Taking Title — in a Retirement Account
An investor can hold real estate in a self-directed retirement account. Many administrators and custodians offer self-directed options, almost all allow real estate ownership. Fees and services vary considerably, so do your homework. The Entrust Group, which has offices in many states, has particularly good information on real estate ownership within a retirement account. Contact Lamarr Baxter (916-708-2035, This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) with questions.
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Self Directed IRA Companies |
Phone |
Office Location |
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(916)-708-0235 |
Oakland, CA |
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(800) 455-9572 |
Carlsbad, CA |
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(440) 323-5491 |
Elyria, OH |
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(800) 969-4472 |
San Francisco, CA |
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(800) 392-9653 |
Offices Nationwide |
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(888) IRA-XCEL |
Bellevue, WA |
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(800) 521-6974 |
Denver, CO |
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(650) 593-2221 |
San Carlos, CA |
Suggested Reading for real estate in a retirement account:
IRS publication on IRAs -- http://www.irs.gov/publications/p590/ch01.html
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Timeline for Acquiring Income Property Investment in a Retirement Account |
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Step |
Time |
Description |
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Decide to Take the Leap |
-- |
Even though it may feel like a leap, switching to a self-directed retirement account is really easy. You simply gain more freedom to invest. You can still invest in bonds, mutual funds, and every other financial instrument in self-directed IRAs. |
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What’s the Cost |
2 days |
Calculate the total cost of ownership for the property—insurance, taxes, closing costs, management fees, etc. This is easy with RBS InvestorCare©. Remember all fees and costs must be paid through the retirement account. The individual and the retirement account cannot exchange any services or fees. |
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Study and Consult |
7-10 days |
Meet with advisors (legal, financial, and tax) to understand issues regarding alternative investments in self-directed retirement accounts. Remember, a real estate investment is not liquid. Since you may not withdraw funds from a retirement account (without a penalty) until your retirement, a good real estate investment fits well in a retirement account. |
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Set up the Account |
1-2 days |
Evaluate several companies before selecting a provider. Most have forms online, so the actual process is easy and fast. Find a counselor who will explain the details to you. We recommend Lamar Baxter at Entrust (916-708-0235,
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
) |
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Fund the Account |
7-10 days |
Send a check for an annual contribution, or transfer assets from another retirement account. |
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Find the Property Make the Offer |
7-10 days with RBS |
This part is very easy with RBS. Shop our property listings and choose your favorite. Since every property produces 9-12% cash return, your most important decision is choosing RBS Homes to provide your properties. Every one comes with RBS InvestorCare.. |
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Get the Loan |
10-15 days |
Real estate loans for property in a retirement account must be "non-recourse." Make sure your lender understands that your IRA will take title to the property, so the loan can conform to IRS requirements. |
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Close |
2-5 days |
RBS uses StarTex Title. Our team there can handle all your needs, especially for purchases in retirement accounts. For remote investors RBS provides courtesy closing in your area. No need to leave home—our notary will bring all the papers to you. |
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Enjoy the Return |
Many years |
Check your bank account. RBS has already deposited the rent; and the financial report is in your email. |
Roth IRA vs. Traditional IRA
Roth and traditional IRAs differ in two primary areas – taxes and mandatory withdrawals. The differences can make a significant difference to your cash flow, so study thoroughly to determine which fits your needs, both now and in retirement.
In a traditional IRA, funds are tax deductible going into the account, and taxed when you take distributions from the account. This reduces your tax burden when making contributions, but applies taxes to all the gains in the IRA upon withdrawal.
Taxes for a Roth IRA are just the opposite. Contributions into the Roth IRA are taxed at your marginal tax rate. However, all distributions from the Roth are tax free. You sacrifice a little now to gain a huge financial benefit in retirement. The tax savings can be significant, depending upon the growth of the investments in your Roth IRA.
For the withdrawals, the traditional IRA has mandatory withdrawal requirements. In contrast, the Roth IRA has no mandatory withdrawals. Here again, the flexibility and potential tax savings are considerable.
As with all investments, check with your tax and financial advisors regarding retirement accounts.