Entrust New Direction Blog

The self-directed IRA is a wonderful vehicle for diversifying IRA or other qualified funds into ‘alternative’ assets like real estate, private placements, notes, precious metals, and more. The whole structure of a truly self-directed plan is different than what most people are accustomed to with their current bank or brokerage company. Most people are more familiar with working with an advisor or appointed financial representative. With that structure, the advisor/representative helps the client determine what the IRA is going to invest in and when. With a truly self-directed IRA there is no advisor or representative. You take on that responsibility as the ‘self’ in the self-directed IRA.

You are the one in control of everything that happens with your IRA. We need your initiative to do anything with the account. We can’t (and won’t) do anything without your direct, written authorization. We are here and accessible to do whatever you need us to do. However, in order to ensure the full security of your account, we do not take any action except upon receiving your direct written request.

As a general rule, if you are a client and you are thinking to yourself: “I wonder who is doing such and such?”—the answer is probably YOU! You decide what your IRA is going to invest in. You put together the details of the investment. You provide us with the investment direction forms, and you approve everything before we process it.

The great thing about working with a local company like Entrust New Direction is that we are available when you need to reach someone. We always answer the phone when you call, and you are able speak with a representative in the appropriate department to help with whatever you need.  Additionally we have a wealth of really good information on our website.

I am a visual person and I like analogies, so here’s an analogy for the self-directed IRA structure: Think of the IRA as a bus. You are the driver of the bus and Entrust New Direction serves as the wheels and sometimes the brakes. A bus without wheels is not going anywhere (you need a self-directed IRA administrator to provide recordkeeping and administration for the IRA), and a bus without brakes is extremely dangerous. Thus, our two roles are essential to the IRA. We will move when you direct the steering wheel of the bus in a particular direction and hit the gas. If you are clearly going the wrong way (i.e. towards a prohibited transaction) we will stop you. 

If you are not an Entrust New Direction IRA client and are working with another self-directed IRA company that doesn’t utilize their brakes, you may want to ‘trade in’ for a better bus. If you find a company that blindly does whatever you ask, without requesting documents or asking basic questions, you may want to separate yourself from that company. Unfortunately there are companies in our industry that operate without ever utilizing their brake system.

It is important to note that, at the end of the day, you are responsible for your self-directed IRA. Entrust does not approve or endorse any investments. We are capable of telling you what the rules are, however when it comes down to it, it’s your IRA and you are responsible for it. We’ve been doing this a long time and we are very knowledgeable of the rules for self-directed IRAs.

We can’t give advice or ‘approve’ your investments, however, if you are forthcoming and honest with all the information and you have a general question about whether something that you are looking to do is a prohibited transaction or not, we can generally answer your questions (or at least direct you to the appropriate section of the Code to research the issue). If we happen to see that the investment you are trying to make is clearly a prohibited transaction, then we won’t fund that transaction (i.e. we will use our brakes). We don’t want our clients to get into trouble with the IRS, that’s not good for anyone. We don’t want ‘bad assets’ in our system, and we certainly don’t want our clients getting into trouble and telling their friends what a terrible experience they had with one of those ‘self-directed IRAs.’

Our goal is to provide our self-directed IRA clients with the broadest spectrum of investment options while at the same time helping them stay out of trouble and maintain their IRA’s tax deferred status. If you know what you want to do with your IRA, and need an administrator that will allow for the flexibility to do it, give us a call. We would love to work with you. 

Photo Courtesy of Bill Ward.

Self-directed IRA holders have discovered gold - in the trash. Some of our clients recently found out how to invest in gold while also being environmentally responsible.  There may be more options for recycled gold, but the one that was brought to our attention, Ohio Precious Metals  extracts the metals from electronics, jewelry, the banking industry (not sure why the banking industry would give up the goods), photographic equipment and other industries.  Gold IRA and Gold Health Savings Account (HSA) owners have been buying recycled gold bars and coins.   If I was allowed to ever have any opinion on an investment, which I'm not, I'd think it was pretty cool.

