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Roth IRA is one of the well-known and oftentimes considered best IRA for self employed. If you are looking for reliable financial investment and retirement account, it is imperative to know more about this plan. Nowadays, you might find it more challenging to decide what retirement account to choose. There is a big difference as well as similarities for 401k vs IRA. Sense Financial Services LLC, the leading provider of premier retirement plan Solo 401k and Self-Directed IRA offers valuable information about these two topmost investment ventures. For Roth IRA, there are essential benefits from this account that you must learn and understand.

Roth IRA plan is not subject to Required Minimum Distribution Rules

One of the reasons why Roth IRA is considered the best IRA for self employed is that it is not required to comply with RMD rules unlike traditional retirement accounts. The Required Minimum Distribution rules subject the account holder to pay taxes on distributions. This is a requirement which takes effect as soon as the plan holder reaches 70 ½ years old. If you are not subject to RMD, tax-free income is accumulated, allowing the account to boost its accumulated and tax-free income throughout the duration of the owner’s lifetime.

401k or Best IRA for self employed: Which is best - distribution extension for surviving spouse

Roth IRA is not only the best IRA for self employed account holders but also a lucrative and useful investment for the surviving spouse. That’s because the account beneficiary of the retirement plan can still opt to continue the contribution to the plan. Or the beneficiary could opt to combine this Roth IRA to their own retirement plan, basically the same Roth IRA. This means that the surviving spouse could take over and benefit from the account particularly the growth on investment with its tax-free features. On the other hand, traditional retirement plans are not allowed to be combined and merged into the surviving spouse’s IRA. The beneficiary is also not allowed to opt for an additional contribution to the existing account.

Roth IRA account holders do not pay 10% early distribution withdrawal penalty

Account holders who decide to withdraw their account contribution before they reach the age of 59 ½ are not subject to the 10% payment of the early withdrawal penalty. Account holders could basically withdraw their converted or contributed amounts to their Roth IRA retirement account without the hassle of paying taxes or the penalty as long as they comply with the 5-year wait period making it the best IRA for self employed.

“Compound interest is the 8^th wonder of the world… Those who understand it earn it… Those who don’t pay it.” ~ Albert Einstein

Thanks to the efforts put in by financial gurus, a lot of people are aware of the concept of compound interest. For those of you a little dubious about the same, here’s a quick definition:

‘Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Compound interest can be thought of as “interest on interest,” and will make a deposit or loan grow at a faster rate than simple interest, which is interest calculated only on the principal amount.’ ~ Investopedia

Being a retirement solution provider, we help our clients realize the benefits of compound interest and one of the best ways to do so is to contribute towards a tax-deferred retirement account.

Why invest in a tax-deferred retirement account?

• Compounding of your money: Your money enjoys tax-deferred growth for several decades, accumulating more interest with every passing compounding cycle.
• Qualified deductions: By contributing to a tax-deferred retirement account, you are eligible for qualified tax deductions, hence reducing your tax bills right away.

Couple compound interest with a Roth Solo 401 k & Get Tax-free Distributions*

How about combining the magic of compound interest with a Roth Solo 401 k account?

A Roth Solo 401k account is a retirement plan for self-employed professionals and owner-only businesses, allowing after-tax contributions. Under the plan, the account owner pays taxes upfront and in return, they receive tax-free distributions.

• Annual contributions: $24,000 in 2016 (including catch-up contributions of $6,000 for professionals above 50 years)
• No income restrictions: Unlike a Roth IRA, there are no income restrictions for making eligible contributions to a Roth Solo 401k plan.
• Tax-free withdrawals: If your Roth Solo 401 k account satisfies certain conditions, you can receive tax-free eligible distributions in retirement.

Here is a short Infographic to highlight some of the primary features of a Roth Solo 401k plan:

When it comes to retirement savings, we all do wish for the same amount of investment freedom that we usually get with our other investments. Traditionally, most of the financial institutions offer limited investment options, starting with stocks and bonds to mutual funds and CDs only. The last recession taught us one thing for sure i.e. not to invest your entire savings in the stock market. So, how do you achieve better control over your retirement savings? Checkbook IRA is the answer to these questions.

What is Checkbook IRA?

In simple terms, checkbook IRA is a self-directed IRA that offers unlimited investment freedom to the account owner. The owner doesn’t need custodian consent for making investment decisions, hence eliminating transaction delays and associated costs in the process.

Understanding the benefits of Checkbook IRA

• Checkbook control: Checkbook IRA is structured in a manner that puts you in charge of your retirement funds. You do not require custodial consent before making an investment. When investing your retirement funds, you can do so by either writing a check or direct wire transfers.
• Unlimited investment opportunities: Saving money in a self-directed IRA with checkbook control allows you to invest in any qualified investment class, starting with real estate, tax liens, tax deeds, mortgage notes, private lending, precious metals, and even private equity. You can achieve true diversification by investing funds in different asset classes.
• Tax-deferred growth: Being a qualified IRS plan, your Checkbook IRA will reap the benefits of tax-deferred growth. For an instance, if you hold rental properties in your account, the rental income will go directly into the retirement account and grow on a tax-deferred basis until retirement. Your investments will benefit from compounding over the next several years. You will pay taxes only at the time of distributions.
• Cost effective: The absence of a custodian can save money otherwise spent on transaction/processing charges while ensuring minimal transaction delays.

