SIMPLE IRA at Vanguard to be used as a Self Directed IRA

[Demetri T.]

There are so many posts here that I don't find myself asking to many questions...  This may be answered elsewhere but I am having trouble figuring out the thought process with it before I head to my CPA.  There is a lot of information out there so I guess I am just looking for some initial information- like a get started kind of thing.

I have been self employed for some time- I have a SIMPLE IRA. My wife has a traditional IRA and both are held at Vanguard. I am thinking of making these self directed- and using them to buy more property.

Does anyone know if I can use Vanguard for this?  

Is there a way to invest in the same property with my SIMPLE and my wife's traditional?

Is there a guide somewhere on BP to look into how to get started with this process?

[Brian Eastman]

@Demetri T.

Yes, you should be able to put those funds to work in real estate.

The best thing to do will be to consult with a professional firm that offers self directed IRA and 401k plans, then follow up with your CPA. Most CPA's are not expert in this specialty field, but you will certainly want to have them on board with what you are doing.

If you are self-employed, have no full time employees other than you and your wife, and if your SIMPLE IRA is more than 2 years old, the best option would likely be a Solo 401k. This is a plan that could potentially hold funds belonging to both you and your wife, and is also much more generous than the SIMPLE IRA when it comes to new contributions.

If your current SIMPLE IRA is less than two years old, it cannot yet be rolled over to a 401k. You could look into an IRA based self-directed program in that case.

While you may be able to hold the funds of your plan with an institution like Vanguard, they will not be able to assist you with implementing such a plan.  Their business is selling equities and funds, not creating custom retirement plans and educating clients with regards to the rules surrounding the use of tax sheltered retirement savings for non-traditional asset investing such as real estate.

With the Solo 401k, for example, the plan is in the form of a trust and you can be the trustee.  As trustee, you can select a bank and/or brokerage to hold the funds of the 401k.  You can then deploy that plan capital into any allowable investment, which includes stocks, real estate and a whole lot in between.