a single investment too. All of the IRAs can be utilized to prepare for retirement and build your nest egg, each with their own unique benefits. Traditional IRAs could offer tax deductions for your contributions and could be a good option for where to move an old 401(k) or other plan from a previous job. Roth IRAs are my personal favorite account, offering the possibility of complete - ly tax-free distributions in retire- ment. Employer plans like the SEP, SIMPLE, and Solo 401(k) are great for small business owners, allowing them to make large contributions. A Coverdell ESA is a great tool for building money tax-free to pay for your children’s educational expenses like tuition, books, or school sup - plies, all the way until they reach age 30. A Health Savings Account can be invested and grown to pay for health expenses for yourself and your fam- ily tax-free. I love having an HSA because I never have to think twice when medical expenses present themselves, big or small. An HSA can be used to pay for vision, dental, medications, x-rays, surgeries and
companies and one of the most pop - ular being promissory notes. However, there are some limita - tions for IRA investments outlined in the Internal Revenue Code, including investments in life insurance con - tracts and in “collectibles,” includ - ing things like art, antiques, most coins and alcohol collections. There are also restrictions in regard to the transactions that are permitted when investing your Self-Directed IRA. Disqualified persons are prohibited from engaging in certain transac - tions with the account and spoiler alert – you, most of your family and your companies are considered disqualified. Prohibited transac - tions include things like buying or selling, lending money, or furnish - ing goods or services between the account and the disqualified per - sons, just to name a few of the major transactions to avoid. For example, I couldn’t direct my Self-Directed IRA to purchase a rental property I already owned personally or have my spouse do the fix-ups on my IRA owned property, as this would be considered a prohibited transaction.
so much more, all with the big perk of coming out tax-free.
3 THE INVESTMENT POSSIBILITIES ARE ALMOST ENDLESS, BUT BE SURE TO CONSIDER THE RESTRICTIONS When real estate investors begin to realize the many incredible invest - ment opportunities that exist in these accounts, I always enjoy watching the wheels turn and hearing “So I can do…” or “Wait, so I can do that too?” I’m in full Cady Heron, circa 2004 mode like “the limit does not exist.” Might be showing my age with that reference! Self-Directed IRAs are great for the do-it-yourselfer type, as they allow you to invest in an almost endless variety of alternative assets. From the basic to the unusual investment, there’s some - thing for everyone here. At Quest Trust Company, we process around 1,000 investments a month and see our cli - ents investing in a multitude of things, including rental properties, flips, sell - er financing, apartment complexes, commercial real estate, oil and gas, livestock, shares in all types of private
4 : : INVESTOR REV I EW
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