You probably already know that some other self-directed IRA custodians choose the gold dealer for the IRA holder, but our clients use their gold IRA or gold 401(k) or gold HSA to buy gold (or silver or platinum or uranium) from any dealer. And of course, our clients can pick anywhere to store their gold (as long as they're an authorized storage facility). Again, I'll repeat: We never give our clients investment advice. We never tell anyone where to buy or where to store their gold. 

As long as I'm repeating myself, let me say again that when it comes to a gold ira or a silver ira or any other precious metal ira, you're only investing in the metal itself, not the pretty coin.  No matter what image is on the coin.  No matter what kind of bar.  Gold IRAs, Silver IRAs, etc are only investing in the metal - never collectible coins.

Form more information, register for the 1 hour Recycled Bullion IRA webinar, first available June 23, 2010 6:00pm MDT.

Photo courtesy of bogenfreund.

A risk management technique that mixes a wide variety of investments within a portfolio. It is the spreading out of investments to reduce risks. Because the fluctuations of a single security have less impact on a diverse portfolio, diversification minimizes the risk from any one investment.

Most everyone is familiar with the concept of investment diversification. Any financial planner worth his/her salt will recommend that you refrain from putting all your money into one investment or one type of investment. Spreading wealth helps reduce overall loss potential.

Many people diversify their retirement wealth into different growth funds, balanced funds, index funds, small cap, large cap etc. There is a problem however with this view of diversification.....yes it is diversified....but only within securities and security related investments. But what happens when the stock market crashes? Did anyone's IRA stock portfolio feel strong in March of 2009? Did you experience some portfolio volatility on May 6th 2010 when the market dropped nearly 1,000 in less than ½ hour?

Would a car salesman sell you a bike?

There is a world of possible IRA investments outside of publicly traded securities. ‘Alternative' assets like real estate, private equities and notes are allowable investments for retirement plans and are essential to a truly diversified portfolio. The problem that most people run into is their current IRA administrator won't allow them to invest in alternative assets within their retirement plan. Quite frankly, why would they? A stock broker makes money by selling stocks. So if you call your stock broker and ask what you should invest your IRA into.... they will probably say stocks. If I go to a car dealership and tell them I want to buy something.... they will probably try to sell me a car. There are two reasons most banks and brokerage companies don't allow alternative assets within retirement plans:

1. They can't earn commission from selling ‘alternative' assets like real estate, private placements and private notes. If they can't make money off these investments they won't promote the fact that they are available. Unfortunately for us everyone knows what the big banks and brokerage companies do... not everyone knows how self-directed plans work.

2. They are not set up administratively to hold alternative assets. A real estate closing is quite a bit more involved than a simple stock or mutual fund investment. To make it work you need to have your IRA with an administrator that is specifically set up to hold alternative assets.

Obviously, securities are the biggest piece of the investment pie for most portfolios. There are roughly $4 trillion in IRAs currently in the US and the vast majority of those funds are in securities (in particular mutual funds). Alternative assets like real estate will never dethrone securities as the primary IRA investment. However, if you want a truly diversified IRA, you can't have everything in the securities market.

As a self-directed IRA administrator we cannot tell you what to invest your IRA or 401(k) into; however, we can provide for you the broadest spectrum of investment options. If you have IRA or other qualified funds, you can move a portion of those funds to an account with Entrust New Direction IRA and invest them in non-security related investments. Most of our clients don't move their entire portfolio into alternative assets.... because then they are losing the securities component of diversification....rather, they move a portion of their funds so they have some money in the market and some in alternative investments.

These are strange times we live in, both financially and otherwise, and now more than ever you need to know what your investment portfolio looks like and make sure all your proverbial eggs aren't all in one basket. If you have questions about what types of investments are permissible or how alternative assets can be incorporated into your IRA portfolio, please call our office or attend one of our upcoming events.

