American IRA CEO Compares Self-Directed IRA to Standard 401(k)

Share Article

A Self-Directed IRA is one of the most popular ways to introduce a level of diversity into a retirement portfolio. But is a Self-Directed 401(k) the ideal type of IRA for some investors? Jim Hitt recently took to the American IRA blog to weigh in.

American IRA CEO

American IRA CEO, Jim Hitt

These different structures both have the same goals for individuals—maximizing retirement—but the way in which they’re constructed leaves some wiggle room for fitting the account type to the individual.

Self-Directed retirement investing is not a new notion. Many investors have been guiding their own retirement strategies for a long time. But according to Jim Hitt of American IRA—who recently published a blog on this topic at the American IRA website—there are some fundamental questions that investors should ask themselves before they decide on whether they want a Self-Directed IRA or Self-Directed 401(k).

These different structures both have the same goals for individuals—maximizing retirement—but the way in which they’re constructed leaves some wiggle room for fitting the account type to the individual. Jim Hitt noted in the post that both of the account types will protect the income of the individual from tax liabilities both at the Federal and State level, which is a tremendous incentive to put money away in a retirement nest egg.

Jim Hitt writes that these two types of accounts split, however, when the details are taken into account. For example, the post writes: “Self-Directed 401(k)s may help shelter any leveraged assets from a special tax called unrelated debt-financed income tax. This is a tax on any current income or capital gains attributable to other people’s money, rather than your own.”

Another difference is the ability of 401(k) account owners to take loans—borrowing money directly from an IRA is illegal, with only a narrow exception during rollovers. But investors can borrow money against a Solo 401(k) plan for up to five years. This provides some flexibility for those who really know how to maximize the use of leverage within their retirement investing—but it’s not necessarily something that will happen for investors every day.

These subtle differences can be hard to understand, Jim Hitt points out, but knowing the differences is key to matching an investor with the right type of retirement account. “People need to know about these subtle differences,” says Jim Hitt, “because at the end of the day, they’re not that subtle. They can add up to a lot of savings for retirement investors.”

For more information, read http://www.AmericanIRA.com and find the article posted there, or call 866-7500-IRA.

About:

American IRA, LLC was established in 2004 by James C. Hitt in Asheville, NC.

The mission of American IRA is to provide the highest level of customer service in the self-directed retirement industry. Mr. Hitt and his team have grown the company to over $250 million in assets under administration by educating the public that their self-directed IRA account can invest in a variety of assets such as real estate, private lending, limited liability companies, precious metals and much more.

As a self-directed IRA administrator they are a neutral third party. They do not make any recommendations to any person or entity associated with investments of any type (including financial representatives, investment promoters or companies, or employees, agents or representatives associated with these firms). They are not responsible for and are not bound by any statements, representations, warranties or agreements made by any such person or entity and do not provide any recommendation on the quality profitability or reputability of any investment, individual or company. The term "they" refers to American IRA, located in Asheville, NC.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Sean McKay
@iraexpert
Follow >
American IRA
since: 02/2014
Like >
Visit website