Is a self-directed IRA worth it if you don't already have one?

[Joseph M.]

Is a self-directed IRA worth it if you don't already have one? What would be the benefits of starting to save in a self-directed IRA vs just using post-tax cash and utilizing tax strategies, such at 1031 exchanges?

[Dmitriy Fomichenko]

@Joseph M.

Millions of people have self-directed IRA, but at some point prior to that - they didn't. You can definitely benefit from having a retirement account that you are in total control.

If you don't have any retirement accounts to rollover - then you will be limited to contributions of only $5,500 per year, so in this case you can probably have a conventional account (not self-directed) so that you can build enough funds before you self-direct.

However, being a real estate agent makes you self-employed and therefore eligible for a self-directed Solo 401k, which is much more powerful then SD IRA. And one of it's biggest advantages is the ability to defer significant amount of your income from taxes into this plan (up to $53,000 per year!). Not only you can reduce your tax liability now, but you can also use your retirement account to invest into assets that you understand and can control in a tax-deferred or tax-free environment (if you utilize Roth).

Check out this article I wrote on BP blog about the benefits of this powerful investment vehicle: 

http://www.biggerpockets.com/blogs/2810/blog_posts...

The bottom line is you can continue building your personal wealth with buying real estate in your own name in parallel of using advantages to grow your retirement wealth much faster because you don't have to pay any taxes on the growth and income.

Hope this helps!