A self-directed IRA is a necessary financial tool for all adults to consider. There are plenty of benefits that come from this type of retirement plan — all of which we’ll cover in an upcoming post — but in today’s blog, we’re going to address how to set up a self-directed IRA.

With this retirement plan you have the freedom to invest in other types of investments such as real estate. When used in tandem with a non-recourse loan, you can purchase investment property to turn into a rental, for vacation or long-term tenant purposes. Our non-recourse lenders cannot set up a self-directed IRA for you, but we can definitely provide some initial guidance and advisement! Find out how to set up a self-directed IRA, and apply for a non-recourse loan with First Western Federal Savings Bank!

What is a self-directed IRA?

A self-directed IRA is a qualified retirement plan that has been approved by the IRS. With a self-directed IRA, you have lots of flexibility when it comes to investments, one such example being with real estate and rental properties.

That being said, there are a number of things you cannot invest in with a self-directed IRA. For example, collectibles — such as cars and pieces of art — cannot be purchased through this type of retirement plan. Additionally, engaging in transactions with someone considered a disqualified person (a lineal family member, for instance) is prohibited. An example of this would be buying a property with your self-directed IRA, then leasing to or letting a lineal family member stay there for free. You also can’t use a self-directed IRA to fix or renovate a property that you own personally.

Who is eligible?

Anyone can open a self-directed IRA, even if you currently work for and have an employer-sponsored plan or have multiple IRAs left from previous employment. All you need to do is transfer or rollover existing IRAs into your new self-directed one. You simply need to open one with any number of companies that offer true self-directed IRAs. Visit our resource custodian page to learn more!

What if I have an employer and also do independent work?

You are still eligible for a self-directed IRA.

What if I have an existing IRA?

In many cases, you can transfer or rollover your current IRA or 401(K) into your new self-directed IRA.

Do you have to use a self-directed IRA for investment purposes?

Yes you do. IRAs are designed as a savings and investment vehicle. You can still invest in stocks, bonds, and traditional Wall Street products. Plus, you have the advantage of investing in alternative assets.

There are so many benefits to starting up a self-directed IRA, and finding the right one opens up exciting new doors for your financial portfolio. With the non-recourse loan lenders at First Western Federal Savings Bank, we can help you utilize your self-directed IRA to invest in rental properties. Not only does this help build your financial assets, but it also gives you additional funds to contribute right back to your self-directed IRA! Get started with a new and worthy type of retirement plan, and contact our lenders to apply for a non-recourse loan once you are set up.