The Argument Against The Self Directed IRA

[Account Closed]

Hi all, as seems to come up every year or two, when I am scrambling to figure out how to minimize  the club over the head,  the internal temptation of a SDIRA arises within. When I search BP there is a lot of info pitching them, their greatness etc etc. I am needing the contrarian view. There can be tremendous benefit , no doubt, not denying that. What I am looking for is whats the argument against them.

One of the big ones is the rules etc. Say I want to buy a park and I am personally guaranteeing the loan , have a lender , we are good to go. Whats the point of a retirement account if you can not invest in the properties you want to and the deals you want to , in the way you want to? Say age 55 , I am treading along, find a great deal but it conflicts with the IRA rules, do I pass , do I take the penalty?

While I understand there are workarounds for several of these things , trying to find someone else who will fund etc but are the SDIRA benefits worth losing control and freedom? 

Also, i might become real boring when I hit 60 and need no more than a deck of cards and mcdonalds coffee.  I think its crazy to hold off on living until your that age when often times health starts deteriorating. ( I believe savings , planning etc is important but for the sake of my general point here) . Is the benefit truly there? 

While I understand the temptation of getting away with buying a 1 dollar burger to satisfy your hunger today, is it really worth it down the road when the true cost shows up? 

Anyone else gracefully pay their tax bills knowing they maintain the control to stroke a check without figuring out if they are "allowed" to use their money in a way someone else permits? 

I am all ears......

[Crystal Smith]

Originally posted by @Account Closed:

Hi all, as seems to come up every year or two, when I am scrambling to figure out how to minimize  the club over the head,  the internal temptation of a SDIRA arises within. When I search BP there is a lot of info pitching them, their greatness etc etc. I am needing the contrarian view. There can be tremendous benefit , no doubt, not denying that. What I am looking for is whats the argument against them.

One of the big ones is the rules etc. Say I want to buy a park and I am personally guaranteeing the loan , have a lender , we are good to go. Whats the point of a retirement account if you can not invest in the properties you want to and the deals you want to , in the way you want to? Say age 55 , I am treading along, find a great deal but it conflicts with the IRA rules, do I pass , do I take the penalty?

While I understand there are workarounds for several of these things , trying to find someone else who will fund etc but are the SDIRA benefits worth losing control and freedom? 

Also, i might become real boring when I hit 60 and need no more than a deck of cards and mcdonalds coffee.  I think its crazy to hold off on living until your that age when often times health starts deteriorating. ( I believe savings , planning etc is important but for the sake of my general point here) . Is the benefit truly there? 

While I understand the temptation of getting away with buying a 1 dollar burger to satisfy your hunger today, is it really worth it down the road when the true cost shows up? 

Anyone else gracefully pay their tax bills knowing they maintain the control to stroke a check without figuring out if they are "allowed" to use their money in a way someone else permits? 

There's a lot to swallow in your post, but as I read between the lines it seems like you're asking is it worth it to have your IRA make all the money & you benefit later, or just do the deal as a regular deal, pay your taxes & benefit now?

The answer to the question depends on how much do you need  to maintain your lifestyle right now.  It's no different than investing in a 401K w/ tax benefits.  Our experience w/ the SDIRA- There were some deals over the years where the tax free profit from a deal went straight to the SDIRA but we decided we wanted to use a portion of the profit to benefit us now.  It was no different than taking an early withdrawal from your 401K.  We paid a penalty & tax but the rest stayed in tax free.  Other deals we left all the money in the SDIRA.  

The benefit of the SDIRA are the options it gave us to save/avoid tax $. W/ proper planning the options can add up to hundreds of thousands available to spend later in life.