Alternative Investments Using Self-Directed Retirement Funds
Book Details
Author(s)Jeffrey O'Brien
PublisherExecSense
ISBN / ASINB00A8NTBZ4
ISBN-13978B00A8NTBZ8
Sales Rank2,056,061
MarketplaceUnited States 🇺🇸
Description
Authored by Jeffrey O'Brien, Attorney at Lommen Abdo Law Firm.
Traditionally, entrepreneurs seeking capital for their new venture – be it an operating enterprise or a more passive endeavor such as real estate investment – have had the option of choosing debt or equity financing. In today’s economic times, and in the wake of the financial troubles of the late 2000s, capital has been scarce due to tightened lending standards amongst banks and the decline of personal wealth amongst those in a position to invest. At the same time, many individuals have sought to capitalize on depressed real estate prices by building a portfolio of investment real estate, while others seek types of investments other than stocks and mutual funds.
How do these new entrepreneurs and investors successfully fund their investment activities? Increasingly, and particularly in regards to real estate investment activities, a common source of capital for new entrepreneurs has been the monies which comprise their retirement accounts through the establishment of “self-directed IRAsâ€. Self-directed IRAs, while governed by the same laws as “traditional†IRAs, carry with them certain risks which can lead to significant and adverse tax consequences for the IRA owner if not properly understood and avoided. Additionally, there are arrangements related to self-directed IRAs that have attracted IRS’ scrutiny and are not advisable.
Given the increased use of self-directed IRAs as financing sources for private placements and real estate investment activities, practitioners need to have a basic understanding of how self-directed IRAs work, what can and cannot be invested in using self-directed IRAs and, most importantly, what types of transactions are deemed “prohibited†by the IRA regulations. In addition, it is important to understand how to properly form a “checkbook control†LLC to facilitate these types of investments.
Traditionally, entrepreneurs seeking capital for their new venture – be it an operating enterprise or a more passive endeavor such as real estate investment – have had the option of choosing debt or equity financing. In today’s economic times, and in the wake of the financial troubles of the late 2000s, capital has been scarce due to tightened lending standards amongst banks and the decline of personal wealth amongst those in a position to invest. At the same time, many individuals have sought to capitalize on depressed real estate prices by building a portfolio of investment real estate, while others seek types of investments other than stocks and mutual funds.
How do these new entrepreneurs and investors successfully fund their investment activities? Increasingly, and particularly in regards to real estate investment activities, a common source of capital for new entrepreneurs has been the monies which comprise their retirement accounts through the establishment of “self-directed IRAsâ€. Self-directed IRAs, while governed by the same laws as “traditional†IRAs, carry with them certain risks which can lead to significant and adverse tax consequences for the IRA owner if not properly understood and avoided. Additionally, there are arrangements related to self-directed IRAs that have attracted IRS’ scrutiny and are not advisable.
Given the increased use of self-directed IRAs as financing sources for private placements and real estate investment activities, practitioners need to have a basic understanding of how self-directed IRAs work, what can and cannot be invested in using self-directed IRAs and, most importantly, what types of transactions are deemed “prohibited†by the IRA regulations. In addition, it is important to understand how to properly form a “checkbook control†LLC to facilitate these types of investments.
