Top 5 Questions For Self Directed IRA
The first question usually is, "What is a Self Directed IRA?" A Self Directed IRA is pretty much the same as a regular IRA except that you control how the money is invested. To be a truly Self Directed IRA you can invest your money where you want, not just where your broker tells you you can.
"Is this legal?" is often the next question. ERISA in the Securities Act passed by Congress in 1975 brought about banks and brokerage houses marketing IRA and 401K plans. They pushed the products they wanted to sell - stocks, bonds and mutual funds.
Nothing in the IRS code said you could only invest with banks or brokerage houses, or that you could only invest in stocks, bonds and mutual funds. People came to believe that, because that is what their bankers and brokers told them to invest in, since that is how they make their money.
Since the stock market drop, and with corporate scandals and corruption, many investors have become frustrated and began looking for alternative ways to invest their money. They wanted to control their own investments. Some wanted to invest in more tangible assets like real estate.
When investors ask about other options, they are often told it just can't be done. The truth is that it can be done. Since your banker or broker would lose money if you took your investments elsewhere, they don't allow it and claim it can't be done.
So, "What can my IRA invest in?" A better question is, "What can't my IRA invest in?" Very strict regulations must be followed for an IRA. However, the IRS doesn't give you a list of what you can invest in, instead they tell you what you cannot invest in: live insurance contracts and collectibles.
Here are some of the things you could invest in: residential or commercial real estate, raw land, trust deeds and mortgages, private notes and loans. You can invest in private stocks, Limited Liability Companies (LLC), Limited Partnerships (LPs), and tax certificates. There are also stocks and bonds, mutual funds, annuities, currency, futures, options, receivables, and commercial paper to invest in.
Our final question for today, "What is ERISA?" The Employee Retirement Income Security Act has come to be called ERISA for short. This act moved the responsibility for an employee's retirement plan from the employer to the employee. The two investments it prohibits are life insurance contracts and collectibles.
Article Source: FxTradingStock.com
About the Author
NAFEP (The National Association of Financial and Estate Planning) wants to put you in control of your finances with the following: self directed IRA and self directed 401k products, administrative and custodial services.
by: John Coktostin
Total views: 41
Word Count: 420
Date: Fri, 9 Jul 2010
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