How Your Retirement Fund can Fund Your Retirement

Having enough money for retirement is a stress-inducing thought for most people. It can be worrisome trying to save money to last 20+ years. That is why investing is a viable option for many people. Instead of only trying to save for retirement, it would be less stressful, and possibly more sustainable, to save for an investment. Using a self-directed IRA to buy investment property is one of many ways to fund retirement. According toInvestopediait may not be as easy as investing in stock, but it is one of several ways to buy real estate. Investing with an IRA means buying through a custodian, someone who manages the transaction, paperwork, and financial reporting. While a custodian is needed, the IRA needs to be free of a brokerage. A custodian helps guide the process, while a brokerage would make all decisions, even if the brokerage would allow this type of real estate investment. It is also important to keep in mind that the IRA and the investor are separate entities and the IRA would “own” the property, not the investor.

Being aware of the rules that come with buying through an IRA is crucial. When buying investment property with an IRA, it is just that, an investment. It cannot be used as vacation property, an office, or a home for spouses, parents, grandparents, great-grandparents, children or their grandchildren or great-grandchildren. It can also not be used for service providers or the IRA or any person or entity that owns more than 50% of the investment. An investor can also not buy from any of these people. When buying the property, it is likely that the investor will have to buy in cash. When it is purchased any money made from it will go back into the IRA. That is why if the investor is buying for retirement specifically, it can be beneficial to use the IRA. When investing with an IRA it is always advisable for the investor to seek out a tax professional. Like with many investments elevated risk can mean high reward. Investing with an IRA in real estate can be risky but the payoff just be the ticket to increase your retirement savings and decrease the stress associated with it!

http://www.investopedia.com/articles/retirement/08/self-directed-real-estate-iras.asp