- They’re difficult to set up—while it might be difficult to navigate the process entirely on your own, setting up a self-directed IRA with Mountain West IRA is simple. When you open your account with us, our step-by-step process provides you with a blueprint to open, fund, and complete self-directed IRA investment transactions quickly, safely, and accurately.
2. There are plenty of investment choices within a standard IRA—unless you’re content to stick with stocks and bonds, a standard IRA just isn’t going to cut it. Traditional approaches to retirement investing lead many otherwise savvy investors to overlook one of the most lucrative wealth-building strategies available. With the great tax advantages provided by a self-directed IRA or 401(k), as well as the wider range of possible investments, you can potentially build wealth and secure your future much more effectively than you can through traditional plans.
3. My (CPA/attorney/broker/friend/other person) said that buying and selling real estate in my self-directed retirement plan was illegal—this has been a long-lived myth. Neither the IRS nor the Department of Labor has ever published a list of legal investments. However, there is a list of Prohibited Transactions and Disqualified Persons that deal with what is not permitted. Real estate and other investments are permitted provided you follow the rules.
4. Signing up for a self-directed IRA with a firm means that they can do whatever they want with my money—as a custodian, we don’t handle your money. Rather, we show you how to take advantage of self-directed retirement plans. All the funds not invested are held for your benefit in our 100% FDIC-insured custodial bank account at Sterling Bank.
5. Many people I’ve spoken to have never heard of a self-directed IRA and have told me it’s probably a scam—it’s a common misconception that the only investments allowed in a retirement account are stocks, CD’s, and mutual funds. The truth is that broader investment options have been available to the public since the inception of the IRA in 1975
The self-directed IRA industry is growing very strong with trillions of dollars invested in IRAs containing non-traditional assets. There are over 50 million retirement account holders, and less than 4% of those are held in non-traditional assets. This number is expected to grow significantly over the next five years as more individuals and their financial advisors attain a greater awareness of self-directed IRAs.
Though we live in an increasingly mobile society, many Americans still haven’t adopted the desire to downsize their possessions to fit this transient lifestyle. That means storage space is at a premium, which opens up a potential investment opportunity for the savvy investor: storage units. Self-storage offers many of the same attractive investment qualities that rentals, office buildings, and other properties offer, including passive income, tax advantages, and appreciation. Investment in self-storage is also made more attractive for many reasons that include:
- Many retirees downsize their homes during retirement but aren’t yet willing to part with a lifetime of possessions. Instead, they seek out additional storage space that their smaller homes can’t offer.
- Some neighborhood housing associations and new housing communities do not allow storage of vehicles like boats, RVs, or even multiple cars on the street outside homes.
- College students use storage space during summer vacation
- Businesses that have downsized and are working out of smaller office space require additional storage space.
Small distributors, start-ups without office space, or home-based businesses use storage space from which to operate their business because operating and development costs of storage units are much more affordable than apartment or retail space. These lower costs also make break-even occupancy ranges lower than other real estate investments. Also, if a storage unit operates on a month-to-month lease, investors can adjust rental rates to compensate for demand. To add further stability to the investment, demand for self-storage is not dependent on the economy. When the economy is booming, people tend to buy more things and thus need more storage. When the economy is slow, people downsize and seek cheaper storage alternatives for the belongings they’re not ready to get rid of.
Self-storage has the lowest default rate of all property types, but like any investment, investors must take time and due diligence to make sure that the storage unit is worth the investment. Well-run, modern self-storage in a good location is desirable to investors and provides a very liquid investment, while old industrial storage units without surveillance don’t command as much demand. As it continues to rise in popularity, self-storage could provide a tangible investment opportunity for you to invest your self-directed IRA in. This is just one of many investment possibilities. That’s the beauty of a self-directed IRA. Since you self-direct your own IRA, you’re responsible for your own investments. We can’t tell you what to invest in or where to find available storage facilities. Self-direction is your choice, but we’re here to show you how to take advantage of self-directed retirement plans. Contact Mountain West to start investing with your self-directed IRA.
Over time, real estate investments have afforded many people the powerful combination of appreciation and income. The purchase of real estate through a self-directed IRA is a popular choice for this and other reasons. Concerned you don’t have enough funds in your IRA for the entire purchase? If your self-directed IRA doesn’t have enough money to pay for the entire purchase on its own, you may be able to finance or leverage the purchase of the income producing property. Keep in mind, if you don’t have enough money in your retirement account to purchase the real estate, the IRS forbids you from extending credit to your own IRA account. So, what are your options?
Real estate investment accounts can use borrowed money as long as the account holder’s credit history, income, or assets are not used to guarantee loan repayment to the creditor. In other words, there can be no personal guarantee given by you as the account holder and consequently, there can be no personal recourse against you since the property and the loan are held within the retirement plan. The loan your IRA would need to acquire is normally known as a non-recourse loan. Be aware that loans for property inside of IRAs may require the payment of Unrelated Business Income Tax (UBIT). It is the IRA holder’s responsibility to have the tax form (990T) prepared by a tax advisor and have the IRA administrator submit the appropriate forms for the property owned by the IRA. The staff at Mountain West IRA can maintain the appropriate records for your self-directed IRA real estate investment. Our goal is to assist you with your alternative asset purchases while paying little or no taxes. Contact Mountain West IRA for additional information.
3 Benefits of Leveraging Your Self-Directed IRA:
- Tax considerations—one of the great benefits of an IRA is tax-deferral. As an investor, you’re able to put more money into investing than you would with a taxable account. When your investment generates income that exceeds expenses, you will be subject to the UBIT. However, the taxes you pay when computing UBIT can be significantly lower than traditional income taxes.
- Benefit from growth—leverage allows an investor to purchase a larger, more valuable asset and profit from its growth, with only a smaller out-of-pocket expense.
- Diversification—instead of investing your entire self-directed IRA balance on one property, you can split the balance among several properties as a down payment and use leverage to finance the rest. By diversifying your investment portfolio, you generate revenue on several properties and minimize your financial risk.
Using a non-recourse loan in conjunction with your Mountain West self-directed IRA is a powerful tool to build your wealth. However, it’s one that needs to be carefully managed. For over six years, Mountain West IRA has been showing individuals and small businesses how to take advantage of self-directed retirement plans as one of the nation’s leading independent self-directed IRA and 401(k) administration companies. With a knowledgeable staff and our clients’ best interests in mind, we offer the outstanding customer service that only an independently owned and operated administrator can. If you’re ready to start your own self-directed IRA, contact Mountain West IRA today.
For some retirees, living in a retirement facility or assisted living home can’t compare to the excitement and ever-changing destinations a cruise ship has to offer. A substantial number of guests on cruises are retired, enjoying the many amenities cruises have to offer. Would you consider retiring on a cruise boat? Here are 5 reasons why some people do:
- Travel—while some retirement communities may occasionally organize local outings, retirees on cruise ships get to travel almost anywhere in the world they want to go. On a cruise, the cost of rent and travel is combined, whereas travel in addition to monthly rent at a retirement facility can be very cost-prohibitive.
- A large community—cruises offer retirees plenty of opportunities to socialize. There is ample entertainment and plenty of social functions, and retirees get to interact with a much more diverse age group than they do in retirement homes.
- Entertainment—cruises have a well-planned itinerary and hosts to entertain cruise guests day and night. A day of entertainment may include bingo, excursions to the port of call, comedians, and musical performers.
- Food—food is included in the price of the cruise package, and there are many exciting options to choose from. Instead of retirement home food, retirees on cruises might have the option to enjoy fresh, tropical fruit and a world-class buffet.
- Price—while cruises range in prices and amenities, it is conceivable to live on a cruise boat for less than $30,000 a year. This is comparable to some retirement communities and can be significantly less than some full-service retirement communities. If you love to travel and aren’t in need of significant assistance, retiring on a cruise boat might be just the option for you. Your investments back home can continue to generate income while you enjoy life on the fair seas.
Mountain West will be hosting a workshop on “How to Buy Real Estate and Alternative Assets in IRAs and Qualified Plans” Tuesday, November 19.
CEO Jon Galane will be providing valuable CE credit covering the following topics:
- Buying real estate in IRAs and Qualified Plans
- Prohibited Transactions by Disqualified Persons
- Regulations regarding self-directed IRAs
- How to leverage IRAs and the benefits that can provide
$25 covers cost of lunch and all materials.
This class is good for 8 hours of continuing education credit through the Idaho Real Estate Commission.
Register here >>
Tuesday, November 19
10096 W. Fairview Ave.
Boise, ID 83704
9:00 am – 5:00 pm
With a traditional IRA, contributions you make to a traditional IRA may be fully or partially deductible, depending on your circumstances, and generally, amounts in your traditional IRA (including earnings and gains) are not taxed until distributed.
For 2013, the maximum you can contribute to all of your traditional and Roth IRAs is the smaller of:
- $5,500 ($6,500 if you’re age 50 or older), or
- your taxable compensation for the year.
The IRA contribution limit does not apply to:
- Rollover contributions
- Qualified reservist repayments
A Roth IRA is an IRA that, except as explained below, is subject to the rules that apply to a traditional IRA.
