I’ve been looking into IRAs recently just for future savings purposes. I used to be completely confused, but now I’m starting to grasp all the different IRA flavors.
So, what’s a Self Directed IRA?
A self directed IRA allows you to invest in assets beyond just stocks and ETFs. You could open a Self Directed IRA to invest in a franchise, or a partnership, even buy real estate. The possibilities are pretty close to endless with a Self Directed IRA.
Contribution limits are the same as a Traditional IRA or a Roth IRA: $5000 for 2008 ($6000 if you are old. 50+)
Lending Club now open for Self Directed IRA Investing
My part time employer Lending Club announced a new Self Directed IRA investment option today in partnership with EntrustCAMA.
Here is the press release.
Should I open an IRA before April 15th?
I’m looking at a nearly $9,000 personal tax bill for 2008. I’ll be able to pay it…but I’d love to reduce the number a bit. I took the standard deduction, no other fancy pants stuff there. But when I input a $5000 contribution to a Traditional IRA (which is how I would setup a Self-Directed IRA), my tax liability drops to around $7800 using turbo tax online.
That’s $1200 I would save by funding a $5K account at Lending Club.
That’s sounds super darn tempting. I need to talk to my accountant first, but I think this might be a good move for me on the personal side (remember, my only debt now on the personal side is my mother and student loans).
Does anyone else have a Self Directed IRA? How do you use yours?
{ 5 comments… read them below or add one }
First – pay your mom! I've said it before – you have many years to "catch up" on your retirement funds – your mom doesn't. Paying her back should be your number one priority. Give her the funds to make a Roth IRA contribution in the maximum amount to assure she has a retirement safety net.
Next – saving $1,200 on your tax bill with a traditional IRA contribution is short-sided. After you've repaid your mom, any contributions you make to should go to a Roth IRA – you won't realize the tax savings now, but in 30 or 35 years, when you go to withdraw the funds, you won't be paying taxes on your withdraws. (With a traditional IRA, when you start to withdraw the funds, you do pay taxes on the $$.)
Finally, why are you looking at an IRA? You are self-employed, you should be looking at a SEP-type of plan which allows you to put way more $$ than an IRA.
A question regarding the Lending Club – is there any kind of insurance on the account should they go out of business? For banks there is the FDIC, for brokerage firms there is the SIPC if the firm fails. If the Lending Club fails, what happens?
BTW – I really don't like the audio on your website – is there a way to turn it off other than muting my computer?
Agree with SmartGirl. You really should pay off your mother as priority. It is the right thing to do.
Audio? I haven't heard a thing *taps speakers* since my first visit a few months ago. hmmmm…
I have a self-directed traditional IRA through Equity Trust Company (http://www.trustetc.com). I've been pretty happy with them. I have mostly funded notes for real estate through my IRA. But I agree with SmartGirl that you should consider opening a SEP as long as you are running a business.