Click Here to Download a PDF of Self-Directed IRA Cheat Sheet
Self-Directed IRA Cheat Sheet
What Type of Accounts Qualify for Self-Direction?
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
- Indy (k)
- 401 (k)
- Education Savings Account
- Health Savings Account
What types of assets can be purchased in a Self-Directed IRA?
Real Estate
Rental Property
Commercial Property
Land
And more...
Promissory Notes
Private Mortgages
Partnerships
LLC’s
Private Stock
Gold and Silver
Foreign Currency
Foreign Real Estate
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
- Indy (k)
- 401 (k)
- Education Savings Account
- Health Savings Account
What types of assets can be purchased in a Self-Directed IRA?
Real Estate
Rental Property
Commercial Property
Land
And more...
Promissory Notes
Private Mortgages
Partnerships
LLC’s
Private Stock
Gold and Silver
Foreign Currency
Foreign Real Estate
Prohibited Transactions
Self-Dealing
Borrowing money from your IRA
Sell, Exchange, Lease Property
from your IRA
Use IRA as security for loan
Transfer funds to disqualified
persons
Extend credit to disqualified persons
Furnish goods, services, or facilities
to disqualified persons
Disqualified Persons
An IRA cannot engage in any
transaction (direct or indirect) with
anybody related to the IRA
IRA holder and his/her spouse
IRA holder’s ancestors and linear
descendants
Investment Advisors and Managers
Any Corporation, partnership, or trust in
which IRA holder has a 50% or greater
interest
Anyone providing services to an IRA
Any Fiduciary of IRA
Self-Dealing
Borrowing money from your IRA
Sell, Exchange, Lease Property
from your IRA
Use IRA as security for loan
Transfer funds to disqualified
persons
Extend credit to disqualified persons
Furnish goods, services, or facilities
to disqualified persons
Disqualified Persons
An IRA cannot engage in any
transaction (direct or indirect) with
anybody related to the IRA
IRA holder and his/her spouse
IRA holder’s ancestors and linear
descendants
Investment Advisors and Managers
Any Corporation, partnership, or trust in
which IRA holder has a 50% or greater
interest
Anyone providing services to an IRA
Any Fiduciary of IRA
The TEN most important things to know about Self-Directed IRA’s
1) Any type of retirement plan can be self-directed.
-Including Traditional, SEP, SIMPLE, Roth IRAs & Individual (k) Plans
2) A Self-Directed IRA can allow someone to purchase Non-Traditional assets, such as Real Estate,
Notes, Private Placements, Gold and more.
-Typical IRA custodians only allow for clients to self-directed their investments in what they
sell (i.e. stock). A Truly Self-Directed IRA administrator will allow for any investment (within
IRS regulations)
3) All income from the IRA investment (i.e. Rent, Interest, Sale) goes back to the IRA tax-free.
Similarly, any expenses related to the IRA asset (i.e. property insurance) get paid by the IRA.
4) There are two types of investments that the IRS prohibits within an IRA
-Life Insurance and Collectibles (i.e. works of art, antiques, jewelry, etc)
5) There are also two primary transactions to avoid within an IRA
-No self Dealing among disqualified parties. Your IRA cannot do business with linear
descen dants of you or your spouse. This could include legal entities that are owned by
disqualified parties.
-No personal benefit from the IRA owned asset. The IRA is the beneficiary of any earnings.
6) An IRA can be a part owner of an investment. Example: John Smith’s IRA owns 65% of a Condo
and John Smith owns 35% personally. All income and expenses get split 65/35. The IRA portion
is tax-free.
7) In the right situation, an IRA can borrow money. The loan must be non-recourse and most banks
require at least 35% down with a minimum loan amount of $100,000. *Note* A portion of gains
attributable to the leverage maybe subject to Unrelated Business Income Tax and/or Unrelated
Debt Financed Income.
8) If the client has an Individual(k) plan, the taxes mentioned above do not apply to leveraged assets.
9) Qualified plans from previous employers, such as a 401(k), 457(b), or 403(b) can all be rolled into a
self-directed IRA. Also, an individual can have multiple custodians so partial transfers are also
allowed.
10) Using a Self-Directed IRA allows individuals to think “outside the box” and invest in opportunities
that are typically not available through traditional IRA custodians. Real Estate, Mortgage Notes,
Promissory Notes, Gold, Private Placements, Private Stock, Foreign Currency Trading, Futures
Trading, Mineral Rights, Structured Settlements, Contracts, Lease Options are just some of the
examples of what Entrust clients have invested in with their IRA.
-Including Traditional, SEP, SIMPLE, Roth IRAs & Individual (k) Plans
2) A Self-Directed IRA can allow someone to purchase Non-Traditional assets, such as Real Estate,
Notes, Private Placements, Gold and more.
-Typical IRA custodians only allow for clients to self-directed their investments in what they
sell (i.e. stock). A Truly Self-Directed IRA administrator will allow for any investment (within
IRS regulations)
3) All income from the IRA investment (i.e. Rent, Interest, Sale) goes back to the IRA tax-free.
Similarly, any expenses related to the IRA asset (i.e. property insurance) get paid by the IRA.
4) There are two types of investments that the IRS prohibits within an IRA
-Life Insurance and Collectibles (i.e. works of art, antiques, jewelry, etc)
5) There are also two primary transactions to avoid within an IRA
-No self Dealing among disqualified parties. Your IRA cannot do business with linear
descen dants of you or your spouse. This could include legal entities that are owned by
disqualified parties.
-No personal benefit from the IRA owned asset. The IRA is the beneficiary of any earnings.
6) An IRA can be a part owner of an investment. Example: John Smith’s IRA owns 65% of a Condo
and John Smith owns 35% personally. All income and expenses get split 65/35. The IRA portion
is tax-free.
7) In the right situation, an IRA can borrow money. The loan must be non-recourse and most banks
require at least 35% down with a minimum loan amount of $100,000. *Note* A portion of gains
attributable to the leverage maybe subject to Unrelated Business Income Tax and/or Unrelated
Debt Financed Income.
8) If the client has an Individual(k) plan, the taxes mentioned above do not apply to leveraged assets.
9) Qualified plans from previous employers, such as a 401(k), 457(b), or 403(b) can all be rolled into a
self-directed IRA. Also, an individual can have multiple custodians so partial transfers are also
allowed.
10) Using a Self-Directed IRA allows individuals to think “outside the box” and invest in opportunities
that are typically not available through traditional IRA custodians. Real Estate, Mortgage Notes,
Promissory Notes, Gold, Private Placements, Private Stock, Foreign Currency Trading, Futures
Trading, Mineral Rights, Structured Settlements, Contracts, Lease Options are just some of the
examples of what Entrust clients have invested in with their IRA.
