Self Directed IRA FAQ's

Q1: Is investing in real estate with an IRA a new thing?

A: No. It has been allowed for many years.  Few people seemed to know about this option - or even care - until the stock market began to decline. Financial institutions, meanwhile, had little incentive to recommend something other than stocks, bonds or mutual funds, since these provided a source for their fees.
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Q2: How many people have self directed IRA accounts?

A: The self directed industry is growing at a rapid pace and is expected to see upwards of $2 trillion enter the market over the next two years. Some of the latest numbers show over 45 million IRA holders in the U.S. and less than 4% of those funds are held in non-traditional assets. This number is expected to increase significantly over the next 5 years as more and more individuals and their financial advisors attain a greater awareness of self-directed IRAs.
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Q3: What is a self directed IRA custodian?

A: The Custodian is a bank or savings and loan association, as defined in IRC 408(n), or any other entity that has the approval of the IRS to act as Custodian. In order to have a self-directed IRA, it needs to be held with a Custodian who will allow investments into non-traditional investments. There are very few of these types of custodians.

A Retirement Account Facilitator or Administrator can set up the legal structure such as an LLC or C Corporation that allows for checkbook control of the funds.  The Facilitator or Administrator, unlike the Custodian, does not hold the funds, but usually contracts with a Custodian to hold the funds as part of the services provided. 
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Q4: How does a Self-Directed IRA differ from a regular IRA?

A: A self-directed IRA is no different than any other IRA. Having a self-directed IRA simply means you are allowed to direct the investments of the IRA. Many custodians claim they allow you to self-direct your IRA investments, but then turn around and restrict what you can invest in. A truly self-directed IRA allows you to make the decisions without restriction.
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Q5: What are the types of retirement accounts that can be moved into Self-Directed accounts?

A: Traditional IRAs, SEP IRAs, Roth IRAs, 401(k)s, 403(b)s, Coverdell Education Savings (ESA) a.k.a. Educational IRAs, Qualified Annuities, Profit Sharing Plans, Money Purchase Plans, Government Eligible Deferred Compensation Plans, Keoghs
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Q6: Is my money safe?

A: A custodian must be a registered Trust Company. For one to register as a Trust Company the institution must meet stringent state requirements and have adequate reserves. Your money is kept in a separate account for your benefit and not subject to creditors of the custodian. Further, if your funds have been placed into an LLC or C Corporation, the custodian never has control of your money - YOU DO !.
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Q7: Is Asset Exchange Strategies, LLC a Self Directed IRA Custodian?

A: No, but everyone with a self directed IRA needs an administrator. Depending on your needs, we have a number of custodians that we can refer you to.
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Q8: Can my LLC purchase real estate I already own?

A: No, not without filing for an exemption.  Property that you or a disqualified person has ever owned is not eligible to be purchased by your LLC since this would be a prohibited transaction.
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Q9: Can I co-invest with the IRA of my spouse or other investors?

A: Yes, both IRAs can be owners of the LLC, in fact so can other individuals and entities as long as the other owners are not disqualified persons. This is very useful for large investments.
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Q10: How much are your Self Directed IRA Custodial Fees?

A: $190 a year...no matter how much money you have.
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Q11: What can I invest in if I have a IRA LLC?

A: Your IRA-LLC can make any investment a regular LLC can as long as you stay away from insurance contracts and collectibles. Also you may not have any “self dealings” without a DOL exemption.
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Q12: Can I buy vacation property?

A: Yes, but you can not personally use it. Neither you nor any other disqualified person can have any personal use or benefit of the property while it is held in your retirement account. The property must be purchased for investment purposes only. However upon reaching retirement age you could take the property as a distribution.
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A: Yes, there are a lot of investment opportunities outside the country that are now available to you.
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Q14: Why is there so little information available on Self-Directed IRA options?

A:The traditional investment community has control and is making money off over 97% of the retirement accounts.  Letting you to know that you have other options to the stock and bond market risks losing the commissions and fees they charge on your retirement accounts.
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