Self-Directed IRA Loans
Private loans lie outside of the stock market and bring balance and diversity to your retirement portfolio.
Combine your retirement account tax advantages with private lending returns.
Put your knowledge and experience in private lending to work for the benefit of your IRA’s growth.
Private Lending IRA Introduction
- Self-directed IRA lending gives you the ability to loan IRA money to non-disqualified persons, while keeping all tax benefits associated with IRA accounts.
- The IRA can receive principal and interest, just like a bank.
- The IRA holder chooses the borrower, principal amount, interest rate, length of the term, payment frequency and amount, and whether the note is secured by collateral or not.
- The IRS requires an authorized IRA provider for all IRAs.
- Not all IRA providers allow loans from an IRA, but New Direction IRA provides outstanding administrative services for all types of IRA lending.
- You, the IRA holder, select the terms of the IRA loan and direct us to send money from your IRA to fund it.
- We make sure the paperwork substantiates that the loan is done through your self-directed IRA, and therefore deserves the tax benefits associated with the account type.
Self-Directed IRA Educational Videos
Private Money Lending with your IRA Webinar
You can become your own investment bank using IRA or 401k funds! Private lending can be a safe and potentially high-yielding strategy as well as a great diversification tool. This presentation discusses the IRS rules governing tax-advantaged benefits as well as common strategies for lending success. Learn important factors like partnership options, note security, and lending procedures. This presentation is perfect for those who are considering private money lending as an alternative retirement plan investment and want to learn the basics.
More About Private Lending
Benefits of Self-Directed IRA Loans
- You have strategic control over the person/entity to whom you lend money as long as the person/entity is non-disqualified.
- Lending is an asset that you have experience with and understand.
- The return on your money is pre-established.
- You can make Traditional IRA loans, Roth IRA loans, or loans with any other qualified plan.
- You choose lending terms and collateral with which you are comfortable.
- IRA loans can potentially yield a cash stream.
IRA Loan Rules - Important Things to Know
As a separate legal entity, your IRA has its own name:
New Direction IRA, Inc. FBO (client name) IRA
- The self-directed IRA loan must be a real economic transaction.
- An IRA is its own financial and legal entity, and it is separate from your personal finances.
- The IRA is the lender, not the IRA holder. Therefore, all income goes back to the IRA.
- All IRA loan documents must be in the name of the IRA, not your personal name.
- For the documents associated with your self-directed IRA loan to be complete and legal, they need to be signed by New Direction IRA (as the administrator for that account).
- The IRA can hire professional help to generate loan documents and/or loan servicing. All expenses for this process will be paid by the IRA.
Step-By-Step Guide to Your IRA Loan
Step 1 Open and fund your IRA – It takes New Direction IRA two business days to open your account once your application is in the office. You will then fund the account with a rollover, transfer, and/or contribution. This may take several weeks, so plan for that in your timetable.
Step 2 Find a borrower and agree on loan terms.
Step 3 Generate IRA loan documents and submit original documents with a Buy Direction Letter to New Direction IRA.
Step 4 New Direction IRA sends money to the borrower.
Step 5 Borrower sends payments to your IRA at New Direction IRA according to the terms of the loan. It is the IRA holder's responsibility to service the loan or hire someone (at the IRA's expense) to service the loan. IRA holders can check account information and track incoming payments through New Direction IRA's online portal.