A. No.

Q. If I die, what happens to my Self-Directed IRA?
A. Just like any IRA, you will name beneficiaries who will receive your IRA upon your death.

Case Studies

Frequently Asked Questions About Self-Directed IRAs

Case Studies