Independent Retirement Account Essay

1106 words - 4 pages

Independent Retirement Account (IRA)

All living beings grow old with time and come to a stage when they can no longer make a living on their own. Be it animals or humans, it is a time when they have to depend on others for their survival. Yes, as human beings, there comes a time in our lives when we can no longer afford to live independently and have to make way for younger and much healthier individuals at work. So what does one do to earn a living?
There are quite a few possibilities of which Independent Retirement Account, or IRA as it is known in short is quite popular with Americans.
What is IRA? One web defines IRA as “the self-directed investment accounts that provide the incentive of tax-deferred (in the case of traditional IRAs) or tax-free (in the case of Roth IRAs) earnings on assets in the account” (FINRA, 2010).
Even in IRA, there are quite a few accounts available to individuals to operate which obviously depend on the investor’s financial goals and situations.
It all boils down to one’s knowledge, expertise and the way they see their investment returning tax-free benefits. Self-directed IRAs for example, provide large tax deductions, asset protection and estate planning benefits. However, one must understand the rules governing these retirement accounts before plunging into one. For self-directed IRA, the rules governing investment are:
• The prohibited investment types
• Self-dealing
• Indirect benefit rules
• Unrelated business income tax (UBIT) (
One of the more popular self-directed accounts is the Real Estate IRA. While there is no doubt that one’s investment advisor or custodian will try and sell you the best possible options with your investment, Real Estate IRA is undoubtedly a safe and secure investment option.
Why allow your hard-earned money invested in IRA just accrue with time when you can make it earn hard cash, short-term? While many of us think that short-term options are risky and could lead to a catastrophe, one must understand that Real Estate IRA is not like trust funds where money is put in shares.
Most major financial institutions which have custody to the majority of IRAs want IRA owners to invest in company-run funds and securities and not in non-traditional investments where they have less control. Thus, when a traditional custodian does allow such non-traditional investment, like real estate, they charge a heavy fee to deter them going ahead with the investment.
With a self directed IRA like Real Estate IRA, one can buy a real estate investment property. Real estate is today, despite the ebbs and flow of the economy, the best way to generate wealth in the world.
So what are the possible real estate investment options available to a self-directed IRA? Plenty! With globalization, countries across the globe have come closer and they no longer share boundaries (no literally). People can today buy property anywhere in the world (there could be certain restrictions...

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