How a self directed IRA investment actually works - 7 Steps to Tax-Free Profits!
Self directed investing is similar to investing outside of a self directed IRA. The following 7 steps detail the basic process.
1) Establish and Fund an account with Equity Trust Company.
To open an IRA with Equity Trust now click here.
2) Identify Your IRA Investment
Equity Trust allows you to invest in assets you know and understand best to achieve your financial goals, including a variety of investment types.
Before investing make sure you know and understand self directed IRA rules and regulations.
3) Ensure Correct Title of Your IRA Investment
You and your IRA are two separate entities, and as such, the investment needs to be titled in the name of your IRA and not you personally.
The correct title for most real estate IRA investments is:
Equity Trust Company custodian FBO (for benefit of) YOUR NAME IRA
4) Request Funds to Purchase IRA Investment
Whenever funds are required to purchase an investment with your self directed IRA, you must instruct Equity Trust do this on behalf of your IRA with the correct investment form.
5) Equity Trust Remits Funds and Retains Records
Equity Trust processes the form and will send funds for the investment based on the specifications. Once the transaction is complete, all records pertaining to the investment are sent to Equity Trust for safekeeping.
6) Maintain Your IRA Investment (How Income and Expenses Flow)
All payments/profits related to investment in your self directed IRA must be made out to your IRA and return to your account. In addition, all expenses related to your investment must be paid from your self directed IRA.
7) Sell Your IRA Investment
Fill out a sell investment form to instruct Equity Trust to sell the investment on behalf of your IRA.
Funds from the sale are then returned to your self directed IRA—tax-free!