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Self Directed IRAs — How They Work
You must take special care not to "self deal" with your account. For example, you cannot buy an apartment building and then live in one of the units for free or fund a startup business that gives you a salary. A trust company will help you setup and manage your self directed account and help you comply with the IRS rules. When purchasing real estate through a self directed IRA you must be careful and follow the rules. Equity trust company has a great page of Real Estate IRA Frequently Asked Questions. When buying rental property it's a good idea to use a trust company to manage the IRA and a property management company to collect the rents. This way you can prevent the IRS from accusing you of "self dealing". How to open an Self Directed IRA account Open an account with a special custodian or trust company and transfer your current IRA money into it. Then you have the trust company send the funds into an investment of your choice. If you decided to purchase real estate with your IRA, the trust company would send money to the escrow company during the purchase. All rental checks from tenants would be made out to an LLC and mailed to the trust company directly. Basically, with a self administered IRA you must be careful to keep all transactions at arms length. That's why it's a good idea to use a trust company to administer your self-directed IRA. Useful Links:
Comment on this article:
Yes, read the article again. They recommend one in it - Equity Trust Company. They are the largest company in the nation that does this. (http://www.trustetc.com/index.html)
Can anyone recommend a good trust company or custodian to use with self administered iras?
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