The Four Stages of an IRA
Copyright 2006 Damon Clifford
With all these different names and terms being thrown around in the financial community, it can get very confusing on what something is, and what it is not.
How many times has it happened to you?
Let me go through and explain the four stages of an IRA.
Stage 1 ? Regular IRA
Everyone knows what the traditional IRA is.
It is what most of us have our money in.
We call up Fidelity, Charles Schwab, or Merrill Lynch and give them our money.
With this IRA, they make the investment choices for you.
They charge you for this, as they are managing your money.
It could be either fee based or commission based depending on the custodian you chose.
Stage 2 ? "self directed" IRA
Stage 2 takes it a little step further.
You still have your money with Fidelity, Charles Schwab, or Merrill Lynch but they allow you to make the decisions.
They have given you a "self directed" IRA.
However, you can only invest in their products which can include stocks, bonds, and mutual funds.
What happens is that they will offer you Microsoft, GM, or Starbucks stock and instead of them choosing which is right for you, they allow you to choose the stock.
With this control (over which stock you choose), they call it a "self directed" IRA.
A simple test to see if you really have a self directed IRA is to ask your custodian if you can invest in real estate and other non-traditional assets.
If they say "no, you cannot buy a house with your IRA", then it is not a "true" self directed IRA.
Okay, here's where we take the big jump from traditional investments to non-traditional investments.
Remember, the traditional investments are typically stocks, bonds, and mutual funds, which all of the larger custodians will offer to you.
The non-traditional investments include real estate, energy, tax liens, and many more.
Stage 3 ? Self Directed IRA
With the self directed IRA you are now allowed to invest your IRA funds in non-traditional assets.
The custodian for the non-traditional IRA will hold your funds for you.
They make their money by charging different types of fees.
These fees can include asset fees, transaction fees, and maintenance fees.
Each custodian is a little different, so you may want to check a couple of them out and see if any of them are a good fit for your particular types of investments.
When you find an investment you want to make, you have to get approval from the custodian first.
This can take time, and depending on the types of investments you are making, you may lose out on "quick turn" investments.
I have seen many investors lose out on an investment because they could not fund it in time.
On the flip side, I have seen many investors who were already at the fourth stage of an IRA and were able to fund the investment and reap the generous returns.
Stage 4 ? Self
Directed IRA LLC
The self directed IRA LLC is by far the most flexible IRA tool, and because of this, one must always be aware to stay within IRS regulations.
You have complete control over your funds.
You are the only one that will be held responsible for the success of managing your IRA account.
This is why the Self Directed IRA LLC is not for the "novice" investor.
With the self directed IRA LLC, there are four main benefits that none of the other levels of an IRA can offer.
First, the self directed IRA LLC provides the lowest custodian cost on their clients.
Second, there is no need for you, the investor, to ask permission for an investment.
Who is going to know more about that "hot" property just around the corner from your house, you or a custodian in Chicago?
Third, there is the extra layer of LLC protection.
It would make it just that much harder for someone to try to seize your assets in litigation.
Finally, and most importantly, you have checkbook control of your account.
You are able to make on the spot decisions about your investments.
You can use this as leverage against the investments you are considering.
Now you should have a better understanding of the different levels of an IRA.
Do you have the type that best suites your needs?
As more and more investors learn about non-traditional assets and how it can improve their portfolio returns, I hope to see many more of them at the fourth level of an IRA
Roth IRA
The Roth IRA (Individual Retirement Account), named after Senator William V. Roth, Jr., came into effect on January 1, 1998. A result of the Taxpayer Relief Act of 1997, the Roth IRA provides a benefit which is otherwise not available in any other form of retirement savings. If you meet the criteria and subscribe to the Roth IRA, all your savings will be tax-free when you or your beneficiary draws on them.
Another advantage is that you can also avoid the early distribution penalties, which you would otherwise have to pay with any other type of withdrawals.
The picture, however, is not all that rosy. This is because you don't get a deduction when you contribute to the Roth IRS.
But since you already paid the taxes for the money contributed to this account, you don't have to pay any at the time of withdrawal.
You need to meet certain eligibility criteria in order to contribute to the Roth IRA. One basic condition is that you should have earned...
Ira > Roth IRA
A SECRET WAY A NEWBORN BABY CAN OPEN A ROTH IRA!
The Roth is kind of weird until you get used to it in terms of how much you can put in (contribute) each year depending on how much you earn (compensation). Because of this you really have two limits, one dealing with your compensation and the other dealing with your contribution. Let me explain.The first contribution limit has to do with compensation, in other words you have to be making some money somewhere. As mentioned, you must have some form of compensation to qualify to make a contribution, but there is also an income limit that says whether or not you can put money in; make a contribution. If your adjusted gross income exceeds these limits, you are no longer eligible to contribute to a Roth IRA.
In 2004, the adjusted gross income limits were:?If your tax filing status is "Married Filing Jointly" - $160,000 ?If your tax filing status is "Married Filing Separately" (and you live with your spouse) - $100,000 ?If your tax filing status is "Single", "Head of Household" or ...
A SECRET WAY A NEWBORN BABY CAN OPEN A ROTH IRA!
Ira > A SECRET WAY A NEWBORN BABY CAN OPEN A ROTH IRA!
