Learn the Rules ~ Avoid these Mistakes
- Getting a property under contract then opening a self-directed IRA
- Taking personal possession of IRA proceeds
- Signing documents on behalf of the IRA
- Investing more than is in the IRA account (not accounting for fees)
- Providing out of date or incorrect wire instructions
- Asking that funds be sent to a 3rd party for an IRA investment
- Incomplete legal documents (notes without maturity dates, etc)
- Personally funding the earnest money deposit
- Forgetting it takes us a couple days to review documents
IRAs (Individual retirement accounts) come in the form of traditional, Roth, SEP, Simple, Spousal, and Inherited and they have different rules for contributions and disbursements.
“Self-Directed” means you choose the assets such as precious metals, real estate, notes, businesses, etc. Not just investing in mutual funds and the stock market.
Prohibited transactions can disqualify your entire IRA account so learn what the rules are and follow them carefully. Prohibited transactions include hiring a parent, grandparent or child (lineal descendants) to work on your properties or sell them as a realtor. You MAY hire nieces, nephews, uncles, aunts though.
For instance, if your IRA buys a house near the college your son goes to, your nephew can live in it, but your son can’t. Your nephew can mow the lawn, but your son can’t.
Do proper due diligence on any companies you want to invest your IRA with to ensure they have not committed crimes, fraud, etc. You can check them out through the SEC and googling “their name fraud”.