This recorded webinar conducted by Advanta IRA provides an in-depth look at the unique IRA alternative assets Advanta IRA has encountered with clients. These investments include cryptocurrencies, farmland, livestock, car carriers, sports teams, movie projects, and burial crypts. The hosts also explain the rules and regulations involved in self-directed IRA (SDIRA) investments.
If you’re considering stepping off Wall Street, you’ll want to watch this recorded webinar or read the recap below. We promise you’ll be amazed at the vast number of alternative investments you never imagined you could use to build wealth in your IRA.
Webinar hosts
Larissa Greene, CISP—director of education at Advanta IRA
Corey Daharsh, CISP—business development specialist at Advanta IRA
Key insights
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- Investing in unique opportunities like cryptocurrencies, farmland, livestock, car carriers, sports teams, movie projects, and burial crypts is accomplished by using SDIRAs. These assets are not typically permitted in conventional IRAs.
- Self-directed IRAs allow investors to invest outside of the stock market into common alternative assets like real estate, private mortgages, private placements, precious metals, foreign currency, futures trading, and more.
- It’s crucial to understand the rules and regulations of SDIRAs to avoid any prohibited transactions.
- Diversifying your retirement portfolio can help protect your nest egg during unstable market fluctuations.
Top 3 Takeaways about Investing in Unique IRA Alternative Assets in SDIRAs
1: Self-Directed IRAs Enable Creative, Personalized Investing
The webinar focused on how self-directed IRAs are a tool for creative and personalized investing. This type of retirement account allows individuals to invest in assets they know and understand.
Your key points from this webinar:
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- Your retirement investments in alternative assets are unique, personalized, and creative.
- You are not simply beholden to stocks, bonds, and mutual funds.
- Self-directed IRAs offer flexibility, control, and freedom to pick the investments for your IRA.
2: Variety Of Unique IRA Alternative Assets for Self-Directed IRAs
The speakers discussed the great variety of common and unique IRA alternative investments allowed in self-directed IRAs and solo 401(k)s.
- Real estate (commercial and residential; single and multifamily)
- Gold and other precious metals
- Cryptocurrency
- Private mortgages
- Private equity
- Businesses such as breweries and coffee shops
- Assets in transportation like car carriers or 18-wheelers
- Ball clubs, music, and movies
- Wineries, crops, and farmland
- Private shares of local companies
3: Understanding IRS Rules For Self-Directed IRAs Is Crucial
In addition to covering alternative assets, Larissa and Corey emphasized the need to understand the rules of self-directed IRAs to avoid prohibited transactions. This includes knowing who the disqualified persons are that your IRA may not deal with, and understanding the tax implications of various investments, such as the unrelated business income tax (UBIT) or unrelated debt finance income (UDFI).
Prohibited investments and transactions with disqualified persons
They explained the only investments the IRS does not allow in self-directed accounts are things they would consider subjective in value, such as antiques, artwork, fine wine, and collectibles as defined in IRC 4975.
Additionally, account owners must ensure that these investments do not involve disqualified persons who are prohibited from transacting with your IRA.
Disqualified persons include:
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- IRA owner and spouse
- Lineal ascendants (parents, grandparents) and lineal descendants (children, grandchildren) plus their spouses
- Investment advisors, managers, and fiduciaries or anyone providing services to the IRA
Additionally, any company, corporation, partnership, or trust in which disqualified persons have 50% or more interest is unable to do business with your SDIRA.
Unrelated business income tax (UBIT)
UBIT is triggered in two ways:
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- Your IRA used financing to help make an investment and earns unrelated debt-financed income (UDFI).
- Your IRA holds a business as an asset and earns unrelated business taxable income (UBTI).
They explained that UBIT is paid by the IRA and not from your personal income. The IRA owns the asset and earns the income. Therefore, your IRA must pay all expenses incurred by assets in the plan—including UBIT. [Find detailed information by visiting the UBIT and UDFI page on our website.]
Valuable Quotes from the Hosts on Taking Control And Using Self-Directed IRAs
“The sky is the limit. Our clients are entrepreneurs through self-direction. You’ve got to have your own ideas, your own plans, and your own ambition to generate income on unique IRA assets like we’ve talked about.”
“So why do people use SDIRAs? Well, first they learn that this retirement plan structure even exists. And then they realize their IRA is a new source of capital for investment strategies that they’re already prospecting or maybe already involved in with their personal funds.”
“Investing your retirement funds into things you understand and are familiar with is really going to spark enjoyment and pride in yourself…like, hey, I made that decision!”
If you have questions about this topic or want to learn more about alternative investments and self-directed plans, contact Advanta IRA. If you’d like to attend one of our weekly live webinars, you can find them on our event calendar.