Asset Exchange Strategies, LLC and (NAFEP) Partner to Provide Financial Advisors Ability to Help Clients Invest in Alternative Assets with an IRS Compliant IRA-LLC
Austin, TX and Salt Lake City, UT (ContentDesk) March 7, 2006 -- Asset Exchange Strategies, LLC, the leading self-directed IRA advisory firm enabling investors to invest in real estate and other non-traditional assets with an IRA, and the National Association of Financial and Estate Planning (NAFEP) today announced an agreement making Asset Exchange the exclusive advisory firm and master distributor of self-directed IRAs to NAFEPs 1,200 Certified Estate Advisor (CEA) members through its Premier IV IRA-LLC product.
As a result of the arrangement, Asset Exchange Strategies the foremost provider of Self Directed IRA LLCs will work directly with NAFEP certified financial planners, securities reps, insurance agents, attorneys, CPAs and others across the country to enable their clients to purchase real estate, notes, tax liens, private stock and other non-traditional assets with their IRAs, addressing growing demand and further expanding Asset Exchanges market reach. As the nations...
Ira > Asset Exchange Strategies, LLC and (NAFEP) Partner to Provide Financial Advisors Ability to Help Clients Invest in Alternative Assets with an IRS Compliant IRA-LLC
How to Stretch Your IRA Tax-FREE
(ContentDesk) May 24, 2004 -- Income taxes are a great inhibitor to building wealth. I've talked about the power of stretching an IRA across multiple generations and how it can build tremendous wealth. Now, I'll show you how it can be done income tax-free.Last week I shared a little-known secret of how to legally turn an investment of $3500 per year into millions and millions of dollars. No, it wasn't by winning the lottery! It was through the power of ?stretching' an IRA. If you missed it you have to read it under the article archive at www.guardingyourwealth.com.
(Mr. Voudrie responds to questions from readers on an almost daily basis.
If you would like clear straightforward unbiased answers to your financial questions, contact e-mail protected from spam bots)Most people think that when they inherit an IRA that they have to take all the money out and pay taxes on it right away. But the IRS...
Ira > How to Stretch Your IRA Tax-FREE
Roth IRA Rules
If you are thinking in terms of saving for your retirement, then the Roth IRA can prove to be a fruitful option. You can contribute a certain amount of your compensation income into a Roth IRA account. The amount contributed is nondeductible and so Roth IRAs, or individual retirement arrangements or individual retirement accounts, as they are commonly called, are the ideal way to enable your earnings to grow tax-free. In fact, the Roth IRA provides earnings that are tax-deferred and possibly tax-free. The contributions themselves are subject to tax deductions, but the distribution or withdrawals are not.Yet there are some Rules and regulations associated with the Roth IRA, and not all people are eligible for this retirement savings option.
First of all, the maximum amount that you can contribute to this account in one year cannot exceed $4,000 or 100% of your gross adjustable income, whichever is less.
To contribute to the Roth IRA, you need to have taxable income,...
Roth IRA Rules
Ira > Roth IRA Rules
5 Simple Steps: Earn an EASY ROTH-IRA Million!!!
So, you wanna earn a million dollars, super-duper easy? How would you like the federal government to give you a big, huge tax break? Wouldn't it feel deliciously good to earn a Million Dollars of income, completely tax free? How would you like to earn a million dollars of income passively, quietly, without lifting a finger? Well, put your seatbelts on, folks, because in a brief nutshell, I'm going to introduce you to the financial vehicle that you've been looking for! Welcome to the wonderful world of investing through a ROTH IRA in 5 simple steps:1. What is a ROTH IRA?2. Which way should I go?ROTH IRA or Traditional IRA?3. When Should I start Investing in a ROTH-IRA?4. How Long Before I Earn $1,000,000 ? One Million Dollars?5.
A ChecklistBefore we proceed, A couple things to please keep in mind. A ROTH IRA, while completely simple and easy for all of us to understand, is not without complexity, and each individual is different. Laws change, so always check with your financial...
5 Simple Steps: Earn an EASY ROTH-IRA Million!!!
Ira > 5 Simple Steps: Earn an EASY ROTH-IRA Million!!!
oil prices Ira The Four Stages of an IRA
Ways to Find a Cheap Loan
If you're in the process of trying to find a cheap loan, you might find it frustrating and wonder if you're ever going to find the loan that you want. If you haven't already, you might want to consider applying for a cheap loan online instead of using a traditional lender? online lenders can usually offer a competitive if not better loan, and may feature a variety of repayment options as well as a convenient application process and 24 hour inquiry and support availability. Combine that with the...
cheap airfare
Ira > Ways to Find a Cheap Loan
Gardening - For the Love of Chocolate - New Specialty Nursery Grows "Chocolate" Plants
Imagine a garden filled with chocolate ? chocolate mint; chocolate columbine; chocolate morning glories; chocolate nasturtiums; chocolate daylilies; chocolate foxglove; chocolate sunflowers and much more.Imagination becomes reality this spring at Chocolate Flower Farm where owners Marie Lincoln and Bill Schlicht specialize in growing unusual, rich, dark plants that add a spot of drama and exotic beauty to the garden. Not just chocolate colored plants but plants in shades of maroon, purple and...
Ira
Ira > Gardening - For the Love of Chocolate - New Specialty Nursery Grows "Chocolate" Plants
An Introduction To Sports Betting
People bet on all major sporting events throughout the world. Be it the Super Bowl or a soccer match in England, millions of dollars are at stake in sports betting. Betting on team sports is illegal throughout most of the United States. Nevada is the only state to legalize sports betting.
Sports betting is typically done at a "bookie." This is a place where a gambler can place bets on various sports competitions including football, baseball, basketball, soccer, hockey, horse racing...
Ira > An Introduction To Sports Betting