Black Mirror

IRA Investment – Investing IRA Options

Advanced Allowable IRA Investments

Statistics have revealed that at the end of 2001, 42% of U.S. households had an IRA account. The total value of these accounts was $2.4 trillion. The wealth from these Traditional IRA accounts constituted almost half of all financial assets for the households involved. Due to the downfall of the economy and the poor results of the stock market over the past few years, $5 trillion has been lost. Much of this money was retirement money that was in Traditional IRA accounts. Now, IRA owners are desperately searching for other means of investing their IRA funds. By investing in other options besides typical stocks, bonds and mutual funds, these individuals have managed to begin building their retirement plans again because making money through any investment vehicle is the purpose of any Roth IRA.

Is Real Estate in your IRA the Solution?

Real estate is one of those possible investments. The Roth IRA rules and simple IRA rules regarding investments in real estate are complex, but the rewards from such investments can be huge. Many people have the wrong concept of their IRA retirement account. They believe these accounts must be offered by an insurance company, a bank or a brokerage house. This is not true. While the IRA does require a large institution to act as a trustee, it should be remembered that the IRA itself is merely a trust that is given tax benefits. These tax benefits are available as long as the trust contains provisions. So, basically, an IRA is nothing more than a trust that must conform to certain conditions.

IRA accounts must meet specific requirements. All contributions must be in cash. The only exception to this is if a contribution is a rollover of another account. Be sure you are aware of the IRA contribution limits. Presently, an individual under the age of 55 can contribute $5,000 per year. Over 55, the limit is $6,000. The trustee of the account must be a bank or another individual who has demonstrated they will administer the trust with all the requirements. In no way can any part of the trust funds be invested in a life insurance contract. All interest that is gained is non-forfeitable. All assets that are in the account must not be mixed with other property. The exception to this is when a common trust fund or common investment fund is involved. As long as there requirements are met, the IRA account can do anything that a trust can do.

Your IRA account can be invested in many ways. Aside from stocks and bonds, you may invest in the start-up of a business, real estate, tax lien certificates and investing in a limited partnership. These are only a few ways in which your funds can be invested. In short, the only things that you cannot invest in with the funds from the IRA account are life insurance and collectibles.

Now that you know what investments are not allowed, let’s take a look at what is allowed. IRA account funds can be invested in trust deeds, the mortgage of the IRA owner, loans made to private corporations and real estate. There are many more, but before you take further steps to invest your IRA funds; it is advised that you consult with your CPA or contact Estate Street Partners to make sure the possible investments are not prohibited.