“Financial Liberty”  or  Rocking Chair?

It’s  Your  Choice !

Invest  Your  Retirement  Plan In Real  Estate  Assets

            Most of us believe that we cannot benefit from any retirement plan other than in whatever an average employer allows us participation.  Obviously, the clear issues with those are the limitations:  i.e., restrictions forbidding personal control of own plan, money  &  assets; limitations on variety of investments or assets allowed (typically only primarily stocks & / or bonds); restrictions on qualifications for  &  dates of vesting; the maximum (or minimum?) potential for growth in the investments, etc.  Other, perhaps even more serious possible crises are the employer declaring bankruptcy, changing policies, acquisition by another firm who changes all the rules  & / or has no employee retirement plan ( or one not as good as the previous one), etc. 

            However, you can take total control, whether or not you are self-employed or employed by someone else, or possibly not employed at all.  There are innumerable opportunities, regardless of your income  &  current status, more than one of which is appropriate for you.  Briefly, this introduces you to some basic, little-known data.  **

            Several IRA plans exist, some of which are:  Traditional, ROTH, SEP, SIMPLE, Individual(k) / Solo (k), in addition to other tax-advantaged plans, i.e. Health Savings Accounts & Coverdell Education Savings Accounts.  Investments inside these plans grow  &  compound tax-free.

            Withdrawals  &  contributions vary between different types IRAs; however, all allow investments to grow on a tax-deferred basis.  Through utilization of inherent tax-deferred qualities in IRAs, investments earnings are capable of significant growth beyond similar investments made outside of an IRA, without tax-deferred status. 

            It may not be too late to take advantage of some of these accounts for the year of 2006.  Traditional  &  ROTH accounts for 2006 contributions must be made by April 15^th or the date you file up to that date.  Others, such as the SEP, can be opened  &  contributions made up to April 15 or up to an extension date of your income tax return (within that IRS allowed extension date with no further time allowances).

            Contributions vary, some being with pre-tax dollars  &  some with after-tax dollars, ranging anywhere from $4,000 to $ 49,000, annually, based on modified adjusted gross income.  Consequently, the actual dollar figure allowed you in any given year will depend on your individual circumstance  &  some are tax-deductible on your income tax in that year.  Obviously, the growth on your investments is in addition to the contributions.  Personal consultation with a CPA, tax advisor or attorney, experienced in these accounts  &  non-traditional assets should be consulted to determine the amount to contribute for the maximization of your tax benefits for that year. 

            A spouse or child may qualify for additional accounts, as well.

            Some IRAs are one hundred percent individual contributions  &  some can be combined with an employer contribution (who may be yourself).

            A little-known fact is that these accounts can (& in my opinion, should be) one-hundred percent self-directed accounts that you own  &  control.  That means that ‘YOU’ control your destiny - your accounts; in other words, ‘YOU’ determine  &  direct the type of investments made in your retirement plan, which include investment vehicles such as the following non-traditional assets:

             This variety allows you the potential of a higher  &  more rapid growth within your plan, with investments that may be safer  &  more profitable.  Remember, because of the nature  &  power of compounding, the earlier you begin such a plan, regardless of your age, even if not necessary for income tax savings, the greater the growth factors.

            Most important is your input  &  your control.  Typically, when a bank or brokerage house tells you that you have a self-directed retirement account, it is not really.  They place restrictions on the account allowing only the investments they recommend  & / or sell, i.e. stocks  &  bonds,  &  will not even allow you to make the other types of non-traditional asset investments.  Some of these investment departments do not even know what is a truly self-directed retirement plan or that they exist.  For obvious reasons, they will even state that non-traditional investments are not good ones (although when made wisely they may be much more beneficial to you  &  your account).  The IRS rules determine whether it is a true self-directed account  &  those allow an investment variety such as investment assets named above.

            The critical factor in each of these is that there not be any “Prohibited Transactions” (improper use) of the account by you, your beneficiary or any disqualified person; in other words, follow all the IRS rules.  Among others, First, generically speaking, you  &  your family may not personally benefit from the transactions (other than the fact that it is your retirement account).  You cannot have any personal use of nor benefit from the property in the IRA.  Second, you may not personally participate in any of the paper-work  &  documents.  To accomplish this, your account MUST be opened with a Custodian Company who coordinates, signs all documents, including offers to purchase  &  contracts  &  title documents, processes all documents, cuts checks, etc.  You, as the owner, direct all the transactions.  You just cannot “touch” the transaction, itself. 

            The “Custodian” should be chartered, regulated, place cash funds in insured accounts for your benefit,  &  follow other appropriate business, trust,  &  fiduciary practices.  Your custodian should also be “passive”.  “Passive” is that it does not offer any investment advice, nor endorse any particular investments, investment products or investment strategies.  Insisting upon a passive custodian eliminates possibilities of any ‘conflicts of interest’  & places you in complete control of your financial future. 

            ---- Please, be aware, you should wisely search for, until you locate, an expert in whatever investments you are interested.  Although you will not sign documents, you want to be confident you are making wise decisions.  Remember, for once, you have the liberty  &  ability to control financial choices, whether you achieve a future of  “Financial Liberty”  or sit in a rocking chair wondering “what happened?”!!