Self-Directed IRA Expertise You Need for the New Year
Estimated Reading Time: 5 minutes
2022 boasted its fair share of economic volatility. Supply-chain aftershocks pulled certain sectors of the market down to earth, while geopolitical events drove others into orbit.
Over the last twelve months, we’ve strived to provide investors with the education they need. In market downturns, steadying the ship isn't enough. Taking advantage of economic dips is a great strategy for setting your self-directed IRA up for future success.
As a reflection on the year that’s passed, we’ve compiled five of our favorite pieces of content published in 2022. Discover top tips that you can apply in the year ahead, including how to add cryptocurrencies and real estate into your retirement portfolio.
Investing with a Self-Directed IRA Through an LLC
Investing in an LLC with your SDIRA is exactly what it sounds like: you’re devoting a part of your IRA into private equity in a company you trust. Remember: all due diligence is your responsibility — your SDIRA provider isn’t able to vet the suitability of any investment.
Investing through an LLC is where the real magic comes in. In this approach, your SDIRA (or a combination of IRAs) owns an LLC. This LLC can then invest in all the same assets that you’re able to purchase as an individual investor.
At first, incorporating as an LLC appears to add an extra layer of complexity to an already intricate field. So, what’s the upside?
Investing through an LLC can afford you:
- Lower transaction fees and faster processing times
- Checkbook control
- Enhanced liability protection
The process might seem complicated at first, which is why we covered everything you need to know about the process in this post on all things IRA LLC.
How to Purchase Real Estate With a Self-Directed IRA
Real estate is a tangible asset class that many investors feel comfortable with. For this reason, it’s one of the most popular investments for SDIRA holders.
In an IRA made up of monetary assets like those available through a bank or brokerage, investors are only able to bet on stocks and bonds. Through index and mutual funds, investors can find some asset diversification. With an SDIRA, they have the power to take this diversification to another level.
Self-directed IRAs allow you to invest in traditional monetary assets while also widening the pool to alternative assets like precious metals, private equity, and real estate.
With an SDIRA, investors are able to place their tax-advantaged funds in a wide array of real estate options. Think multi-family homes, office buildings, REITs, or any property type you can imagine.
One of the key things to keep in mind when investing with a real estate IRA is that any repairs or improvements must come from your SDIRA. If you commingle personal savings with an IRA-owned property, it qualifies as a prohibited transaction. This violates IRS rules and will land you in deep trouble as the account owner.
Curious about the process? Head on over to our article on how to purchase real estate with an SDIRA.
How to Invest in Cryptocurrency With a Self-Directed IRA
Cryptocurrency has experienced incredible volatility over the last few years. Some investors saw their net worth triple, while others invested at inopportune peaks that swiftly came crashing down.
Investing large sums of one’s net worth or retirement funds in crypto entails a great deal of risk with the potential for even greater rewards (or ruination). This evolving class of digital currencies combines groundbreaking technology and market decentralization for an asset with the potential to operate independently from the stock market.
For decades, self-directed IRAs have afforded investors the opportunity to diversify their portfolios. Many have taken advantage of self-direction, investing portions of their retirement funds in real estate and precious metals. Now, it's possible to devote a chunk of your portfolio to tax-advantaged cryptocurrencies.
In this crypto-focused article, we break down the unique characteristics of decentralized currencies. Learn all about the most popular currencies and how you can dip your toe into the world of crypto through Entrust.
2023 IRS Income and Contribution Limits
Is there any better way to ring in the new year than to plan for updated (and increased) IRA contribution limits?
You’d prefer fireworks and a bottle of Champagne in Times Square? Fine, but you’d have to admit, revised IRA limits are a close second.
For 2023, the IRS raised contribution limits for IRAs for the first time in four years. Driven by inflation and cost-of-living adjustments, taxpayers will soon be able to contribute up to $6,500 across their different IRA accounts.
401(k) contribution limits also saw a hefty increase, from $20,500 to $22,500. For those over 50, catch-up contribution limits also rose from $6,500 to $7,500. If you have a SIMPLE or SEP IRA, dive into our article on contribution limits to discover how much you can increase your savings in the coming year.
If you’re interested in comparing the 2023 changes to your current limits, scroll through our contribution limits page.
Comprehensive Self-Directed Account Guide
Here it is — the ultimate guide to every type of self-directed account you can imagine.
In this walkthrough, we’ll inform you of the key differences between traditional IRAs, Roth IRAs, and other tax-advantaged accounts. You'll discover the ins and outs of each type of self-directed account, including deciding which may be right for you.
Meanwhile, if you've already seen how a more diverse retirement portfolio can help you, this guide can show you how to centralize all of your self-directed accounts in one place. For instance, you can open an education savings account (ESA) or health savings account (HSA) for a loved one.
ESAs can be a great way to kickstart education savings for investors who recently had a child. These accounts provide tax-free withdrawals for qualified education expenses.
Meanwhile, HSAs provide an excellent opportunity for a last-minute tax deduction. You can apply pre-tax funds to qualified health expenses, and the funds generally roll over from year to year.
Open a Self-Directed IRA to Ring in the New Year
2021 proved to be a rollercoaster of a year, and 2022 added even more loops and corkscrews to the track.
In times of economic volatility and uncertainty, many investors find it difficult to keep fear at bay. It’s important to remember that these periods require great deals of patience, clear-headedness, and a long-term growth mindset.
Expand your financial horizons in 2023 by opening an SDIRA with The Entrust Group. The application is simple, straightforward, and shouldn’t take more than ten minutes of your time.
Another bonus to opening an SDIRA with Entrust? There are no account minimums, so you might be closer than you think to building your ideal retirement portfolio.