We find that many of our event attendees know very little about self-directed IRAs before they find Entrust New Direction and start asking questions. As someone that teaches a lot of these classes, I often have the pleasure of seeing the excitement our prospective investors have when they learn about all the neat things you can do through a self-directed plan.

Several of our competitors have picked up on the fact that the ‘idea' of self-directed IRAs can attract a crowd. A couple of these companies have recently promoted investor boot camps or destination weekend workshops for which they charge a sizeable fee. The problem is the information they provide is the same information that we provide for free!

Many of these companies will get you started by answering your basic questions for free but then tell you that you need the boot camp to take your knowledge to the next level. There is no hidden or secret information in respect to self-directed IRAs. The answers are what the answers are....the issue is whether the company you are working with will give them to you. Admittedly sometimes things do get complicated with this industry, and questions get a bit more in-depth, but that is all the more reason to work with a company that you can call for free to get answers to those questions.

Another frustrating thing that we've found is some of these companies, even after you've paid to attend their event, won't give you the information you seek. Instead they will try to sell you a book or a CD or a ticket to another event! How frustrating is that? You take the time, energy and money to get yourself to an event to learn about self-directed IRAs, and you walk away with nothing but an opportunity to invest more time, energy and money.

Just to be clear, I think generally speaking, investment bootcamps can be great. I've been to several and I always walk away with good information and new contacts. It is important, however, that you don't pay for a bootcamp when you could get the same information free somewhere else. The bootcamps that I've attended and enjoyed "sold" information that I otherwise couldn't get my hands on... and thus they were worth it.

It should be noted as well that just because you pay for an event doesn't mean the event is better. We will take the Pepsi Challenge with any self-directed IRA company when it comes to educating investors and providing in-depth information. And we will do it without charging and without forcing you to fly to Florida for the weekend boot camp. Our endgame is the self-directed IRA client that sets up an account and purchases an asset like real estate, precious metals, hard money loans, or even publicly-held stocks. Everything that we do leading up to that point is just part of the business.

We realize that there is a gap between what people currently know and understand about self-directed IRAs and what they need to know and understand to be comfortable enough to open an account and move forward. We try to fill that gap with free education and employees on staff that are available to answer your questions.

I should mention that I am not opposed to a company selling their product and making a buck. Good for them. Yea Capitalism! But for you, the individual that wants to learn about self-directed IRAs, do your homework up front and you can probably save a few bucks and get things started on the right foot. If you have questions, call your local experts here at Entrust New Direction IRA, Inc. We are here to help.

Image courtesy of Tobyotter

We field quite a few calls from ‘creative' investors scheming to get around the IRS rules for self-directed IRA investing. As somebody that takes a lot of these calls, I am often surprised by the lack of respect that the IRS gets from the average US tax payer. I understand that very few people have ‘warm and fuzzy' feelings about the IRS; I mean it is pretty rare that a surprise contact by the IRS is a good thing! So I understand the distaste with the IRS, however I think people should be careful not to confuse dislike with a lack of respect.

("tax collector" photo by eflon)  

The fact is, the IRS is pretty darn good at what they do once they open an audit. IRS audits are extremely thorough. If you break a rule and your IRA is audited you are probably going to get busted and the penalties can be extremely damaging to your IRA. On top of that, unlike within our Judicial System, the accused is guilty until proven innocent - not the other way around. The burden of proving innocence falls on the accused taxpayer.

The IRA prohibited transaction rules can be found section 4975 of the IRS code. In respect to buying real estate within an IRA the rules are you (and your direct lineal relatives) cannot use the asset that your IRA owns. Additionally, your IRA cannot have transactions (buy/sell) with you or your direct lineal relatives. These rules are pretty cut and dry and there is no legitimate way to get around them. If your IRA owns a property, there is no way for you to use the property or benefit from the property in any capacity. Likewise, if you own an asset personally there is no way to move it into your tax-deferred IRA.