How to Buy Investment Properties with an IRA - Step by Step (Part 4 of 4)

Using a self-directed IRA to buy real estate is a sound investment strategy for many people. The ability to buy assets that can provide strong returns is appealing to a wide range of people. Listed below are the basic steps necessary to buy a property in compliance with the IRS rules governing the use of an IRA account.

1. Contact a financial firm that has experience with self-directed IRA’s. Working with a firm that is familiar with these accounts and the real estate transactions is the most important step.

2. Understand the IRS rules. A property bought via the IRA must be an investment home. Second homes, vacation homes and primary residences are strictly prohibited. Furthermore, distributions from the account are not allowed until the owner of the IRA is at least 59 ½

3. Deposit funds into the account. One of the important rules about buying property with an IRA is that all funds for the purchase as well as any other expenses has to come directly from the IRA. The owner cannot chip in extra money to help cover property tax or replacing the roof, in example.

4. All revenue received on the property must be deposited to the IRA account. The revenue cannot be given to the IRA owner or relatives.

5. Take time to preview multiple properties. It is wise to enlist the assistance of a real estate agent who has knowledge with these types of transactions. An agent can recommend properties in areas that have strong rental history. Furthermore, the agent can help calculate the return on investment based on average rent payments for the area.

6. Once you have picked out an investment property it is time to put down an offer. Contact the custodian for your IRA account and tell them you want to buy a property. The custodian will then fill out the necessary forms and sign all real estate documents on the behalf of your IRA account.

7. It is a wise idea to get a contract with a property manager to handle the finances of the property. This will prevent you from collecting the rent payments and making any necessary repairs yourself. A property manager can keep all the transactions clean and legal and free you from the headache of property management.

It is important to understand the rules concerning using an IRA to buy and manage real estate investments. Failing to follow the rules can lead to penalties and possibly loss of the tax advantages associated with an IRA account. When in doubt consult a tax professional before making any decision or transaction with the IRA funds.

This is Part 4 of a 4 Part Series.

Part 1: How a Realtor® can help you invest in your IRA

Part 2: Purchasing Investment Properties for your IRA

Part 3: How to invest in real estate using an IRA

Part 4: Step by Step Guide to Buying Homes with your IRA

Like many Affiliate Brokers, at some point in our careers we determine it's time for us to go out on our own and do our own thing. Now, that time has come for myself however, I don't have the personal funds I need to start my own office. Like many others I need money. You can get money all kinds of different places however, banks seem to be the most obvious choice for most of us. In fact, I myself have seriously considered my local bank, the one I actually use for my personal money but, I am almost completely debt free and I really don't want to acquire additional debt through traditional means. Without saying it, yes.....I listen to a famous particular radio broadcaster who is known and preaches about living debt free and yes, I am trying to do just that however, I know that some debt is good. In this case, this is debt I can take on that will further my long term goals.

Now, with all that being said, let me just say, for those of you who do traditional lending...banks, etc.... I am not saying not to use you. In fact, I believe you have a valuable place in the market place and do good by lending dreamers like myself the funds we need to bring our plans into reality however, I just don't think that type of lending is a good fit for me.

So, my next option are Investors and let me tell you, I have found out in the past 2 months, not all Investors are created equal. I learned about debt partners, joint venture partners, equity partners, etc... and for a while, it all had my head spinning.....really spinning. Now however, I feel a little better and I can actually say, I think I know what I want. I think what I am looking for is a Self Directed IRA Investor who is prepared to invest in a LLC as a Debt Partner. Now, where do you find them, how do you connect with these people? That is the question.

Several IRA Custodians have reached out to me in the past couple weeks because many of my blogs have revolved around this idea. Truthfully, I really don't know why more of us, especially those of us in the REO industry aren't completely and utterly schooled in this type of investing and likewise, making it work for ourselves but, that is another blog for another time. None the less, these IRA custodians, due to heavy regulations, can't just come out and say, or do for that matter, "we want to invest in your company". So, how in the "h""e" double hockey sticks to you find these investors?

So, here is the goal. I need a Self Directed IRA Debt Partner Investor who wants to invest in a real estate brokerage focused on Traditional buying, selling and investing, distressed homeowners / REO / Short sales and the Self Directed Private Banking Concept. Anyone out there know of anyone? IF you do, please send them my way, I want to talk with them, I want to send them our business plan, I want to earn their investment. Granted, I don't need a lot, less than 50k so, even a "small time investor" would be cool.

If you don't know how to use your IRA to invest in a LLC, ask me. I can guide you to resources that will educate you, people who can offer you insight. If the only thing stopping you is that you don't know enough about it, don't let that stop you from picking up the phone and calling me because, I can help guide you.

Self Directed IRA Network??

Well, as many of you know, for the past couple months I have really been digging deep into the self directed IRA world and I have to admit, I am truly disappointed. Here I was expecting a world filled with information, people everywhere willing to share, professionals offering advice and services however, I ended up finding a world almost as closed off as REOs. After further investigation, I started to realize that it's not closed......it's just not open. In other words, no one has blown it up. Well, that got me thinking, why not REOPro, why not me?

Here is what is going to happen. Here in the next few weeks, likely right at the start of the new year, I am going to start a social network for self directed IRA investors and professionals. Like REOPro, it's going to offer people the opportunity to come together, freely share information, ideas, resources through blogs, forums, video sharing, picture sharing, on-line chat and, much more.

What we need now are advertisers. Unlike REOPro, I don't want to stay in constant debt with this new network, in fact I am thinking of having some portions of the site closed and only open to paying members however, I am curious as to just how many people may be interested in something like this. I am thinking of a really low annual fee, like $5.00 a year....really low but, keep in mind, I am not trying to get rich of my site, just trying to pay the site bills.

What we need now is some "pre" advertisers. We need to get some people on board who would be willing to pay to have their banner randomly rotating across the top of the site. I will only have 3 opportunities...that's it. Similarly to REOPro, the three banners will rotate randomly on a 30 second interval and no, we aren't fancy enough to see how many people click your ad and all those other tracking things but, if you put in a promo code in your ad, you can track it that way. No contracts, no required length....very simple, $200.00 a month, pay 3 months in advance, if you decide to leave, we will refund the prorated remaining balance to you in full.

If interested in this new network to launch in January 2013, let me know, email me at JGonzalez@RealTracs.com

The market is always changing and as such, I have learned that I too need to always be changing or at least growing. With that being said, for the past 3-4 months, I have been doing a lot of reading on self directed IRAs. More specifically, the "Private Bank Concept" within the self directed IRA industry. Honestly, this concept amazes me, in fact, I am struggling to understand why more of us in the REO industry aren't cornering this market.

I guess first off, I had to realize that many people don't even know they have the ability to direct their own IRA. I had read somewhere that 3.4 trillion dollars is setting in IRA funds right now across this country and most people (like 99%) aren't making more than 1-2% annually.....if that. Granted, most of these people have their money with some investment firm who has the money diversified in stocks, bonds or mutual funds and they make money by managing those funds for you so, it's not in their interest to tell you, "hey, did you know you can do this better on your own and save the money you are paying us?" so, most of you don't know anything about self directed IRAs. Don't feel bad, as of 3-4 months ago, I didn't either. I don't even remember how or who told me about them so, I can't even source or thank anyone for directing me to this awesome opportunity.....sad but, true.

At this point, it's important to tell you, I am a Realtor, not an Investment Adviser, not a Certified Public Accountant and most definitely not an Attorney (no offense). I am simply a Realtor who is looking to drum myself up more business, make more money and start my own brokerage by the start of 2013. Like any good small business owner, I need to find capital however, I don't want to be tied to the SBA (Government Secured Loans) or tied to a bank, personally, I would like to work with individual investors however, it's tricky. Yeah, I have a proven track record and yeah, I have a great business plan...as told to me by my SCORE counselor but, it's not easy to convince someone to give me their money to grow my business and in return, I will give them their money back plus interest. Let's face it, money is tight these days for us all however, what if I was able to tap into money you aren't using to pay your day to day bills? Ok...so, who isn't living paycheck to paycheck, I get that but, some of us worked hard enough that we have nearly 3.4 trillion dollars that isn't doing much for us and my thinking was, how could I convince people to give me some of that money. My thinking was, what if I told potential investor, Priscilla Penny Pincher that I was able to find a real estate investment (flip) that would net her a 10% return on her retirement money, why would she say no? Ok....yes, I am sure you can think of many reasons to say no but, really.....10% return in 6 months on money that is making 1% return in 12 months, it's a no brainer, right?

Well, that is where the Private Bank Concept with self directed IRA funds comes into play. It's nothing more than a strategy that real estate investors are using to complete more deals than ever before. Basically, it allows me to borrow money from an individual...not a bank, to do my flips with while paying the individual back the money borrowed plus a interest rate triple, quadruple or even quince the rate they are currently getting on the money.

Yes, it's risky, it's real estate and yes, we can't guarantee anything but, we can reduce risk by implementing strong, robust loss mitigation and exit strategies so, risk is minimized. Let's also not forget, the loan you are providing me is secured by real estate....real property so, it's not like you're going into this with no collateral.

So, here I am, learnded (yes, that is my Honey Boo Boo term for the day) about this Private Bank Concept and all I need now are the funds however, I am curious, are any of my REOPro member doing this already? If so, let me know, let's talk, let's exchange resources, let's work on creating our own Private Bank!