How To Save For Retirement by Investing in a Business

When it comes to the options available for opening a retirement account, many people find themselves clueless as to which particular one to go for. One of the lesser known but even more efficient retirement plans is the self-directed IRA. You can use this account for the securing of your post-retirement future by investing in and gaining profit from pretty much anything you want. This is not an illegal offshore scheme either; in fact it is actually encouraged by the Internal Revenue Service (IRS). According to the guidelines laid down by the government body, investors who own a self-directed IRA are entitled to invest on a tax-free basis in anything they want (barring a few collectibles and alcohol among other items).

If you think you can predict the market for a certain land area, go ahead and buy some real estate with your self-directed IRA, and enjoy with tax-free returns. If you feel more comfortable investing in small businesses, whether or not you own them, you can do that too with a self-directed IRA.

A business owner knows his own business quite well and can make accurate predictions when the profits will start flowing in. This can be a useful strategy for investing with a self-directed IRA. However, a few things have to be remembered before diving into these affairs. As mentioned above, there are a few items you cannot use your self-directed IRA account to deal in. Here is a longer list:

•    Collectibles

•    Antiques

•    Rugs

•    Art

•    Metals (except gold, silver and palladium bullion)

•    Stamps

•    Gems

•    Coins (except some US-minted ones)

•    Alcoholic drinks

Before starting a business that you want to fund using your self-directed IRA, you will want to make sure that you are not buying or selling any of the above-mentioned items. Note that you should take a look at the IRS regulations for the complete list. Regardless, it is unlikely that you would be dealing in anything prohibited other than the items mentioned here.

Another thing that you would want to watch out for while using your self-directed IRA to invest in your business is that you can’t treat that business in the same way as other entities controlled by it. For example, if you want the company under your self-directed IRA hire your company to smooth out the woodwork, even if you pay market rates, then forget about it because this is not permitted. You can’t even hire, borrow from, sell to, or lend money from anyone in your family. Exactly the same applies to your financial advisers and lawyers and their businesses.

You should know that you can contribute only up to $5,000 to a self-directed IRA within any given year. The limit is increased to $6,000 at the age of 50, but this is still considered a small window for bringing in new capital. If your business happens to need some additional capital, you will have to pay for everything using existing self-directed IRA assets.

To know about, Top 3 Advantages of Self-Directed IRA’s: Click Here

How To Save For Retirement by Investing in a Business