You cannot deduct contributions to a Roth IRA.
If you satisfy the requirements, qualified distributions are tax-free.
You can make contributions to your Roth IRA after you reach age 70 ½.
You can leave amounts in your Roth IRA as long as you live.
The account or annuity must be designated as a Roth IRA when it is set up.
The same combined contribution limit applies to all of your Roth and traditional IRAs. Your Roth IRA contribution might also be limited based on your filing status and income.
So, how do you know which one to choose? These are some of the factors to take into consideration:
- Deductibility–contributions to Roth IRAs are never deductible, so if you want to get tax deductions on your contributions to your IRA, you will want to choose a traditional IRA. Your eligibility to deduct traditional IRA contributions depends on whether you meet certain criteria.
- Contribution age limitations–there is no age limit for contributing to a Roth IRA, while you have until age 70 1/2 to contribute to a traditional IRA.
- Income–income caps don’t apply to a traditional IRA, whereas your income must fall under a certain limit to contribute to a Roth IRA
- Tax treatment–distributions from a traditional IRA are treated as ordinary income and may be subject to income tax. Early distributions are also subject to tax. Roth IRA distributions are tax and penalty free. Roth IRA distributions are considered qualified if they meet the following requirements:
- A distribution is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and
- The payment or distribution is:
- Made on or after the date you reach age 59½,
- Made because you are disabled,
- Made to a beneficiary or to your estate after your death, or
- Used to purchase a first home (up to a $10,000 lifetime limit)
The Roth IRA may be a better choice if your tax rate after retirement will not be lower than it is now. A traditional IRA may be better if your tax rate will be lower than it is now.
Contact a Mountain West IRA professional to establish either a self-directed traditional or Roth IRA.
Coming on the heels of our recent expansion of services into Florida and Washington, Mountain West IRA is proud to announce the opening of our permanent office in Largo, FL. We are thrilled to better serve the needs of our clients with the opening of our new Florida office. This Southeast Region Grand Opening will be November 1st!
As one of the nation’s leading independent self-directed IRA and 401(k) administration companies, we are proud to expand our services to offer individual and small business owners more options for investing in alternative assets. While our office is growing you can still expect the same industry-leading customer service Mountain West IRA is known for. We remain passionate about helping our clients build wealth through their self-directed retirement plans and can’t wait to get started in Florida.
Our Success is your Gain: Mountain West IRA has more exciting news. For clients on our transaction-free value fee schedule, your account may see lower fees for account sizes of $100,000 and $750,000. There will be no changes under $100,000 or over $750,000. Our fixed asset fee schedule will remain the same. It’s time for you “To build the Ultimate Retirement Machine” and see lower fees.
Many people dream of starting small businesses or starting a new venture but fear using traditional small business financing or taking out loans with high interest rates. However, prospective entrepreneurs and business owners don’t often realize that existing retirement funds can be used to fund start-up businesses. If you’re confident the business has the potential to be a success over the long run, investing your retirement funds can be a very savvy financial decision. By rolling your existing retirement savings into a Mountain West self-directed IRA, you can now invest in a business or start-up without tax penalties. There are IRS restrictions, but you should certainly consider using this smart and viable financing option.
Investing your self-directed IRA in a start-up or small business allows you to affect the value of both your small business and retirement account. You have the ability to lower the overhead of your start-up while accelerating the growth of your IRA. In addition, the following benefits make investing in a start-up a win-win situation:
- Use funds from your self-directed IRA without early distribution taxes or penalties
- Start your small business without incurring as much debt while gaining substantial tax benefits
- Invest up to 100% of your self-directed IRA or use a percentage
- Combine your self-directed IRA funds with those of your spouse or business partner
- Net substantial savings on interest fees and protect your credit
- Roll profits you gained back into your business or retirement plan
- Put yourself in the fast lane for financial success
To learn how you can invest your self-directed IRA in a start-up or small business, contact Mountain West IRA. Now’s the time to enjoy the substantial savings that come along with the tax and credit advantages of a self-directed IRA.
Networking with other real estate investors can provide support and open up real estate investment opportunities you might not otherwise have known about. Networks like real estate investment associations or clubs allow investors to challenge and support each other–the shared knowledge and opportunities can play a crucial role in advancing your career.
If you’re interested in joining a local real estate investor club, you’re in luck! Tonight, Ron Phillips of Wealth Accelerator System invites you to join the local investor club meetings in Thanksgiving Point near Salt Lake City. A short drive to this great event gets you a delicious free dinner, a great opportunity to meet other investors, and valuable investing techniques to accelerate your growth exponentially.
View event details >>