Let’s continue with the basic questions most folks have about the concept of Self Directed IRA/401k/Seps. They’re pretty much treated the same, though you need to know there are well defined differences. Here we go — we’ll start where we left off for the sake of continuity.
The problem for most folks is they’ve never known this option might’ve been available to them — and for decades to boot. Between the NASDAQ crash several years ago, and the most recent Wall Street meltdown, many highly frustrated people have been on the prowl for a potential alternative. For many, this has been a pretty satisfying discovery. Also, and this often goes unsaid, the most important factor is the phrase Self Directed — folks appreciate the control. Duh
Why do the professionals I ask tell me I can’t do it?
There are two major reasons. First, they can’t sell what they don’t have. Second, they are simply unaware of what’s possible. Many accountants and attorneys are honestly unaware of what’s possible. Some even think investing in real estate through your IRA is illegal. As usual, it’s a matter of knowledge and expertise.
How do I take money out of my IRA to buy real estate without paying taxes or penalties?
That’s possibly the most common misconception. The funds and subsequently the ownership of the real estate purchased, remain inside the IRA. Compare it to buying stock. You don’t take the money out, then buy the stock, right? Same thing with real estate, though the process is obviously different. Buying stock is mainly an electronic exercise, taking very little time. On the other hand, buying real estate will take the normal 30-60 days along with the death of a large tree. 
What is ‘Rolling Over’ and how long does it take?
It’s exactly what it seems to imply. For example, you once worked at ABC Corp. but now work for XYZ Co. The 401k you left behind is probably a candidate for a ‘rollover’ of its funds into a Self Directed IRA. The most time efficient way to accomplish this is called an IRA to IRA rollover. It involves instructing your current custodian to issue a distribution of all or part of the accountholder’s funds. I won’t bore you here with the details, but rest assured it’s not rocket science by any stretch. Doing it this way will take a matter of days as opposed to several weeks dealing with custodians dragging their feet while unhappily losing business.
When the money is transferred, what’s next?
Your new custodian will notify you. often by email. It’ll depend upon how the funds were deposited — by endorsed check or wire? A check will cause a 2-5 day delay as it snakes its way through the system. A wire will be available either the day it arrives or at the latest the following day.
We’ll stop here. Next, we’ll begin to address the nuts and bolts of buying real estate through your Self Directed IRA. Call me with questions — 619 889-7100. By the way, interested in the new world of real estate investing? Have a good one.
Related posts:
- Some Basic Facts About the Self Directed IRA
- Some Facts and Definitions About Self Directed IRA’s
- Facts About Buying Real Estate Through IRA’s and 401(k) Qualified Plans
- Facts of Which Real Estate Investors Should Be Aware
- What’s Your Big Picture? Purposeful Planning + Real Estate Investing = Masterpiece
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