(Put the “I” back in Your IRA)
Let’s begin with the basics. You can control your IRA. The acronym “IRA” simply stands for Individual Retirement Arrangement. There are many versions of the IRA. You can find lots of current and accurate information in the Internal Revenue Code beginning with Individual Retirement Arrangements (IRAs). However, you’ll find the most useful IRS information in Publication 590-A and Publication 590-B.
Even the sea of “legalese” lists you (the individual) and therefore you can decide how to invest your IRA funds.
“Individual” is the Important Letter in IRA
You can surf the legal codes all that you want. You won’t find information about where you have to invest your retirement savings. That’s because Congress intentionally allows the individual to make that decision.
Any individual with an income can open an IRA. Unlike 401ks, which are accounts provided by your company (even a company you own), IRAs are accounts that you open as an individual. You can contribute to an IRA, if you (or your spouse) receive taxable income and you are under age 70 ½.
You do not need a financial planner, nor a Wall Street broker to open an IRA.
An IRA (or Solo 401k) is a great way to grow your wealth because money in the plan grows without hindrance from the taxes of Uncle Sam. Tax deferral is the main incentive congress includes to encourage Americans to take more control of their retirements. The other major incentive from congress is you can have an IRA separate from other retirement accounts such as a pension or 401k. Many people have an IRA along with other accounts as independent assurance their retirement years will also be their golden years.
Take Control of Your IRA
Although almost anyone can open an IRA, all IRA accounts are not equal. Probably the simplest IRA to open is through a bank savings account. Your contributions are tax deferred and protected to the limits of the Federal Deposit Insurance Corporation (FDIC) but there will not be any growth through investing. The best you hope for is that the miserly interest rate keeps up with inflation (which isn’t likely to happen).
When you invest your IRA, it grows in value from income, interest, dividends, and capital gains. These compound each year while remaining tax deferred. Being tax deferred is very important because the money you would have paid in taxes remains in your IRA. This lets you invest that money further for even more growth.
The bottom line is that how you invest your IRA is a very individual decision. You can be ultra-conservative by keeping it in a savings account (without hope for growth), follow the herd by trusting it to Wall Street, or you can take full control of your financial future by making your own investing decisions with a IRA LLC.
Getting the Most From the “I” in IRA
With an understanding that an IRA is a very individual decision, there are still several options after you take control of your IRA. One option in particular offers you more individual control than others do. Specifically, the IRA LLC compared to the self-directed IRA is noticeably different in how it treats the individual.
Although the self-directed IRA (SDIRA) implies that you have full control, you really don’t have as much control as with the IRA LLC. The SDIRA maintains a custodian between you and your retirement (investment) funds. That custodian has the final say in what you can actually invest in. Ultimately, the custodian writes the check from your account only after approving what you want to invest in. Many custodians claim that they allow you to self-direct your IRA investments but then only let you invest in to what they offer.
A truly individual IRA allows you to make investment decisions without restrictions. You don’t have to go to a custodian for approval of the investment or to write the check. You truly have freedom in your l IRA because you have checkbook control as the manager of your IRA owned special LLC.
When it comes to the “I” in IRA, nothing is more individual than the IRA LLC.
You Have Full Control with a IRA LLC
Granted, a self-directed IRA custodian is one step toward obtaining more control. However, the custodian makes this is time consuming, cumbersome and more expensive than it needs to be.
With an IRA LLC your IRA makes one investment – it owns the LLC. After that, it is the LLC that makes all the investments with the tax liability flowing through to the owner – the IRA. However, the profits stay in the LLC where the full untaxed amount is ready for reinvesting. With that, you are able to make investments the minute you decide to without getting permission from anyone.
You have the checkbook. You are in FULL control of your retirement money.
Have questions about your Checkbook IRA LLC and retirement? Checkbook IRA LLC experts at Nabers Group will help you get your retirement funds into your control, where they belong.