Trees in an IRA or an HSA with New Direction IRA, as Seen in Wall Street Journal

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Since the March 2nd Wall Street Journal article “IRAs Get Sexier”, which described an IRA owning Koa trees rather than stocks and bonds, the phones at New Direction IRA have been ringing off the hook. According to CEO and co-founder Bill Humphrey, "It seems like more investors tired of Wall Street want different investment choices." With self directed accounts, clients can invest in whatever they choose. Humphrey listed trees, real estate, gold, private companies, and other examples of client retirement investments. He said, "A Self Directed plan from New Direction opens the door to whatever investment you believe will return the best results long term."

At New Direction the focus, rather than selling or recommending investments, is to help the clients learn about their options and guide the client through the process of making it happen. Co-founder and CEO Bill Humphrey said, "Self Direction is not for everyone. The self directed investor must be willing to take the responsibility for investment choices. Although their outside advisers or associates can help. Since we don’t sell any investments, we don’t question your choices or try and steer your decisions. Our clients already have the sexiest IRAs on the block." New Direction offers Roth and Traditional IRAs, SEP IRAs, as well as 401k plans.

Humphrey warns clients and potential clients not to overlook the HSA for retirement expenses of the medical variety. Creative investors are discovering the investment potential of HSA funds and some clients feel that the tax shelter of an HSA can be better than either a Roth or Traditional IRA. New Direction includes Self Directed Health Savings Accounts in the available plans, Humphrey explained, because many employers are now offering plans in conjunction with HSA contributions.

Most investors look at an IRA as a long term investment, and recently, according to New Direction, more HSA investors are doing the same thing. As mentioned in the WSJ article, investors in hardwood trees are looking for a long term return. Humphrey said, "Our clients mention the low initial amount required as one of their reasons for making the investment aiming that the trees will 'grow' in value between now and retirement."

A New Direction HSA can purchase Hawaiian Koa trees or whatever investment they choose, and harvest future profits. Those profits are never subject to tax, provided distributions are used for qualified medical expenses. And HSA contributions are not subject to tax either. Thus, HSAs offer tax free contributions and distributions as well. Account holders generally defer distributions from HSAs to retirement years while allowing the account to grow in the meantime.

Given the lower typical balances in HSAs, the focus is often on lower priced investments. Small plan balances don’t necessarily limit the client to small investments. HSAs and IRAs with low balances may also, as mentioned in the WSJ article, make purchases with other investors or using debt leverage.

Since 2003, New Direction has focused on education of investors on the details of the process and rules. They teach hundreds of free webinars and classes to educate both new and experienced investors how the take advantage of a self directed plan. Through their professional training classes for CPA and others, the details of tax treatment of profits of the plan and any UBIT (unrelated business income tax) are also addressed.

New Direction IRA, Inc., a self-directed IRA plan provider and record-keeper, offers only self-directed IRAs, HSAs, Coverdell educational savings accounts, plus company sponsored SEP, SIMPLEs, 401k plans and recordkeeping for qualified plans and defined benefit plans. They can be reached at 303-546-7930 or toll free at 877-742-1270. Visit their website at NewDirectionIRA.com. New Direction does not offer investment advice nor do they sell any investments.

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John Sheflin
New Direction IRA
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