Self-Directed IRA Investor Makes $1,000 Overnight while Saving $400 in Taxes

Richard Alpert’s father used to respond to his son’s occasional smart-aleck remark with, “If you’re so smart, why aren’t you rich?” It’s a question he’s often pondered and these days, those smarts are making him rich.

For example, on a recent Thursday afternoon, one of Alpert’s business acquaintances called to ask if he could borrow $47,000 for the following day to fund the short sale of a bank-owned property. It came with the promise of paying him well for the privilege – to the tune of $1,000 for the 24-hour loan. The buyer was lined up but the bank wouldn’t release the property unless it received cash.

“An offer like that is difficult to turn down,” notes Alpert. “The best way for me to do this, of course, was through my Roth IRA.”

There was only one problem. Although Alpert had a sufficient balance in his traditional IRA, his Roth had less than a third of what he needed to make the loan. He’d planned to convert his traditional IRA to a Roth this year because of the 2010 conversion advantages. This was the perfect motivator.

Only an Efficient Self-Directed IRA Custodian Could Make This Deal Happen

The next morning, Alpert called Equity Trust Company. Through the quick and courteous work of a Client Service Team employee (and some quick paperwork on his end), he was able to complete the IRA conversion and wire funds to his business acquaintance the same day. Throughout the speedy conversion, Alpert received progress updates, step-by-step guidance and assurance that every “I” was dotted and every “T” crossed.

"In the end,” says Alpert, “I saved about $400 in taxes. That money went in my pocket, not Uncle Sam’s. And I stayed in full compliance with every law and every word of the tax code.”

Plus, the loan transaction went exactly as planned. And Alpert made 2.13% overnight, 100% tax free, forever.

“It's not staggering, to be sure, but I had the same frightened rush of excitement the first time I rode a motorcycle past a police officer,” he says. “Anything that feels this good has to be illegal. But, of course, neither motorcycle riding or tax-free investing is against the law.”

Pretty smart investing, don’t you think? No wonder he’s on his way to rich.
Read more about Richard Alpert’s approach to investing with his self-directed IRA.