Investing in Equipment Leasing Through a Self-Directed IRA

Investing in Equipment Leasing Through a Self-Directed IRA

Lease options are among the many alternative assets allowed in self-directed IRAs. Real estate lease-to-buy arrangements are popular; but did you know you can include equipment leasing in your retirement plan?

Historically, local banks and large national financial institutions had a prominent stake in the equipment leasing realm to service manufacturing, trucking and logistics, construction, and other types of clients. However, some have left the sector, creating an attractive asset class for private equity and other investors—including those with self-directed IRAs.

You can use funds in your self-directed IRA to make this investment in two ways: invest in equipment leasing funds or purchase the physical equipment and lease it directly to businesses (in effect, the plan becomes the equipment broker).

 

How does equipment leasing work?

Unlike equipment financing, which is a form of debt financing (a loan payable at X percentage for Y months or years), equipment leasing programs use operating lease structures that define the arrangement between parties. The operating agreement is essentially a contract that permits the lessee to use the asset without conveying ownership rights.

 

Equipment types for self-directed investment

All types of businesses use equipment of some kind—large or small, heavy or light. There are plenty of investment opportunities if you want to include equipment leasing in a self-directed IRA. Here are some examples across various industries:

 

Benefits of investing in equipment leasing

As with many alternative assets, equipment leasing provides consistent passive income through fixed lease payments. The self-directed IRA gets reliable, tax-advantaged cash flow throughout the operating period of the lease. Keep in mind that if the leased equipment requires maintenance or repair, those expenses flow through the IRA.

If the equipment is in good working order at the end of the lease period and the agreement has a clause that allows the lessee to purchase the asset at that time, the retirement plan will receive additional funds (at a profit for the investor). Or the account owner may choose to lease the equipment to another party, ensuring further positive cash flow on the investment.

Leased assets offer portfolio diversification and a hedge against stock market volatility (and inflation), as the lease is not correlated with market performance. There is also potential for high returns, depending on the equipment and current market and sector conditions.

 

Considerations in equipment leasing arrangements

Bear in mind that the equipment’s value may depreciate over time—which may affect one’s tax situation for good or bad—or that the lessee may stop making payments.

If you are investing in an equipment leasing fund, be sure you understand the ground rules. Some funds require investors to hold shares for the life of the fund (which could be longer than a typical direct leasing arrangement), prohibiting them from selling those shares.

Therefore, it is important to understand this asset class, conduct your full due diligence regarding the investment, and as we often recommend, consult with a trusted advisor before diving in.

 

Need more information? Next Generation is here to help.

Equipment leasing is growing in popularity as an alternative asset in general and can be a great way to diversify a self-directed retirement portfolio. As a firm committed to investor education, we offer a complimentary educational session to help owners of self-directed IRAs get answers to their questions about this retirement wealth-building strategy—and the many investment options these plans allow. You can also contact our helpful team at NewAccounts@NextGenerationTrust.com or 888.857.8058 during regular business hours.

Young HNW Investors Prefer Alternative Assets High-net-worth individuals under age 44 are choosing more nontraditional investments for their retirement portfolios

A recent study by Bank of America revealed that investors under age 44 prefer to invest in alternative assets. The 2024 Bank of America Private Bank Study of Wealthy Americans surveyed high-net-worth (HNW) individuals with at least $3 million in assets. One must have at least $1 million in investable assets to be considered a high-net-worth individual.

Unlike their older counterparts in the Gen X and baby boomer cohorts, nearly three-quarters of millennial and Gen Z respondents said that traditional stocks and bonds will not provide above-average investment returns in today’s environment. The younger HNW investors said they prefer real estate, crypto and digital assets, private equity, and direct investments into companies. They also prefer to invest in companies that focus on positive social impact.

Among this investor group, 93% said they are likely to make more investments in alternative assets in the coming years over publicly traded investments. (Note: although this group favors less exposure in the traditional stocks and bonds than older investors, those surveyed do still hold these assets as part of their portfolio mix with 47% for ages 21-43 vs. 74% for ages 44+).

Given that the younger investing generation has grown up during cycles of severe market downturn after the events of 9/11, the Great Recession, and the pandemic, it might not be that surprising that confidence in traditional markets is less enthusiastic among them. Millennials came of age during a 2.5-year bear market from 2000 to 2002 and then saw the 50% collapse in stock prices a few years later (2008-2009).

 

Growing wealth among young HNW investors through self-direction

Given the preference for including alternative assets within their portfolios—and blessed with investment time horizon than Generation X and baby boomer investors—the Gen Z and millennial HNW investors today can start crafting a healthy financial future through self-direction.

As noted above and as we wrote about last year in this blog article, many HNW investors are including alternative assets within their portfolios. These individuals understand these are long-term investments through which to build wealth (given that as a group, they have less need for highly liquid assets), that returns are not correlated with the stock market, and that those returns have the potential to outperform traditional investments.

Rather than be limited to stocks, bonds, and mutual funds, investors can include private equity, commercial real estate and real estate-related assets, precious metals, royalties, and so many more non-publicly traded assets within a self-directed IRA. And with high net worth available to invest in what they already know and understand, it’s not surprising that wealthy investors (of any age) are including these alternative assets in their self-directed retirement plans.

 

White glove service for discerning investors of all generations from Next Generation

High-net-worth individuals with significant investable assets may also expect a higher level of service when it comes to their financial institutions. At Next Generation, all our clients are treated to exceptional service and attention—from the human beings who answer our phones to our resources for investor education.

