“You can’t do that!” Supercharge Your Roth Solo (k) with Real Estate! (Part 2)

  • by crv.staff
  • 06.02.09
  • 3:35 PM UTC

Last post we discussed diversifying your portfolio into asset classes outside of traditional Stocks and Bonds. We also discussed how this might be done with IRA funds, rather than cash on hand.

So how does one invest in Real Estate by using IRA funds??

There are many companies in the US that specialize in self-directed retirement plans. You simply open an account with one of these companies, and complete a tax-free rollover of your existing IRA from your current retirement account custodian to an IRS approved custodian that allows you to have a Self-Directed IRA.

These custodians are commonly called “Self-Directed IRA Administrators”
PENSCO Trust, is a very popular company with a low cost structure and solid customer service. Guidant Financial is one of the largest in the marketplace, and Equity Trust Company is another.

Investing in real estate within an IRA is not a new concept. Investing in real estate in your 401(k) has been around since the Employer Retirement Income and Security act of 1974 (ERISA). In fact, there are more than $7 trillion dollars held in retirement accounts with 3% of those retirement accounts currently in Self-Directed IRA’s with real estate holdings. Real estate investment within your IRA is a viable, productive alternative to mutual funds, stocks, bonds and your typical brokerage accounts.

Which kind of retirement accounts can be moved into a Self-Directed IRA or 401(k)?

After the Economic Growth Tax Relief Reconciliation Act of 2001 (EGTRRA) it’s easier than ever: Traditional IRA’s, SEP IRA’s, Roth IRA’s, 401K’s, 403B’s, Coverdell Education Savings, Quali?ed annuities, pro?t sharing plans, money purchase plans, Keoghs, government eligible deferred compensation plans. In other words, virtually any and every retirement account!

Once you have opened your Self-Directed IRA, you are free to use those funds to purchase raw land, improved real estate or a variety of investments previously unavailable to you with your traditional retirement accounts.

Next post we will review some of the rules and regulations one must follow in order to invest with IRA funds.

Bret G. Dudl

This article does not constitute advice. When making investment and tax decisions make sure to speak with your tax advisor or a qualified retirement plan administrator for details.

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