Many individuals and investors are unaware of their accessibility to options that provide them with control over the IRA investments. If a substantial amount of your life savings are locked up in a retirement account this can provide a great opportunity to make a large investment in a  non-traditional investment vehicle.

Generally, major financial institutions that manage most U.S. retirement accounts don’t see the profit in offering real estate or nonpublic traded assets in retirement plans as this would create a substantial administrative burden among other considerations. This leads to self-directed IRAs, which are IRAs where the custodian of the account allows the IRA to invest into any investment allowed by law, to become widely overlooked as a viable option.

When employing this investment strategy it is crucial to ensure you have a truly self-directed retirement fund with an independent trustee or custodian. Many plans may appear to be self-directed but limit choices to a custodian’s list of pre-approved investments.

These investments typically include real estate, promissory notes, precious metals, and private company stock.

Under current law, a retirement account is only restricted from investing in the following:

  • Collectibles such as art, stamps, coins, alcoholic beverages, or antiques
  • Life insurance
  • S corporation stock
  • Any investment that constitutes a prohibited transaction
  • Any investment not allowed under federal law

Self-directed retirement accounts are exposed to prohibited transaction. The rules detail restrictions regarding whom your IRA may transact with.  Prohibited transaction rules restrict your retirement account from engaging in a transaction with a disqualified person.

Disqualified persons include:

  • The account owner
  • Spouse
  • Children
  • Parents
  • Business Partners

Consult with a trusted CPA before executing investment decisions or initiating any substantial changes to your investment plans.  CPAs know your finances better than any other advisor and should have the expertise and network to offer valuable, preemptive recommendations.

Investors and business owners of all types should look for an advisor that serves as a partner; an ideal CPA is a financial expert with companies within your industry that can provide ongoing financial and business advice when you need it most.

Camuso CPA PLLC’s focus and specialization delivers a unique perspective on best industry practices to provide the most value to clients.

Contact us today for financial and tax planning and get your finances in order: