Are you setting sail for retirement soon? If you have special expertise and experience in business, real estate or investments, you may want to set your own retirement course by investing in a self-directed IRA. There is virtually no end to the variety of investments available for self-directed IRA account holders. Portfolios may contain mutual funds, stocks and bonds, real estate, franchises and partnerships, publicly- and privately-held corporations, private limited liability companies, secured and unsecured notes and mortgages.
And, the tax advantages of self-directed IRAs can be significant. Your self-directed IRA investment profits may be tax-free or tax-deferred, and there’s also the possibility for big tax deductions. In addition, certain self-directed IRAs allow investors to pass along their assets to their beneficiaries with little or no tax obligations.
With alternative investing, account owners can be pro-active in improving their investment returns because they can choose assets that are not publicly marketed. While there are many investment choices for self-directed IRA account holders, the Internal Revenue Service mandates that IRAs must be held by a custodian with trust powers. A Bank of Utah trust custodian can serve as your first mate and will help safeguard your retirement funds by managing your assets under your direction. The custodian also files reports in compliance with IRA regulations, issues statements of net gains and losses, and records all transactions pertaining to the IRA. But, remember, you are first-in-command. Your trust custodian cannot guarantee the profitability of your investments.
IRS “prohibited transaction rules” serve as a compass that points to what you can use as approved assets and will steer you toward those who can and cannot engage with the IRA directly or indirectly. The purpose of the IRS rules is to encourage the proper use of IRAs for growing retirement savings. Internal Revenue Code prohibits disqualified persons from engaging in certain types of transactions that the IRS believes will directly or indirectly benefit either the IRA holder or a close family member, instead of growing your retirement savings.
The IRS will impose costly penalties if you don’t follow the rules. Bank of Utah, being a financial institution, will help ensure your investment ship stays on course, and can hold IRA securities for safekeeping in electronic or physical form. We act as a passive, non-discretionary custodian of customer-directed, self-directed IRAs. Bank of Utah’s “trust crew” has a solid reputation for acting responsibly, ethically and lawfully. Bank of Utah maintains records of all the transactions pertaining to the investment and document them clearly. Keep in mind that your trust custodian is prohibited from giving you legal or financial advice, so it’s also smart to add a competent attorney and CPA/accountant to your crew.
If you are ready to explore rolling an IRA, 401K, Roth or other investments into a self-directed IRA, visit Bank of Utah at https://www.bankofutah.com/wealth-management/investments/self-directed-ira. Our trust department will answer your questions and help you through the process that typically takes seven to ten business days.
With you as captain, along with the help of a compass (IRA rules), your first mate (trust custodian) and your crew (Bank of Utah’s trust team, your accountant/ CPA and attorney), you’ll be well equipped to navigate your retirement ship.
Jodie Nutt
Bank of Utah Self-Directed IRA expert
Contact Jodie
