In today’s video, Adam Bergman, Esq. and Isaac Rodriguez, a client of IRA Financial, discuss making an investment with a Self-Directed IRA.
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IRA Financial Group was founded by Adam Bergman, a former tax and ERISA attorney who worked at some of the largest law firms. During his years of practice, he noticed that many of his clients were not even aware that they can use an IRA or 401(k) plan to make alternative asset investments, such as real estate. He created IRA Financial to help educate retirement account holders about the benefits of self-directed retirement plan solutions.

IRA Financial is a retirement account facilitator, document filing, and do-it yourself document service, not a law firm. IRA Financial Group does not provide legal services. No attorney-client relationship exists between Client and IRA Financial, its management, salespersons or IRA Financial’s in-house legal counsel. IRA Financial Group provides IRA retirement facilitation service and CANNOT provide Client with legal, investment, or financial advice. Prior to making any investment decisions, please consult with the appropriate legal, tax, and investment professionals for advice.

IRA Financial is not engaged in rendering legal, accounting or other professional services. If legal advice or other professional assistance is required, the services of a competent professional person should be sought. (From a Declaration of Principles jointly adopted by a Committee of the American Bar Association & a Committee of Publishers and Associations.). The scope of Professional Services does not include the costs of any custodian related services.

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Self-Directed IRA Investments: A Guide to Building Wealth for Your Retirement

Planning for retirement is crucial, and one of the most effective ways to secure a comfortable future is by investing in an Individual retirement account (IRA). While many people are familiar with traditional IRAs that offer limited investment options, there is a lesser-known alternative, known as a Self-Directed IRA, which provides investors with a broader range of investment opportunities. In this article, we will explore Self-Directed IRA investments and how they can help you build wealth for your retirement.

What is a Self-Directed IRA?

A Self-Directed IRA is an individual retirement account that allows investors to have more control over their investment choices. Unlike traditional IRAs managed by financial institutions, Self-Directed IRAs provide the freedom to invest in a wider range of assets, such as real estate, private equity, tax lien certificates, precious metals, and more.

Advantages of Self-Directed IRA Investments

1. Diversification: With a Self-Directed IRA, you’re not limited to traditional stock market investments. This allows you to diversify your retirement portfolio, reducing the risk of losses due to market volatility. By including alternative assets, you can balance out any potential downturns in the stock market, providing a more secure financial future.

2. Tax Advantages: Self-Directed IRAs offer the same tax benefits as traditional IRAs. Contributions made to the account are tax-deductible, and any earnings on investments grow tax-deferred until withdrawn in retirement. This can result in significant tax savings over the long term, helping your retirement nest egg grow faster.

3. Higher Returns: By investing in alternative assets through a Self-Directed IRA, you have the potential for higher returns compared to traditional investment options. Real estate, for example, has proven to be a lucrative asset class for many investors. By leveraging your IRA funds to purchase an investment property, you can benefit from rental income and property value appreciation, all within the tax-advantaged structure of your Self-Directed IRA.

4. Investment Control: Self-Directed IRAs allow you to have full control over your investment decisions. You can choose the assets that align with your investment goals, risk tolerance, and expertise. This personalized approach eliminates the need for third-party investment managers, giving you the flexibility to make investment decisions based on your own research and knowledge.

Considerations and Limitations

While Self-Directed IRAs offer exciting investment opportunities, there are a few considerations and limitations to keep in mind:

1. Complexity: Investing through a Self-Directed IRA can be more complex compared to traditional IRAs. You should have a solid understanding of the assets you wish to invest in and comply with the IRS regulations to avoid potential penalties or disqualification of your IRA.

2. Due Diligence: With the freedom to invest in a wide variety of assets, conducting thorough due diligence becomes crucial. Extensive research and analysis should be undertaken to ensure the asset is a suitable investment for your retirement portfolio.

3. Prohibited Transactions: The IRS strictly prohibits certain transactions within a Self-Directed IRA. For example, you cannot invest in collectibles, life insurance, or engage in self-dealing transactions, where you benefit personally from an investment made by your IRA.

4. Custodian Requirements: Self-Directed IRAs require a qualified custodian to handle the administrative tasks and ensure compliance with IRS regulations. Choose a custodian experienced in handling alternative assets to ensure a smooth and efficient investment process.

Ultimately, Self-Directed IRA investments can be an excellent way to diversify your retirement portfolio, potentially increase returns, and take greater control over your financial future. However, it is crucial to thoroughly educate yourself, seek professional advice, and understand the rules and regulations associated with these investments. With careful planning and prudent decision-making, a Self-Directed IRA can be a powerful tool for building wealth for retirement.