Most Americans would probably be better off trading in their 401(k)s and other employer-sponsored retirement plans for a Self-Directed Retirement Plan (SDRP) – that allowed them to (roll-over existing contributions in order to) buy and hold real estate (in the name of the plan). Several accounts (from different people) could be combined to increase total funds available to invest. The money used is never “withdrawn” – so there are no tax penalties. A IRS return may need to be filed – but only for information purposes. All profits are also tax-free as long as the proceeds are kept in the SDRP. A $4,000 per year Roth IRA contribution could easily earn 200% or more TAX FREE return on investment this way!
Two amazing examples to consider:
A parent or grand-parent could pay their (new-born) child $4,000 a year to model for photos – and deduct the cost as a business expense on their tax returns. Since the child “worked” and earned income s/he could contribute to a Self-Directed Roth IRA and have the money used (along with others) to purchase property in the name of the SDRP (thus dramatically increasing the value of their Roth IRA with profits from rent or sale). There are no “inheritance” or “gift” taxes since the money was earned. By the time a child is old enough to know/care, his/her retirement fund could be worth millions….!
A homeowner could purchase the mortgage to their own home (in the name of their SDRP) from their lender and continue to make payments as usual. They still get all the benefits and deductions from making mortgage payments – but all the money paid would be accruing tax free in their SDRP. They would also be protected from law-suits and liens because nobody could take their home without first taking away their retirement plan – which is practically impossible.
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