We know these rules well because we remind people every day.  We want all IRA owners - clients, prospective clients and otherwise, to know the rules so they never have to dread the call from the IRS.  Our number 1 job is education because we want every single person we speak with to know the rules.  While we do not take legal or fiscal responsibility for the self-directed IRA, we do feel a personal responsibility for your education. 

We like to think of ourselves as the angel on your shoulder when you make an investment decision.  You, of course, make your own decision.  But we try to whisper in your ear, "Prohibited Transaction", and "Self-dealing, don't do it".  We want you to have as much money as you can legally acquire when you're ready to retire.

And of course, you want that too.  We often get asked the question "how would the IRS know if I use the property?" As an administrator of self-directed IRAs, we don't get involved with how likely it is that someone gets caught in a prohibited transaction; we are focused on not allowing clients to get their IRA involved in a prohibited transaction in the first place. Granted, there are not IRS police spying on your IRA-owned property trying to catch you in the act of using the property. However, if you or your IRA gets audited there is a very high likelihood of getting caught if you did in fact break the rules.

Another unique thing about the IRS that you should understand is they don't just look at the transaction itself, they also look at the circumstances involved. We've had prospective clients propose structured arrangements to get around the rules. We've heard things like "what if I sell my personally owned property to my friend and then buy it back with may IRA.... how would the IRS ever know?" The fact is, it would take the IRS all of about 2 minutes to see what you've done and to declare the arrangement as a prohibited transaction. Buying the property with your IRA from your friend is not directly a prohibited transaction; however, the arrangement of selling something you own to the friend and then buying back with the IRA is most definitely a prohibited transaction. Additionally, not only did you break a rule, but you intentionally created a scheme to get around the rules....The IRS is not going to take this lightly.

Other investors suggest using an LLC to get around the IRS rules. LLCs can sometimes be useful in structuring real estate investment.  However, they are not magical entities that make all the rules disappear. If your IRA invests in an LLC, then the rules apply to the IRA now apply to the LLC as well.

The penalties for prohibited transactions can be extremely harsh. The IRS does not tie their hands down by telling you exactly what will happen if your IRA takes part in a prohibited transaction. Each case is judged on a case by case basis. You will almost certainly lose your IRA tax-deferred status (the IRA would be immediately distributed to you personally). This can create an unexpected tax liability as well as penalties if you are under the age of 59.5. On top of that, they will most likely impose a 15% prohibited transaction penalty. There have been extreme cases when the prohibited transaction resulted in 100% loss of the IRA. Prohibited transactions are not to be taken lightly.

The bottom line is this: your IRA receives special tax treatment from the IRS.  IRAs have built in tax-deferred growth. In order to maintain that treatment, it is important that the IRA investments are just that...investments. If you want to use the IRA funds or benefit from the IRA funds then you should take a distribution, pay the tax and then do whatever you like with the funds. However, while they remain in the IRA you (and your direct lineal family members) should not benefit from what the IRA is doing. So next time you are trying to think of a creative way around the IRS rules, STOP!.... there is no legitimate way to get around the IRS rules.

You can imagine the dismay of our fantastically patient Director of Accounting, Deborah Broaddus, when she was in the middle of being flooded with a zillion questions from clients about recently received statements and gets yet another question from me, an employee who should know better, about IRS reporting forms. Well, one of the things I've always loved about my job is that I learn something new every day and evidently this day was the day I would learn about how 1099-R and 5498 forms and IRS reporting work together.

I promised Deborah in exchange for her infinite patience with me that I would share what I learned with all of you, since many may have the same questions that I did. Or something similar.

Have you recently asked yourself, 'Why did I get this 1099-R? I didn't make a distribution.' See below for a list of reasons why people receive 1099-Rs. Depending on the reason you receive a 1099-R, you may or may not have tax consequences (see the discussion of the 5498 form below), but it is still good to understand the form and why you received it.

