I have a lot of people ask me about what to invest in and how. Not every time, but often, the self-directed IRA investments can be great options for people that are in the real estate industry. For this post, I wanted to go over the basic concept and give some actual real-life examples. Once you read this, if you still need help or have questions, you are more than welcome to reach out. We are here to serve and help!
What is an IRA and what does a “self-directed” IRA mean? This is an Individual Retirement Account. There are two options:
- Roth IRA – contributions are post-tax and then the growth is tax-free for life
- Traditional IRA – contributions are pre-tax and then the growth deferred
During the 2020 year, you can contribute $6k a year and add $1k if you are over 50. There are income limits for contributions for the Roth IRA and the tax-deductible traditional. However, you can always contribute to the traditional but the income limit determines if the IRA is tax-deductible or not. All traditional IRA’s are tax-deferred. The Roth IRA is the only tax-free growth IRA.
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