Operation Of Your Self-Directed IRA/401k

This report does not cover the procedures for operating your IRA within the approved guidelines. Every custodian has ample books and documents describing permitted transactions. IRA beneficiaries are cautioned to abide by related party rules, prohibited transactions in collectibles, unrelated business income tax and the ramifications of operating outside of the rules. The penalty is possibly all the assets of the IRA.

Investors I know pay careful attention to the rules, since the rewards are great and the penalties are severe. Also, most investors I know do not own real estate in their IRA due to the liability involved. Most investors use options and loans with IRA funds.

Investing in real estate is allowed by the rules and a direct investment in real property should be made using a land trust as the titleholder to provide the safety and privacy to limit liability.

Use the custodian’s publications for guidance. The IRS publication on IRA procedures is also helpful and can be downloaded from their website.

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