Categories: Podcast

Everything You Need To Know About Self-Directed IRAs with Bill Neville

Synopsis

Bill Neville is a retirement account expert and business development manager at The Entrust Group, a custodian that holds self-directed retirement accounts. If you’ve ever been confused about self-directed IRAs or anything related to retirement accounts, you need to listen to this episode. We go over a lot of information in great detail. So prepare to take a lot of notes!

Key points

  • A self-directed IRA account differs from the traditional account in that self-directed allows you to invest inside your IRA in almost any investment you want, not limiting you to publicly traded stocks, bonds, and mutual funds that traditional custodians are willing to hold inside IRAs.
  • With self-directed IRA accounts, It’s possible to invest in non-traditional IRA investments such as real estate, metals, even airplanes and corporations. Three things you can’t invest in, however, are collectibles, life insurance, and S corporations.
  • Custodians of self-directed accounts won’t provide advisory services regarding the things that you want to invest in so you should be ready to make your own research and conduct your own due diligence.
  • It is not a question of “why would I invest in real estate inside my IRA instead of using my personal account?” but rather, “What can you invest inside your IRA should you decide to invest in it?” Will you be limited to stocks, bonds,and mutual funds? Or do you want to invest in other things as well?
  • There are certain guidelines to keep in mind when investing inside a self-directed IRA, like self-dealing or dealing with disqualified persons, to avoid running the risk of having your account disqualified.
  • The self-directed IRA industry tends to be pretty inexpensive compared to most banks and brokerage firms.

References

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Ralph Miller

View Comments

  • is it true that if i invest my money in a roth self directed ira and purchase real estate in it i pay tax on the money i used to open it and the proceeds from the sale or rental of the property are tax free? also, if I'm eligible to withdraw i can take all the funds out tax free including my original investment?

    Thanks so much , Eddie D Russell---potential ira holder

    • You can buy interest into an LLC or REIT without an controlling interest. Any solely owned properties will be considered sole ownership and thereby considered disqualified.

    • Hey Eddie! I'm not an IRA expert, but what you have is basically right. The money you put into a Roth retirement account is post-tax money. Inside the account it grows tax free and the money you take out (when you're eligible) will also be tax free. If the account is over 5 years old you're also able to take out your principle (the money you actually put in) tax free at any time with no penalty.

      In terms of selling properties inside of the self-directed IRA. There's a thing called a UDFI which basically means that YOU WILL BE TAXED on the proceeds if you bought the house with debt (I didn't know about this before recording my episode with Bill). For example, if you financed 80% of the home with a loan and paid for the other 20% with your SDIRA, then you're subject to taxes for 80% of the net profit when you sell.

      Hope that answers your question!

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