The Roth IRA is famous for its ability to earn compound interest tax-free.  Less well known is the fact that an investor doesn’t have to have his IRA administered by a financial institution; they can administer their account themselves by selecting the “self-directed” option when the account is set up.

You Control the Account Money

With a self-directed IRA, one simply sets up an LLC which holds the account funds.  One-hundred percent of the capital gains from investments and the profits from business transactions stay in the LLC account, with no taxes due on the profits.

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A consistent character trait of entrepreneurs is that they are risk-takers.  They like to control how their time and money are spent.  Many entrepreneurs who own a Roth IRA prefer to administer their account themselves by choosing the “self-directed” designation.

You Control the Account Money

With a self-directed IRA, one sets up a Limited Liability Corporation which holds the IRA account funds.  Essentially, the IRA owns the LLC, and the entrepreneur becomes the directing member of the LLC.  The directing member is free to invest the IRA funds however they please.  All of the profits from business transactions stay in the LLC account, earning compound interest.  Having all of the profit generated by the LLC available for re-investment gives a business owner leverage that was not previously available.

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If you are like the majority of Americans, you have not thought about retirement savings. Even if you are in your 40s, studies show that you don’t want to think about retirement income planning. It is the rare 30 or 40 year old who is serious about funding the future. Over 75% of Americans who have a 401k plan available to them, do put money into it. They fund it, however, with only 6.5% of their wages. That is simply not enough.

Retirement planning, or any financial planning, is not something that we have been encouraged to talk about or think about. Luckily that cultural stance is beginning to shift as the Baby Boomers start to retire. Well over 50% of them are not financially secure. They are now beginning to get serious about 401k plans, IRAs and Roth IRAs. They qualify for the “catch up” provision within the 401k code, because they are over age 50 (well, there are a few Boomers still under age 50) which means they can pile an additional $5,500 on top of the $16,500 allowed yearly.

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Highlights from This Post

• Most beginning traders fail and why you won’t.
• Organize your family finances to trade successfully.
• Why you’re your own worst enemy and how to get out of the way of yourself.

I was drinking beer one day with a very prominent teacher in the futures industry.  We had been talking for a while when an odd look came over his face.

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