Question 1

What is a Self-Directed IRA?

Accepted Answer

A self-directed individual retirement account (SDIRA) is a type of individual retirement account (IRA) that can hold alternative investments. While the account is administered by a custodian, the account holder is responsible for managing its assets. Thus the name, "Self-directed". Self-directed IRAs are best suited for more sophisticated investors who want to participate in alternative investments and get the benefits of a tax-advantaged account.

Question 2

What is a Solo 401(k)?

Accepted Answer

A Solo 401(k) is a retirement account design for self-employed or businesses with with no full-time employees. The Solo 401(k) plan offers many of the same benefits as a traditional 401(k) plan. It allows the business owner to make contributions as both the employer and the employee, maximizing their contributions.
 
Contribution limits to a Solo 401(k) plan are higher than traditional plans. The 2020 contribution limit is $57,000. If you are over the age of 50, the limit is increased to $63,000.

Question 3

Can I invest through a self-directed IRA and Solo 401(k)?

Accepted Answer

Accredited investors can join a real estate fund on {Your Fund} using capital from a self-directed IRA through a custodian. Investors can also send money directly from their Solo 401(k) plans. Talk to the sponsor of the fund to learn more about your options.

Question 4

What is the process for completing an investment?

Accepted Answer

For Solo 401(k)s, you can send money directly to {Your Fund}.
 
For SD-IRAs, each custodian has different processes to fund an investment. We recommend you research various custodians to determine which one best suits your needs. Different custodians require different information on your investment so please make sure to understand their requirements prior to setting up an account with them.

Question 5

Can I transfer self-directed IRA funds or Solo 401(k) funds into my existing account?

Accepted Answer

No. Investors need to set up a separate account for retirement funds.

Question 6

Is all income from investments tax-deferred?

Accepted Answer

Interest received from investments is generally tax-deferred. For Self-Directed IRAs, on equity investments, most income is tax deferred but you may receive Unrelated Business Taxable Income (UBTI) from some equity investments. Any UBTI income would be taxable. Any pass through UBTI will be reported to your on your K-1. Please work with your tax accountant to ensure you pay any necessary taxes on UBTI income.

Diversify your Retirement Funds