On the subject of planning your financial future, a financial consultant may advise you to prepare for your retirement years by setting up an IRA. What he or she won’t explain to you is that although a traditional IRA does offer many benefits, you’ll get significant benefits by selecting an IRA LLC.
With an IRA LLC, you will enjoy limited accountability and asset protection, control of the IRA checkbook, the freedom to put money into whatever you want and the power to make time-sensitive investments fast in order to beat out the competition. What’s more, you will have a tax advantage over other investors competing for margin as well as tax-free or tax-deferred benefits.
Naturally, you will want to use this freedom to decide on your own investments by locating solid investment vehicles. One such investment choice is real estate. The reality is, a self directed IRA LLC works rather well if you wish to invest money in real estate properties. The reason being you can select from a wide variety of real estate possibilities like foreign properties, investment real estate purchase, commercial real estate purchase, raw land, mortgages, deeds of trust, partnerships, private developments, REITS, property foreclosures and tax liens.
Due to the range of options that exist in real estate, you can actually build a diversified portfolio, a method that’s commonly thought to reduce your investment risks in the event of economic fluctuations.
However, what happens if you’re not keen on real estate investments or a real estate IRA? Does this detract from the numerous benefits of keeping a self directed IRA LLC? No, absolutely not.
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You are still left with numerous other investment choices. For example, you can easily increase funds for your golden years by making investments in discounted notes, mutual funds, bonds, precious metals, forex, futures trading and private placements. Your truly self directed IRA also can take full advantage of investments including tax liens and deeds, stocks and options, and secured and unsecured personal loans.
Your checkbook IRA account provide you with the same flexibility and resources associated with a business account, but this account shall be owned by the IRA LLC instead of by you.
It is essential to note, that having a truly self directed IRA doesn’t suggest you won’t ever need to have a self directed IRA custodian. You are still required to have one according to section 408 of the tax code.
Nonetheless, the main difference between a custodian who mainly deals with a conventional IRA and one who mainly deals with a truly self directed IRA is significant as you are not going to have to get approval for every dealing to ascertain if it’s in accord with the plan document. The responsibility of your custodian is purely to secure your IRA LLC plus file an annual IRS report on your account.