4 Alternative Investment Accounts Your Self Directed IRA Custodian Should Offer
In addition to all of the types of self directed IRA investments that your self directed IRA custodian offers, you are faced with a number of other options. Do you want your self directed IRA to reflect that of a traditional IRA with paper investments like stocks and bonds? Or would you rather invest in something you know more about such as real estate or gold bullion?
Do you like the options of having your financial decisions in your own hand but don’t want to give up your Roth IRA? There’s a plan for that, too. You can roll over your Roth to a self directed Roth IRA.
Maybe you own a small business that doesn’t have a qualified retirement plan in place and you want to know your options with SEP, SIMPLE, or Solo 401(k) plans?
All of these plans are viable plans that a truly self directed IRA custodian should offer, but did you know there are other types of plans that they can offer to further enhance your retirement savings?
Safe Harbor Plans
A Safe Harbor 401(k) Plan refers to a type of 401(k) that allows employers to offer more lenience when they set up their plan without the added concern of noncompliance with the IRS or discrimination towards highly compensated employees. The Small Business Job Protection Act of 1996 included this new type of 401(k) in its act.
This savings plan allows the employees to set up larger levels of contributions and larger tax deductions in addition to the benefit of being able to participate in a self directed account.
- Contributions cannot exceed $16,500 or over 100% of the pay
- Profit sharing contributions may not exceed 25%.
- Total contribution may not exceed $49,000.
- Those over the age of 50 are offered an additional contribution of $5,500 or total contribution of $54,500.
The Roth Safe Harbor 401(K) was passed in 2006 and works slightly different from a Roth IRA. The tax benefits of the Roth remain, but there are no income limits.
Health Savings Account (HSA)
The HSA Plan allows you to set aside money that will help pay for current or future medical costs. An added benefit is that it will decrease your health insurance premiums as much as 70%.
You may deduct your HSA contributions from your taxes and any withdrawals that are made for a medical expense qualified under the plan are not subject to taxes.
- Contribution limit for individual is $3,050.
- Contribution limit for a family is $6,150.
- Catch up limit for those 55-65 years of age and 65 and older if qualified of +$1,000
Coverdell Savings Account (CESA)
This type of savings plan allows you to pay for your children’s educational costs. This also includes grandchildren or great grandchildren. As long as the contributions are made for qualified educational purposes of the beneficiary, all contributions are tax-free and tax deductible.
Contributions may not exceed $2,000.
All profits are compounded with the contribution and are tax free and tax deductible.
As you can see, when you choose your self directed IRA custodian, you may want to consider not just what kinds of self directed IRA investments that they offer but also the additional plans available.