Private Lending from Your IRA? | Lion Investing

[Note from Rebecca: Many of our LION members have expressed an interest in using their IRAs to fund local investments. For months, we tried to track down a subject matter expert in this area, and we finally met Scott Maurer, with Advanta IRA, who provided the article below. Of course, this is not a recommendation for Advanta; that would be illegal. But we found this information helpful and think you will, too. Scott's contact information is at the bottom of the article.]

Private Lending and IRAs

Many people are unaware that their retirement funds can be invested in assets other than stocks, mutual funds, CDs, and other products offered by banks and brokerage firms. However, a self-directed IRA allows you the freedom to invest in a large variety of other assets, including real estate, private placements and private lending. When you invest within an IRA, the best part is that your returns on the loan are tax-deferred or tax-free (in the case of a Roth IRA)!

When lending money out of your IRA to an individual or entity, your IRA plays the part a bank normally would, and you decide what terms you are willing to accept when loaning the money out of the IRA. Many sophisticated investors are doing just that ? making private loans to individuals or entities and substantially increasing the wealth of their retirement accounts through earnings on the interest rates (or other terms) of these loans.

Private lending provides a flexible benefit for both the lender and borrower:

• The private lender (IRA) provides capital to the borrower much faster and with more accommodating terms than traditional lending institutions.

• The IRA owner chooses the loan recipient, the type and terms of the loan, and also decides whether to provide secured or unsecured loans.? Secured loans are backed by collateral to protect from default. Unsecured loans can be offered at a higher rate of interest in lieu of collateral.

When lending money out of an IRA, the IRS does place a few restrictions on the individuals or entities that can be on the receiving end of those funds. Keep in mind that your IRA may not loan money to disqualified persons: you or your spouse, your parents or grandparents, your children or their spouses, your grandchildren or their spouses, and entities that are owned or controlled by those individuals. When lending money secured by collateral, the IRA owner will also want to make sure that seizing the collateral if necessary will be practical and within IRS guidelines.

What role does Advanta IRA play?

As the administrator of the self-directed IRA, Advanta IRA makes it quick and easy for you to roll over an existing IRA, SEP, Roth or 401(k) into a self-directed plan so you can begin exploring alternative investments. The self-directed IRA owner maintains complete control over all of the investment decisions by choosing who they are lending to and what assets are serving as collateral. Advanta IRA enables investors to perform outside of the traditional, Wall Street box to make investments based on their own knowledge and expertise. ??

Advanta IRA does not serve as a closing agent or escrow agent for the lending transaction, but we do work with the IRA owner and other parties to insure the documents properly reflect the IRA as the lender in the transaction. After the loan has been funded, Advanta IRA would receive the payments back to the IRA and properly credit them to interest and principal as appropriate. The IRA owner can follow their account online to insure that payments are being made timely and in the correct amounts.

Contact Advanta IRA if you?d like to learn more about how you can open up your IRA account to private lending and other alternative investments. Contact Scott Maurer at smaurer (at) advantairagroup (dot) com or by calling 800-425-0653, ext. 1123.?

Source: http://lioninvesting.com/2013/07/private-lending-from-your-ira/

rob dyrdek oberon donald driver donald driver mariana trench transcendental meditation obama care