I did not mention this in my Bio – I am on the Board of
Directors of a community bank in organization – a de novo bank. The FDIC approved the bank’s application
earlier this week. At our board meeting,
the CEO mentioned we are moving from the capital accumulation stage to the
governance (management) stage of our organization. Like you, I try to hone my listening skills
and apply what I hear to other areas of my life. Such is the case here. I thought about my own Roth IRA and how I got
started investing in real estate in the early 90’s. I thought about the stages of approval,
capital accumulation and now, management.
Approval for IRA and
IRA accounts have had the authority to be established and
housed with a custodian for alternative investments since 1974. In my early days of retirement real estate
investing it was a struggle because few knew about it and there were few banks
that had stepped forward to be custodians.
Solo 401(k) plans were created through tax law and allowed
beginning in 2002. These plans are
designed primarily for the self-employed with no employees and owners that do
not control other entities with employees.
We often think only of contributions to retirement
accounts. Many of us have been
contributing (accumulating capital) for many years. Our mature retirement accounts can be transferred
or rolled over from the typical brokerage account to more closely held
management and checkbook control. Rather
than concentrating on the contributions, we can now direct our funds to a
greater breadth of investment choices. For
instance, many of my clients have transferred funds that started in a employer company
401(k), ended up in an IRA to remove them from the company and then ended up in
a solo 401(k) in a new for-profit retirement business – unretired boomers!
Management of your
IRA or Solo 401(k):
So, here we are. We
have been approved and raised our capital.
Now we are in the management phase of our venture. With the correct setup and structure, we can
manage our investments in anything allowable.
All investments are allowed for IRAs, except collectibles, sub-chapter S
corporation stock, or life insurance.
Only collectibles are not allowed for solo 401(k) investments. By the way, I purchased 40 acres in the Upper
Peninsula of Michigan years ago. It has
a 180 degree view of Lake Superior and the only good drinking water in miles. I sleep well at night!