Safeguard Advisors – – You can use your IRA money to buy income-producing Real Estate, with a Self Directed IRA.

Emphasis must be placed upon the fact that transactions will be deemed to be “prohibited” if investments, in any way, currently benefit the account holder, close family members and a few others who are known as “disqualified parties”.

Safeguard Advisors’ attorney consultants are specifically trained in ERISA law.

Note: Because the rules and regulations are complex, it is strongly recommended the account holder utilize the services of competent advisors and attorneys who are experts in the area of Self Directed IRA investing….(read more)

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Self Directed IRA Rules – Top FAQ’s

When it comes to saving for retirement, individuals have several options to choose from, one of which is a Self Directed Individual retirement account (IRA). This type of retirement account offers more control and flexibility over investment choices, making it an attractive option for those who want to diversify their portfolio beyond traditional investments. However, there are rules and guidelines that must be followed to ensure compliance with the Internal Revenue Service (IRS). In this article, we will cover some of the frequently asked questions regarding Self Directed IRA rules.

1. What is a Self Directed IRA?
A Self Directed IRA is a retirement account that allows individuals to have more control over their investments. Unlike traditional IRAs, which limit investments to stocks, bonds, and mutual funds, a Self Directed IRA permits non-traditional assets such as real estate, precious metals, private equity, private lending, and more.

2. Who can open a Self Directed IRA?
Anyone who has earned income and is under the age of 70 ½ can open a Self Directed IRA. This includes self-employed individuals, freelancers, and small business owners. Unlike Roth IRAs, there are no income limits for eligibility.

3. Are there contribution limits for Self Directed IRAs?
Yes, the contribution limits for Self Directed IRAs are the same as traditional IRAs. In 2021, the maximum contribution limit is $6,000 for individuals under 50 years old and $7,000 for those 50 and above. These limits may change annually, so it’s essential to stay up to date with the latest IRS guidelines.

4. What are the prohibited transactions within a Self Directed IRA?
While Self Directed IRAs offer great flexibility, there are some transactions that are prohibited. These include self-dealing, such as purchasing a property for personal use, using the IRA to start or invest in a business in which the account holder owns more than 50%, and transactions with disqualified persons such as close relatives and business partners.

5. Can I take distributions from a Self Directed IRA?
Yes, individuals can take distributions from their Self Directed IRA but may be subject to taxes and penalties, depending on their age and the type of IRA. Generally, if a distribution is taken before the age of 59 ½, it will be subject to a 10% early withdrawal penalty in addition to regular income taxes.

6. Can I rollover funds from other retirement accounts into a Self Directed IRA?
Yes, it is possible to rollover funds from other retirement accounts, such as Traditional IRAs, Roth IRAs, and 401(k)s, into a Self Directed IRA. This is known as a direct rollover or trustee-to-trustee transfer and helps to maintain the tax-deferred status of the funds.

7. Is custodial services required for Self Directed IRAs?
Yes, a Self Directed IRA must be held by a qualified custodian or trustee. The custodian’s role is to ensure that the IRA is administered in compliance with IRS regulations and to handle the necessary paperwork and reporting.

8. Should I consult a financial professional before opening a Self Directed IRA?
Absolutely. Self Directed IRAs require careful planning and knowledge of the rules and regulations to avoid potential pitfalls or unintended consequences. Consulting with a financial advisor or tax professional is highly recommended before making any investment decisions.

In conclusion, a Self Directed IRA offers individuals greater investment flexibility for their retirement savings. However, it is crucial to familiarize yourself with the rules and regulations to ensure compliance with the IRS guidelines. By understanding the top FAQs surrounding Self Directed IRA rules, individuals can make informed decisions and maximize the potential benefits of this retirement account option.