Consider this the first of what will no doubt be an ongoing theme of posts on Self Directed IRAs/401Ks — along with acquisition of real estate using them as a tax deferred vehicle. Large numbers of folk are now either doing it already, have been doing it, or are askin’ about it. Why? You know the answer to that — fear of not only more Wall Street losses, but the desire for two things. They want more stability, and cash on cash returns of more than .4% on their capital.
Let’s start with the answers to a few basic questions. As time passes, I’ll be drillin’ down to more and more detail. Before long, you’ll have a fairly decent grasp of at least what’s possible, the nuts ‘n bolts of how, and what might make sense — or not — for you. Let’s get started.
Just what is a Self Directed IRA?
It means you’re in charge of what investments will be made. But there’s a caveat. Not all are created equally. Some say you’re in charge yet limit what’s on your investment menu. Pick your ‘custodian’ carefully, as there are many ways a high quality custodian can be worth their weight in gold. More on custodians later.
In what can a Self Directed IRA invest?
The answer is kinda sorta backasswards. What’s OK is delineated by what’s NOT allowed — Life insurance contracts — Capital stock in S Corps — Collectables. The rest of the investment menu is wide open with the proper custodian.
Are Seps and 401K’s also allowed do act in this manner if Self Directed?
The short answer is, you bet they are. They can pretty much do what IRAs can.
Note: If you’re 59½ or older you can convert your 401K (called a rollover) to a self directed IRA. That’s a smart move for most, not all. Also, if you’ve left a company, your 401k there can be rolled to a self directed IRA. Again, recommended for many, but not all.
Can I buy real estate with my IRA?
That’s a trick question, as you wouldn’t be readin’ this stuff here if ya couldn’t. 
That goes for your Roth IRA and your Sep too. Just sayin’…
Last question for today — How long has this been possible?
Surprisingly, buying real estate with these plans has been possible since they were first created, over 30 years ago. Most people simply haven’t been aware of the option. Heck, I only found out about it back in the late ’80′s. Just finding out yourself? Better now than never, right?
Call me with your questions. 619 889-7100 will get you to me. Have a good one.
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