Investing in Alternative Investments with a Self Directed IRA

There is one major benefit to investing in alternative investments with a Self Directed IRA (SDIRA); Tax Benefits.

To recap, an IRA (Individual Retirement Account) is a tax-advantaged savings or investment vehicle used for an individual’s retirement. 

The benefits of investing with a self directed IRA:

The greatest benefit to investing using an IRA are the tax advantages. The structure of the tax benefit is determined by the type of Self Directed IRA (Traditional or Roth).

Roth IRA: No tax deductions for contributions; tax-free earnings and withdrawals in retirement.

Traditional IRA: Tax deduction in contribution year; ordinary income taxes owed on withdrawals.

How to invest in alternative investments with a self directed IRA:

There are many options as to where you can set up an IRA account. Many financial institutions offer the ability to set up an IRA account. 

The major difference between a regular IRA and a self directed IRA are the types of assets you can invest in. When talking about alternative investments (Real Estate, Private Equity), a Self Directed IRA is required. The IRS (Internal Revenue Service) requires an IRA Custodian to manage these types of retirement accounts. Custodians tend to be trust companies that are approved by the IRS to manage these alternative investments.

If you would like to learn more about investing in alternative investments using an SDIRA, schedule an appointment.

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