Take Control of Your Finances and Unlock Your IRA/401K

By Carl Fischer

As an administrator for CamaPlan Self Directed IRA, I’ve heard people complain that they have lost up to 50% of their retirement plans. Some of these people are now happy that they have some of it back. If you are happy with “hope”as a strategy then you have no need to read further. This article is for individuals who want to use their own expertise and knowledge in deciding what investments to make, and take control of their financial future.

The majority of our clients invest in four major categories:

  1. Real estate
  2. Notes and mortgages secured by real estate
  3. Precious metals such as gold and silver coins and bullion
  4. Private placements such as LLC’s, limited partnerships, C-corporations, trusts, etc.

Most of our clients feel safer with hard assets that they can see and touch and are pretty sure will never lose all value. They look for a hedge against inflation and understand what kind of returns they need to make to secure a financial future. The two main assets our clients choose to solve these concerns are real estate and gold. The majority of real estate investment group members, already working with real estate, choose to invest their IRAs into property to take advantage of tax-free or tax-deferred rental income and appreciation. We are not talking about REIT’s all over the country, but property you would buy in areas you are familiar with.

Investing in Real Estate With Your Self Directed IRA

A self-directed IRA gives you the freedom to invest in non-traditional assets, such as single-family and multi-unit homes, apartment buildings, co-ops, condominiums, improved or unimproved land (leveraged or unleveraged), commercial property, and more. If your self-directed real estate IRA doesn’t have enough money to pay for the entire purchase, you can finance or leverage any income-producing property. The property is used as the collateral for the loan. Because the property belongs to your IRA, the debt must be repaid from assets within your IRA, whether it’s income from the property, permissible contributions, or other assets in the IRA. 

All real property is either purchased or sold for your benefit using your Qualified Plan and/or IRA funds. Your entire transaction must flow through the tax-free or tax-deferred retirement account. The escrow must be opened by the account, not in the name of the beneficial owner. Vesting is always in the name of the account. The funds in your IRA may be used as good faith deposits, down payments, or purchase money. When purchased, these properties become assets of your retirement plan or account. Certain rules and regulations apply, such as the following:

  • You may not personally own property that you intend to purchase with plan funds and you must ensure that your intended purchase is not a prohibited transaction.
  • Neither you, your spouse, nor your family members (other than siblings) may have owned the property prior to its purchase by your plan.
  • Neither you nor your family members (other than siblings) may live in or lease the property while it’s in your plan.
  • Your business may not lease or be located in or on any part of the property while it’s in your plan.
  • You may receive any property as a distribution from your plan as a retirement benefit.

Investing in Notes, Mortgages, or Deeds of Trust With Your Self Directed IRA

In today’s environment, many individuals are becoming lenders and bypassing the bank to maintain the higher returns. As one client remarked, “Why should I give the bank my money for less than 1% and have them lend it out at 6+% to people in my neighborhood? I can do the same thing myself with a good attorney and common sense. There are plenty of good people looking for loans.” A note is a vehicle that is used to extend credit from one or more individuals or entities to another individual or entity. There are two types of notes:

  • Secured notes are backed by collateral, providing the lender increased assurance of return of the loan amount and interest, such as mortgages and deeds of trust.
  • Unsecured notes are not backed by collateral. You might consider an unsecured note for perhaps a friend or a non-disqualified relative, but it is a higher risk—and sometimes reward—than a secured note.

To clear up confusion, a trust deed, deeds of trust, and mortgage notes are largely the same investment, depending on the state that you reside in. Your CamaPlan Self Directed IRA may invest in trust deeds, mortgage notes, and deeds of trust and other interest-bearing notes. These notes may be either in first or subordinate positions and may be purchased from brokers or private parties. Usually, the documentation is recorded at county recorder’s offices, and title to the property is insured as instructed.

You may also purchase or sell portions of mortgages. In such cases, your retirement account holds an undivided interest in that portion of the note and receives the proportionate amount of income due under its terms. In addition, you may purchase discounted notes as well as real estate purchase options.

You will need to complete a CamaPlan Self Directed IRA Asset Purchase Directive to properly complete the transaction. It is important that you follow the guidelines provided on these forms to avoid any unnecessary delays and costs.
As with all real estate purchases, these retirement investments entail specific requirements that are critical to the smooth completion of the transaction. 

In conclusion, you have a choice to make—take control of your investments or continue to use “hope” as your strategy. For more information on these subjects and more, contact us at 215-283-2868.

Carl Fischer is a Certified IRA Services Professional (CISP) and an investor. He is a principal of CamaPlan Self-Directed IRA LLC. He can be reached at Nothing in this article is intended as tax, legal, or investment advice.

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