You will receive a 1099-R if you:
* took a distribution from a retirement account.
* made a conversion of a Traditional IRA to a Roth IRA.
* devalued an asset to zero.
* rolled funds over from a 401k to an IRA or other retirement plan.
* rolled funds over from an IRA to an HSA.

If you did one of the first two items on the above list, your reported income will increase by the amount on the 1099-R form. If your asset was devalued to zero, you essentially are paying tax on a distribution that has zero value. No matter what your tax rate, tax on something worth nothing is also equal to nothing.

If you received the 1099-R form for one of the last 2 reasons listed above, another reporting form becomes relevant, form 5498 which is also filed with the IRS by Entrust New Direction as part of our annual IRS reporting. The 5498 will reflect the results of any rollovers you made to accounts held by us.

For example,if you rolled funds from an IRA to an HSA like my family did, the 5498 will reflect that the amount reported on the 1099-R was rolled over into an HSA and not received by you personally (remember the IRS only allows that once in your lifetime). The same is true if you rolled funds over to an IRA from a 401k plan. The net result is that the 5498 will indicate that the amount reported on the 1099-R did not result in increased income for the current tax year.

Your first statement of the year serves as your substitute form 5498.  You can reference this form for your records. As long as the amounts on the 1099-R match the amount listed as the rollover which funded your account on your statement from us, the net resulting tax is zero. Keep your statement (substitute 5498) and the 1099-R form with your tax files for documentation.

Many self-directed IRA administrators have exclusive arrangement set up for storage of their clients’ IRA-owned precious metals.  In the event that you want move your IRA-owned metals to a new precious metals storage depository, you will most likely need to find an IRA administrator that allows the use of that new depository.  Luckily there are IRA administrators that allow flexibility in choosing the precious metals storage company.  Entrust New Direction IRA, Inc (gold.newdirectionira.com) allows their clients to choose where their IRA metals are stored. 

If you have metals held with another precious metals depository and you would like to move them to a different depository you will take the following steps: 

1. Set up an IRA with Entrust New Direction IRA Inc. All forms and information can be found at: gold.newdirectionira.com
   
   
2. Submit IRA transfer forms to Entrust New Direction. The IRA transfer forms can be downloaded from gold.newdirectionira.com. On the transfer forms you will indicate that you are performing an ‘in kind' IRA to IRA transfer (in kind means you are moving the metals without selling them). Along with the IRA transfer forms it is a good idea to include a letter to the current IRA administrator/depository explaining what you are doing and authorizing the movement of the metals.
   
   
3. Once Entrust New Direction IRA receives your transfer request they will forward the request to your current IRA administrator with delivery instructions and a packing slip. Your current IRA administrator will coordinate with their depository and instruct them to ship the metals to the new depository. Additionally, the IRA administrator will remove the assets from their records and show them as transferred out to your IRA with Entrust New Direction IRA, Inc.
   
   Note: if both depositories are in Wilmington DE then you can instruct the current custodian to authorize the depository to release the metals for personal pick-up by a representative of the new depository.
   
   Note: it is also a good idea to get a medallion signature guarantee on the IRA transfer forms before mailing them to Entrust. A medallion signature is similar to a notary but stronger. It is a guarantee that your signature is genuine. You can generally obtain a guarantee from a bank officer at your local bank. The guarantee is not always required; however, some IRA administrators require it before they will honor the transfer request.
   
   
4. Prior to the arrival of the metals you should sign the account agreement for the new depository and submit that to Entrust New Direction IRA Inc. The new depository should notify Entrust New Direction and you when the metals are received.
   
   
5. Entrust New Direction will post the assets to your IRA.

Entrust New Direction has never recommended an investment nor provided investment advice, and we never will.  What we try to do sometimes is describe what some of our clients are doing - we provide examples and options.  Usually we deliver positive examples, such as the client whose self directed IRA bought a tractor and rented it out hourly, daily, weekly, monthly - enlarging his retirement account after every rental.  We love to share the good examples and will continue to do so.

