No investment (aside for FDIC-insured deposits) is guaranteed. However, most successful investors feel that the risk of investing in assets they know and understand is much less than the risk associated with making only conventional investments.
It’s not uncommon for advisors to never have heard of self-directed qualified retirement plans. We have worked with many professional advisors across the country to educate them regarding QRP’s and self directed QRP rules so they can give good financial advice to their clients.
IRS Publications state what investments are prohibited in Qualified Retirement Plans. These investments include: artwork, stamps, rugs, antiques and gems. All other investments, including stocks, bonds, mutual funds, real estate, promissory notes, foreclosures, and tax liens are acceptable as long as IRS rules governing retirement plans are followed.
Yes. To ensure compliance, you should be familiar with specific rules for 401(k)’s and in particular, self-directed 401(k)s. There are certain types of transactions that you cannot perform through a 401(k). Most importantly, the IRS prohibits “self-dealing” investments in which you or family members of lineal descent have prior ownership.
While the concept of investing in real estate and other assets in retirement plans has been around for more than 30 years, it hasn’t received a great deal of attention. Why? Most custodians that offer 401(k)s (banks and brokerage firms) focus on mutual funds and CDs-because they have financial interests…Click for more
The QRP does require more administration than something like an IRA. Since you, the business owner, will typically be the trustee in a QRP, you have a fiduciary responsibility to protect assets. This responsibility is not normally required in an IRA that has a third party custodian.
In addition to the tremendous 401(k) benefits already discussed (tax-free profits, tax deductions, asset protection and estate planning), you can invest tax-free in investments that you know and understand, which through the power of compounding interest, can create additional wealth for you and your family.
A self-directed 401(k) is technically no different than any other 401(k). It’s unique because of the available investment options. Most custodians only allow approved stocks, bonds, mutual funds and CDs. A truly self-directed 401(k) allows those types of investments PLUS specific gold and silver, real estate, notes, private placements, tax…Click for more