Lawsuits and Self-Directed Retirement Acccounted

[Chris C.]

If one has an self-directed IRA or 401K, how do you go about insurance and lawsuits? For example, after regular home-owners insurance, could you be sued for the balance in your retirement account? Would you need to have two umbrealla insurances (one for retirement account and one for personal/business/LLC use)?

[Dmitriy Fomichenko]

@Chris C.

If you want to use an umbrella policy for additional coverage for your IRA-owned properties - you won't be able to use your personal umbrella insurance and would have to buy separate one just for IRA/401k.

You also want to be selective on the investments you put in your self-directed IRA or self-directed 401k. You don't want high risk investments there. I personally prefer private lending (trust deeds) in my retirement account, the reasons are: low risk, nice returns (10+%), and completely passive.