Build your wealth: self-directed IRAs let you choose your investment.

• Author: LeBlanc, Jodie
• Position: Money Talk

With 401Ks, traditional Individual Retirement Accounts (IRAs) and Roth IRAs, retirement account options are plentiful. However, one type of IRA could be of particular interest to business people who have accumulated a lifetime of experience and knowledge in a particular industry: self-directed IRAs.

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The self-directed IRA offers an almost infinite set of investment options, and as the owner, you determine where and how your money is invested. The self-directed IRA also brings tax advantages that will help you meet your retirement goals.

Traditional IRAs and Roth IRAs limit investments to stocks, bonds and mutual funds, but self-directed IRAs are different. If you have been building knowledge of a particular industry--be it biotech, construction or hospitality--a self-directed IRA is a flexible tool that allows you to use your expertise to choose wealth-building investments.

For example, many investors enjoy the self-directed IRA's potential to include real estate. Using a self-directed IRA to hold real estate assets has advantages such as tax-deferred or tax-free profits, compound interest, asset protection and estate planning.

Additional investment options include limited liability corporations (LLCs), partnerships, private equity and real estate, including land, land trusts, single-family homes and apartment buildings. While the options are broad, a strict set of IRS guidelines apply to self-directed IRAs.

Exploring Your Options

If you think a self-directed IRA might be a good option for you, first consult with your CPA and then seek the advice of a financial institution that has trust powers to hold self-directed IRAs. As the fund custodian, your banker will manage your IRA assets under your direction by filing all needed tax reports in compliance with regulations, issuing bank statements of net gains and losses, recording all transactions, performing administrative duties and paying related expenses, such as property taxes, utility bills and maintenance expenses.

In my career as a trust officer for Bank of Utah, I have helped many individuals with their self-directed IRAs, and they have found positive results. Paul shares his story:

"As I thought about the requirements of retirement, I wanted to have the option of directing money from my IRA into real estate investments where I thought there was an opportunity. I was familiar with IRA regulations and knew about self-directed accounts. Self-directed IRAs are not...