This week, however, we're providing some cautionary tales.  Such as the story of the retirement investment vehicle stuck in the mud.

We've described how to care for your single-member LLC (AKA the checkbook control IRA).   We've described this in detail because there are many many details, many hoops for the retirement investor to jump through when investing in a single-member LLC.  Some of the hoops are extremely flammable.

Our president shared her point of view on Swanson, a case which many people use to justify single-member LLCs/checkbook control IRAs.

We've also described that the IRS may be firing a warning shot over the bow of those who invest retirement funds into their own businesses.  Frequently, these two gray areas are combined, and this situation describes our first horror story.

The Horror Stories

Early one morning, a man called as soon as we enabled the phone system, his voice trembling, "I think I may be in very big trouble", he said.  He took some money from his LLC and spent it on his own personal company without tracking it, not realizing that this was a taxable, penalizable occurrence.  "It was my LLC," he said, "I always thought I could do what I wanted with it.  Nobody told me different."  He was the client of another firm, a firm that specializes in single-member LLCs, and they wouldn't call him back.  We are still doing our best to help him.

Another man sold a real estate asset from within the LLC and used his own Social Security number on all closing documents.  Consequently, he received a 1099 and owed taxes on the proceeds of the sale, which severely cramped his personal finances.  If some folks, myself included, happened to do the same, we would have to declare bankruptcy.

A woman with property in Honduras sold the property, which was held in her "checkbook control" IRA, and she put the proceeds into her personal bank account without our knowledge.  She used these proceeds to purchase commercial property in her own name. The purchase had to be reported as a prohibited
transaction. We don't know the end of this story as she's out of the country. This could end up as a criminal matter.

• Fines. 
  
• Penalties. 
  
• Forced distribution of assets.
  
• Gargantuan tax bills. 
  
• Jail time.

These are a few of our least favorite things.

As stated up top, we do not and will not advise our clients on investments, unless they're trying to perform a prohibited transaction.  We give as much information as the client will take, and hope for the best.  We want our clients and potential clients to know their options - by no means is a single-member LLC the best or only option for self-directed IRA investment. And by no means is Entrust New Direction one of the many firms who will push you into a checkbook control IRA. What we do provide is expertise in the rules, an experienced sounding board for you and your investment ideas.

We now resume our regularly scheduled stories of successful and happy investors.

Photo courtesy of phototram.

The Employee Benefits Research Institutes's 2009 Retirement Confidence Survey could be called the 2009 Retirement Crippling Fear Survey.  Those surveyed who voiced confidence in a comfortable retirement dropped to 13%, the lowest in 16 years of surveys.  72% of people plan to work after retirement, which is essentially not retiring.  32% think Social Security will save them.

Scary.

We don't need a survey to tell us that the stock market, along with the value of most Americans' 401(k)s, has dropped like the New Year's Eve ball in Times Square. We know this.  We also know that many employers are no longer matching 401(k) funds, further devaluing a 401(k) and demotivating the 401(k) holder.  We can safely assume that the federal government is not prepared to support us in retirement.  None of this is new information, but nothing seems to change.

Entrust New Direction, of course, has a horse in the retirement investment race.  We want more people to open self-directed IRAs for many reasons, obvious and not.  But if millions of Americans are not financially ready for retirement, all the rest of us will be adversely affected as well, whether by higher taxes or stress on the public safety net or some as-yet-unknown factor.   So it's in your best interest and mine that as many Americans as possible are financially comfortable in retirement. 

Now to motivate these millions of un-confident eventual retirees.  Is fear the best motivator?  This is, of course, a nebulous question. 

If the fear is immediately apparent (a drooling bear moving rapidly toward you), it's the best motivator.  But how many of us think about retirement savings while working full-time or overtime, raising a family, practicing hobbies, enjoying friends - basically, while living a full life?  If the fear of a destitute retirement doesn't spur you every day/week/month to save and plan, then it's not the best motivator.

