Roll your IRA into Real Estate

Roll your IRA into Real Estate

Do you know that you can purchase California Land in your IRA?

Yes! You can roll your IRA (traditional, SEP, Simple, or Roth) as well as some qualified 401(K), Solo 401(K) and 403(b), etc. into carefully selected California land. Carefully chosen California real estate is proven to be a particularly safe and rewarding long-term appreciation strategy.

What is carefully selected land? It is pre-developed land in the growth path of a major metropolitan area. California has a current population of approximately 37 million. More than one in five Americans lives in California. More importantly it continues to grow at rate of 500,000 annually and is projected to reach 40 million by 2013. It has predictable future growth based on the demographics of the area.

Why Use Your IRA

The whole idea behind qualified retirement plans and IRAs is to give people incentive to save for retirement. Tax deferral is a powerful benefit because it allows you to invest money that would otherwise have to be paid out in taxes each year, thus enabling you to build your retirement fund that much faster.

“Ninety percent of all millionaires become so through owning real estate. “ Andrew Carnegie. ACE Capital Group has helped thousands of people roll their IRA’s to acquire select California real estate. The first step to maximizing your IRA is to gain more control over it. If you already don’t have a Self-directed IRA you need to identify one and transfer your employer-sponsored plan into it. There are plan administrators that specialize in owning real estate in your IRA.

The rules for rolling over your IRA are not complicated, but there are lots of them, so professional advice is recommended. We suggest checking out the ACE Professional Network. Some of the rules deal with how to do the rollover itself; some pertain to the type of investments within the IRA; and some rules relate to how and when you can and must take distributions from your IRA.

Maximizing Your IRA

The investment returns earned by your IRA assets will determine the size of your nest egg at retirement. For example, if you roll over $25,000 when you’re 35 and invest it at a fixed rate of, say, 5% compounded annually, you would have close to $80,600 when you turn 60. But if you invest in a growth vehicle that averages 15%, you’d end up with nearly nine times as much, over $716,000, even if you never add another penny to the account.

And if the stakes are bigger the difference is even more dramatic. Now, these numbers are provided as an illustration only; your investment returns could be very different, and it must be remembered that required minimum distributions at age 70-1/2 would begin to diminish the IRA. The point is that you should pay close attention to how your IRA assets are invested because it could make a big difference in your comfort level in retirement.
Putting Together a Well-balanced Portfolio

If you have been personally managing your 401(k) account or other retirement plan, you are familiar with the concept of asset allocation and diversification. By investing retirement funds in several non-correlated asset classes, you have most of the bases covered. You don’t need to worry about choosing the “right” asset class because you have a little money in each. If one asset class falls in value, the effect on your overall portfolio should be negligible because your money is spread among several different asset classes.

At the same time, it often makes sense to adjust portfolio holdings along with changes in the outlook for the markets and the economy. This is called tactical asset allocation. Rather than sticking with the same allocations year in and year out regardless of what the markets are doing, investments get channeled where opportunities are more attractive. You’re still diversified across asset classes, but the weightings change based on the outlook.

However, tactical asset allocation requires a little more attention than ACE’s Land Banking long-term strategy which you can purchase-and-forget, buy-and-hold, and is not as active as a market timing strategy. However, land is not a readily liquid asset and may require consider time to sale or transfer.

Prohibited IRA Investments

The IRA does not prohibit the acquisition of land as an IRA asset, but has defined a number of prohibited transactions which are simply not allowed in IRA accounts. If an IRA holder does engage in a prohibited transaction, the amount will be considered a distribution, subject to taxes and applicable penalties. Here are some of the items you can’t invest in with your IRA:

  • Art
  • Rugs
  • Antiques
  • Metals
  • Gems
  • Jewelry
  • Stamps
  • Coins
  • Alcoholic beverages including wine
  • Certain other tangible personal property

One exception to the no-collectibles rule is that your IRA can invest in gold or silver coins minted by the Treasury Department and in certain gold, silver, palladium, and platinum bullion.
In addition, the following are examples of prohibited transactions concerning your IRA:

  • Borrowing money from it
  • Selling property to it
  • Receiving unreasonable compensation for managing it
  • Using it as security for a loan
  • Buying property for personal use (present or future)

The whole idea behind prohibited transactions is to preserve the spirit of the IRA, which is to save for retirement and get a tax break for doing so. The IRS doesn’t want people using their IRAs to escape taxes on personal and business transactions, which is just common sense. Beyond these few restrictions, however, you are free to invest your IRA in a way that will help you grow your nest egg in accordance with your risk tolerance and time horizon.

For more information Contact a Representative or register for one of Webinars.