Generation X has not been slacking off when it comes to saving for retirement. Known for being fiercely independent, members of Generation X now in their late 30s and 40s are jumping on opportunities to steer their retirement money in a truly self-directed IRA. According to a retirement survey by PNC Financial Services Group, 51 percent of Gen X-ers began saving more money for retirement after feeling burned by the Great Recession. In comparison, only 37 percent of baby boomers in their 50s and 60s are saving more. Some economists believe the former “slacker” generation could end up faring the best in retirement because of their diligence and willingness to try non-traditional routes. Most Gen X-ers don’t have pensions like their parents, but many began saving with 401(k) plans. When lawmakers introduced the Roth I RA in 1997, many Gen X-ers had earned income that allowed them to contribute to the tax-deferred retirement plan. Now, many middle-aged people consider rolling money from old 401(k) plans and their Roth IRA’s into self-directed IRA. Having a truly self-directed IRA takes it a step further by allowing even more autonomy.
Having a passive custodian
With a checkbook control self-directed IRA LLC, you enjoy a passive custodian who satisfies IRS regulations but doesn’t get in the way of your independent decisions regarding alternative investments. Many independent and educated Gen X-ers like being the manager of their LLC and having that checkbook control over retirement funds.
Transferring funds tax-free
Whether your end goal is to buy rental properties, gold or an Alpaca farm, you can move different retirement funds into a truly self-directed IRA. The IRS allows you to transfer tax-free the following: Roth IRA, Traditional IRA, Roth 401(k), Traditional 401(k), 403(b), SEP, ESOPs, SIMPLE, SEP, Keoghs (self-employed plans) and money purchase pension plans.
Letting the gains flow back tax-free
When you see gains, cash flow, dividends or income from your alternative investments, you will enjoy seeing the gains flow back into your self-directed IRA to benefit you in retirement. Because it’s a retirement savings vehicle, your self-directed IRA gains remain tax-free. With a Roth in particular, you not only enjoy a tax deferred status now, but pay no income taxes when you take out the money in retirement.
Getting your questions answered
Some people feel skeptical about things they don’t understand, while Gen X-ers simply educate themselves. Investing with a truly self-directed IRA isn’t much more complicated than trading stocks on your own at a discount brokerage firm. If you consider yourself part of the “individual investor revolution,” consider taking it to the next level with alternative investments. Instead of investing in the stock market after a long six-year bull run, many people strive to create lasting wealth by investing in areas where they feel more comfortable.
When getting started with a self-directed IRA, you just have to make sure you and your IRA remain as separate entities. Instead of using a bank or a brokerage firm as your custodian, rely on a passive custodian that isn’t trying to sell you their own products. You can do a 60-day rollover or choose a trustee-to-trustee transfer between two custodians to transition into a truly self-directed IRA. Then you can pick your own alternative investments instead of have a custodian with too much control.
At New Standard IRA, we help you set up an IRA LLC so you can protect your tax advantaged status of your retirement funds while investing in real estate and other things besides traditional stocks and bonds. Talk to us about what’s permissible under IRS codes and how you can enjoy freedom and flexibility with complete checkbook control. For more information about the truly self-directed IRA advantage for Gen X’ers and others, please contact us.