Investing through an IRA or 401(k) can provide huge tax benefits. These benefits compound over time, resulting in a much larger nest egg for you in retirement, and for your loved ones after you are gone.
The downside to IRAs and 401(k)s is that you are normally restricted to a small class of traditional investments, all of which are typically highly correlated to the stock market. This leaves you very exposed in an economic downturn. Every market rally eventually ends in a downturn, so it is only a matter of time before you’re bitten.
The very rich figured this out long ago, and broke free of being restricted to holding 100% of investment assets in stocks, bonds, and mutual funds. Endowment funds, for example, tend to keep about 25% of investments in “alternative assets”. But until recently, this type of protection has been unavailable to most investors.
The good news is that you can now “have your cake and eat it too” with a “checkbook” self-directed IRA (or if you’re self-employed, click here for a special self-employed retirement plan). With a self-directed IRA, you can keep the tax benefits of your Traditional IRA, Roth IRA, or 401(k) while still protecting yourself against stock market downturns by investing a portion of your retirement funds in alternative assets, such as:
- Rental Real Estate
- Bitcoin and Other Cryptocurrency (while holding your own private keys)
- Private Lending Notes
- Gold and Other Precious Metals
- Private Real Estate Investment Trusts
- Offshore Assets
These truly self-directed IRAs can be structured as either Traditional or Roth IRAs. If you have an existing IRA or 401(k), it can be rolled over into this setup tax-free.
Best of all, I can structure this IRA so that you have “checkbook control”. This means that you can make your investments as needed without relying on third party custodian approval. This cuts out 90% of the fees that self-directed IRA custodians tend to charge. By using a law firm to form your self-directed IRA structure with checkbook control, you can eliminate most of the “fluff” fees that most self-directed IRA marketing companies charge.
Unlike most self-directed IRA setups done by marketing companies, because I am a tax lawyer I can provide tax advice throughout the entire process.
Disclaimer: Vandrew LLC is a law firm which assists in alternative investing in tax-advantaged retirement accounts. We are not a registered financial advisory firm or money services business (as we never direct your actual investments, which remain under your control). The practice of Vandrew LLC is limited to federal tax matters, with specific focus on IRAs and 401(k)s.