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Investing with your 401K

Investing in real estate can be accomplished by using a self-directed IRA.  

A Self-Directed IRA allows investors to hold unique and varied investment options inside a retirement account. Unlike traditional IRAs or Roth IRAs, which often consist of stocks and bonds, a self-directed IRA provides a broader selection of investment options.  The account owner is then the person who is managing the account, and therefore must take on the responsibility of due diligence and ongoing management of the underlying assets. 

In some ways, a self-directed IRA is like a traditional IRA or a Roth IRA.  The account is designed to provide tax advantages, and participants must follow the same eligibility requirements and contribution limits.

The difference lies in the tyupe of invesmtents you can hold in the account.  While a traditional IRA or Roth IRA might be used to invest in CDs, stocks or mutual funds, a self-directed IRA can be invested in many other alternatives.

Funds in a self-directed IRA might be used for:

        -  Real Estate

        -  Promissory notes

        -  Cryptocurrency

        -  Tax Lien Certificates

        -  LLC Membership interests

        -  Gold, silver and other precious metals


If you create an LLC structure where your investments are held within an LLC that’s within your IRA, you will gain even more control. This particular set up allows you to skip the custodian approval process. You will no longer have to ask for permission to invest in a certain item. You have check control when you purchase through your LLC, giving you the ability to just move forward with purchasing the property you feel is best.

As with a Traditional IRA, all investments are either tax-deferred or tax-exempt with a Self-Directed IRA. Tax-deferral essentially means you do not have to pay taxes immediately. You can pay at a later date, and allow the investment to grow unhindered until you take a qualified distribution.

Unfortunatly, a self-directed IRA is not a plan you manage completely on your own.  Self-directed IRA's require you to utilize the services of a third party, often referred to as a custodian or trustee. 


 To open a self-directed IRA, you can take the following steps:

    1.  Find a custodian or trustee for the account

    2.  Select the investments you would like to make

    3.  Carry out the due diligence needed for the investment

    4.  Find a broker to purchase the investment

    5.  Ask the custodian or trustee of the account to carry out the desired transaction

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