Most people fear the unknown.  EBRI reports that 44% don't know how much they'll need for retirement.  Not very confident numbers.  The numbers indicate, however, that ignorance may not be bliss.  If we Americans don't know how much to save and we don't have confidence in the amount we're saving, we must not fear the unknown, or we must not be adequately motivated by that fear.

We may be motivated by a different kind of fear.  From a different point of view, the unknown may be contributing to our collective dilemma.  Most people don't know about self-directed retirement accounts, and many of those who do know about it think they won't be able to successfully grow their retirement account on their own.  They may not know what to invest in, or how to do so.

We talked about the fear of retiring without sufficient funds.  This is a distant fear, certainly not viceral, not real to most of us.  What is real to most of us is the fear of losing our money.  What is real is watching the numbers fall every quarter, knowing that money you earned and saved is now gone, due to some individual or some company's bad decisions or bad luck.

But, as we've heard over and over during this recession, people with 401(k)s don't look at their statement.  They're too scared to see more losses.  But if they're not looking at their statements, they won't close their 401(k) and start investing in a Roth, they won't even shift to a safer less-volatile sanctioned and commissioned investment. They're paralyzed.

Many financial "experts" talk about waiting out the storm.  They say that the stock market will come back within a decade or two.  Maybe so.  No one really knows.  Even if the stock market does come back, there is no guarantee we won't go through a similar recession again. 

If you're reading this, you likely already hold a self-directed IRA or you are considering one.  Maybe you were able to shake off the retirement paralysis, look at your statement, and do something to change the status quo.  Good for you. 

Now for your sake and mine, spread the word.  Tell your story, I'll tell mine, and maybe together we can shake enough Americans out of their retirement investment paralysis so they can start controlling their own destiny. Maybe together we can inspire people to look at their 401(k) statements and stop the bleeding.

Nebula photo courtesy of koolkao. 

Bear photo courtesy of 顔なし.

Locavore, the Oxford American Dictionary word of the year, 2007, and now in Webster's Dictionary, is defined as "one who eats foods grown locally whenever possible."  You, dear self-directed IRA holder, could become a locavestor, i.e. "one who invests retirement funds locally whenever possible".

Of course, a locavore's ideal location is amongst agriculture, while the locavestor would have more options in an urban evironment, but even New York City has farmer's markets, and even Idaho has investment opportunities.

Some ideas for locavesting:

1) Loan money locally                                                                           Your IRA can lend money to your church, your kid's soccer coach, your next-door neighbor.  Many people are paying 15-30% or more for credit card debt.  Your IRA could swoop in, earn 10% interest and save someone you know thousands of dollars.  Don't know anyone in need?  You could put an ad in the local paper.  Plus, the money your lender saves will likely be spent locally, further strengthening your town or city.

2) Buy shares in a local private company.                                                            

While this may not be the best time to start a company, many people who were laid off are doing just that.  They need start-up cash, and your IRA could contribute now, and look forward to a bug payout later.   There are likely local established companies which aren't ready to go public, and they may be looking for a cash infusion to help them along until the economy steadies.  Your IRA could buy into the next Microsoft or McDonald's, before they grow gargantuan. 

3) Buy a foreclosed home in your neighborhood.

Your IRA can vastly improve the neighborhood if you buy a foreclosed home and rent it.  Your IRA gets fat with rental income, and the neighborhood's home values improve.  Or if you don't want to deal with renters, your IRA could buy and hold the home, until the local real estate market improves. 

4)Buy the farm.                                                                                       To combine the best of eating and investing locally, you could find a small agricultural operation and your IRA could become a partner.  Not only could your IRA grow like the rutabagas, your retirement investment could contribute to the health of your community, literally.

If you see my new bumper sticker: "Think Globally, Invest Locally", please wave.  I'll wave back.