If you feel bore owning exchange-traded funds in your 401(k) Roth or want to spice up your investment portfolio with a DIY approach, consider a unique self-directed Roth IRA LLC. Many workers grow weary of the daily grind as well as a company-sponsored retirement plan that doesn’t give them a lot of freedom or control. After rolling money from an old 401(k) Roth into a self-directed Roth, you get the same tax advantages as before. When you retire and take money out of your Roth accounts, you owe no income taxes. Of course, the money you put into any kind of Roth account is money that the IRS has already taxed. As an advantage for you, the money within any IRA account grows tax-free. As far as the variety you get with a self-directed IRA, the investments run the gamut from real estate to tree farms. You are only limited by your own imagination and a few IRS rules such as avoiding self-dealing or forgetting to treat your self-directed IRA as a retirement account.
Pursuing a passion
Experts say people who use self-directed Roth IRA accounts not just save on taxes. They also diversify their portfolio and pursue a passion whether it’s real estate or an offbeat business. If you aren’t sure what to do with your money once it’s in a self-directed IRA, invest in what you understand and love.
Putting your money to work
Some investors who open a self-directed IRA have more than a million. But even if you are not a millionaire, you can use a self-directed Roth IRA LLC. With even just $150,000 to $200,000 you could buy a rental property outright in some real estate markets. With checkbook control, you can write a check to buy the real estate owned by your self-directed IRA. A truly self-directed IRA with checkbook control means you don’t need to wait for trustee approval.
Thinking of where to invest
Some of the unusual investments that people try after dealing with sagging and disappointing returns in their Roth IRA accounts or Roth 401(k) plans include camps, goat farms, alpaca farms and tree farms. No matter what you own in your self-directed IRA, it’s set up as a limited liability corporation. You have a stake in the LLC, but can’t personally manage your rental property or your farms.
Investing in franchises
Other investors choose to invest in private equity funds and companies. Some IRA investors purchase franchises related to everything from doughnuts to craft beer. In many cases, you must have a net worth of at least $1 million to invest in franchises, depending on the particular company. If you don’t have $1 million at this time, you can also invest in a franchise after your self-directed IRA grows in value. The great thing about an IRA is your investment often multiplies over time thanks to great ROI (return on investment). You can also invest in hedge funds that short stocks, which appeals to independent people who think the stock market is declining. Commercial real estate is also hot. Other ideas include investing in consumer lending platforms such as Prosper and Lending Club. If you aren’t as adventurous, consider simply investing in a rental property in your own community. At this time, the rental market is booming throughout the country.
At New Standard IRA, we help you set up a self-directed IRA whether you choose a Roth or a traditional account. Ask us about checkbook control accounts for maximum freedom and flexibility. For more information about setting up a self-directed Roth IRA LLC to get the most out of your retirement investments, please contact us.