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Self-Directed IRA Lending

Self Directed IRA lending

Investing with a Self Directed IRA can be a great alternative to investing with conventional IRAs. Conventional IRAs are very limited on the types of investments allowed. Typically conventional IRAs are only allowed to invest in stocks and bonds.  The options are much brighter through a self-directed IRA. You can invest in many other things through a self-directed IRA that are non-traditional investments such as real estate, physical gold and silver and private placements.

With so many different investment options available through a self-directed IRA, it can be overwhelming to know how exactly you should invest with your self-directed IRA. While we would love to make it easier for you it is ultimately your decision as to what you will be investing in.

One thing to note is that the two most common types of investments inside a self-directed IRA are real estate and gold or other precious metals. Those are great options but you don’t have to be limited to just real estate or precious metals.

One option that you may or may not know of that can also have great returns for your retirement account is lending out your IRA funds, AKA, self-directed IRA lending.  What is lending out your IRA funds? In essence, you are filling the same role as a bank. You are lending someone money and they pay you back with interest.

If you are interested in learning about some of the benefits to lending through an IRA check out, “Want To Be The Bank? Now You Can Through IRA Lending”.

IRA lending Procedures

  • The IRA is the lender, not you personally.  Therefore, if American Estate & Trust were the custodian holding your IRA the title of the loan needs to read “American Estate & Trust FBO______________clients name”.  FBO stands for For Benefit Of.
  • The loan must be real transactions with a specific interest rate and terms
  • You cannot lend to a related party.  This includes you, your parents, or children.
  • Any expenses related to the loan transaction (i.e. attorney drafting up loan agreement) must be paid with IRA funds.
  • All income generated from the loan must go into the IRA account and not in the clients’ personal bank account

If you have any more questions about self-directed IRA lending, feel free to call or email me.

Author: , Self Directed IRA Professional