- Investment Flexibility: Self-directed IRAs allow owners to invest in a broader set of assets than traditional IRAs, including real estate, private companies, and other non-traditional investments. This flexibility can potentially lead to higher returns on investments.
- Tax Benefits: As long as the account qualifies as an IRA, the taxpayer-investor is not immediately liable for income tax on the gains, allowing the investment account to earn maximum returns until the time comes for payout, when the taxpayer will owe income tax on those greater gains. This deferral of income tax liability on retirement investment gains is a significant benefit of self-directed IRAs.
- Control Over Investments: Owners of self-directed IRAs have the ability to direct how their IRA assets are invested without forfeiting the tax benefits of an IRA. This control allows for personalized investment strategies tailored to the owner’s financial goals and risk tolerance.
- Potential for Higher Returns: The ability to invest in a diverse range of assets, including high-growth opportunities like private companies, can lead to substantial returns. The Internal Revenue Code allows funds in an IRA to grow through investment in qualified privately held companies, even if such growth occurs at a swift rate.
- Protection from Creditors: In most jurisdictions, self-directed IRAs may be protected from creditors in bankruptcy proceedings, provided they meet specific exemption criteria under state law. This protection can provide peace of mind and financial security for the account holder.
These benefits make self-directed IRAs a powerful tool for retirement planning, offering flexibility, tax advantages, control, potential for higher returns, and creditor protection. If you are interested in setting up a Self-Directed IRA, please reach out by clicking the “Contact” button on the top of the page.