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Self-Directed IRAs - Not Just for Real Estate

After speaking with clients so often one-on-one as well as in groups I was confident that all the people I spoke with really understood all the possibilities available to them with The Entrust Group's self-directed plans. I was quickly brought up short

By: Jaime Raskulinecz

IRA Insights

After speaking with clients so often—one-on-one as well as in groups—I was confident that all the people I spoke with really understood all the possibilities available to them with The Entrust Group’s self-directed plans. I was quickly brought up short recently when speaking with a few people.

One was a client, John, and two were prospective clients, Curt and Sam, with their applications in hand. All three people were friends and familiar with some of the others’ transactions and pending transactions.

I, and others in my office, had been speaking with all of them over several months about our accounts and the possibilities for their investments.

The client, John, mentioned to one of his friends, Curt, that he was going to need a short term loan soon and he asked if Curt would be willing to lend him the money from his newly opened IRA account. The loan would be secured by a second mortgage on John’s condo.

Curt and Sam were incredulous. They both said at once, “We thought these accounts were strictly for real estate investing!” You can imagine how surprised I was as we have had several conversations about this. I realized that we have a tendency to concentrate on the real estate examples pretty heavily when explaining our business.

This is primarily because this is the most popular investment choice when clients open an account with us. But, I think, it is also because it is simple to explain and the topic is sometimes overwhelming for the first time client. The IRS regulations say that the only investments not allowed in an IRA are life insurance and collectibles. And, IRAs may not invest in S-Corporations although other entities are allowed.

Some of the inquiries for non-traditional investments we’ve gotten in the past few months include off shore hedge funds, domestic hedge funds, investment capital for a start up truffle farm in the south, investments in credit card debt, investments in oil and gas TIC instruments, a bed and breakfast in Central America, shares in a Costa Rican Corporation formed to invest in real estate in Costa Rica, hard money loans, first and second mortgages, and unsecured personal loans.
These are just some of the many choices available to you.

So please think about more than just real estate when you think about investing with your retirement funds. The choices are only limited to the depth of your imagination. And the IRS regulations, of course!

Jaime Raskulinecz, CPM is the CEO of Entrust Northeast, LLC, www.entrustnortheast.com Serving New York, Northern New Jersey and Connecticut.

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