Posted On: JULY 2023
An IRA can be a valuable tool in your retirement and estate planning arsenal, but what if you’re not satisfied with its performance? One option is to set up a “self-directed” IRA.
Unlike traditional IRAs, which typically offer a limited menu of stocks, bonds and mutual funds, self-directed IRAs can hold a variety of alternative investments that offer the potential to earn higher returns, such as real estate, closely held business interests, commodities and precious metals. They can’t hold certain assets, however, including S corporation stock, insurance contracts and collectibles (such as art or coin collections).
From an estate planning perspective, self-directed IRAs have considerable appeal. Imagine transferring real estate or closely held stock with substantial earnings potential to a traditional or Roth IRA and allowing it to grow on a tax-deferred or tax-free basis for the benefit of your heirs.
Before acting, it’s critical to understand the significant risks and tax traps involved with self-directed IRAs. For example:
If you’re considering a self-directed IRA, we can help you steer clear of the tax traps and minimize your risk.