Our team takes the time to explain the many options and benefits of self-direction as a retirement wealth-building strategy and provides tools to streamline the transaction process as much as possible—from opening a self-directed IRA to transmitting investment instructions to completing the transaction. We also provide both administration and asset custody for our clients’ accounts for additional convenience.

 

If you’d like to learn more about working with Next Generation as your self-directed IRA administrator or if you have questions about specific alternative assets, we invite you to schedule a complimentary educational session with one of our team members, register for an upcoming webinar (or peruse our webinar library; or contact us at NewAccounts@NextGenerationTrust.com or 888.857.8058

Jaime Raskulinecz of Next Generation Shares Insights About Using a Self-Directed IRA to Invest in Distressed Commercial Property

Owners of self-directed IRAs can invest in distressed and other commercial real estate to diversify their retirement plans by including this alternative asset

ROSELAND, NJ, July 26, 2024 /24-7PressRelease/ — From suburban office parks to metropolitan office buildings to shopping malls, a lot of distressed commercial property is available on the market today. Jaime Raskulinecz, CEO of Next Generation Trust Company, said that the work-from-home and online shopping trends contributed to the emerging decline of commercial property tenancy pre-COVID and that the trend accelerated greatly during and after the pandemic.

“These factors have left commercial property owners with real estate ripe for investment by other parties—including investors with self-directed IRAs,” said Raskulinecz, whose firm provides account administration and custodial services for self-directed retirement plans.

She added that declining asset valuations and transaction volume have also contributed to the growing pool of distressed commercial properties in the U.S., as have loans that are facing maturity, pointing to a Wall Street Journal report that over $2.2 trillion in commercial mortgages is scheduled to mature by the end of 2027.

State of the U.S. commercial property market
In a recent blog article on her firm’s website, Raskulinecz cited compelling statistics regarding the state of commercial real estate in the U.S. today. Among them:

• Offices comprised 41% of the distressed sector’s value in 2023.
• By the end of 2023, the market value of distressed commercial properties was nearly $86B.
• The pool of potentially distressed properties was $234.6B at the end of 2023 with the multifamily market representing $67.3B and offices $54.7B.
• A CoStar report cited increasing delinquency rates among office building owners, from .57% in January 2023 to 6.28% in January 2024—the longest period of increasing delinquency rates since 2019.

“This all sounds dire for commercial property owners, but the current environment lays the foundation for savvy investors interested in commercial real estate, an alternative asset allowed in a self-directed IRA,” said Raskulinecz. “Real estate provides a long-term investment with returns derived through asset appreciation and the potential rental income from investment properties.”

In a recent Forbes Finance Council article, Raskulinecz shared information about investing in various types of commercial real estate using a self-directed IRA. The asset class includes office buildings, multifamily properties, warehouses and industrial properties, self-storage facilities, strip malls and shopping centers, and hotels.

“As with all self-directed investments, the income and expenses related to the assets flow through the account to avoid self-dealing, which will create a prohibited transaction and cause the account to lose its tax-advantaged status,” explained Raskulinecz. Next Generation executes the transactions and has custody of the assets on behalf of its clients.

A full explanation of how real estate investments are conducted in a self-directed IRA is available in the blog article and on the Next Generation website. To learn more about self-direction as a retirement wealth-building strategy, visit www.NextGenerationTrust.com.

About Next Generation

Founded on the philosophy that every person should have control over their retirement plans, Next Generation educates consumers and professionals about self-directed retirement plans and nontraditional investments, a strategy at one time reserved only for the very wealthy. Next Generation Services provides comprehensive account administration and transaction support, and its sister company, Next Generation Trust Company, acts as custodian for all accounts. The neutral third-party professionals at Next Generation expertly guide clients and their trusted advisors as part of their white glove, personalized service for a seamless transaction experience from start to finish. For more information, visit www.NextGenerationTrust.com, or contact Next Generation at 888.857.8058 or NewAccounts@NextGenerationTrust.com.

# # #

Next Generation Celebrates 20th Anniversary as Administrator and Custodian for Self-Directed Retirement Plans

Company Was Founded by CEO Jaime Raskulinecz to Help More Investors Diversify Their Portfolios By Including Non-Publicly Traded Alternative Assets Within Their Retirement Plans

ROSELAND, NJ, July 15, 2024 /24-7PressRelease/ — The team at Next Generation, a full-service administrator and custodian for self-directed retirement plans, is celebrating the firm’s 20th anniversary this year, reflecting on a history of growth since its founding by CEO Jaime Raskulinecz in 2014.

Raskulinecz and her team have guided clients through 20 years of market fluctuations, including the Great Recession in 2008 and the COVID-19 pandemic. As she points out, self-directed investors, whose retirement portfolios include alternative assets, have been better positioned to weather the economic storms because their nontraditional investments are not correlated with stock market performance.

“I had a vision 20 years ago to create a platform for more people to invest in alternative assets they know and understand, and want to include in their retirement plans,” noted Raskulinecz. “I am proud of the growth we’ve achieved and celebrate my team for helping bring us to this significant anniversary.”

Unlike typical brokerage accounts that limit investments to stocks, bonds, and mutual funds, self-directed IRAs, HSAs, ESAs, Solo 401k’s and other plans enable investors to diversify their portfolios by including a broad array of non-publicly traded alternative assets within their plans. These include real estate, precious metals, private equity, mortgages, secured and unsecured notes, private placements, royalties, and many more.

“Many people are already investing in these asset classes outside of their retirement plans and may not realize they can build tax-advantaged retirement wealth by including them within a self-directed IRA,” said Raskulinecz, who founded the company out of her desire to include real estate investments within her retirement plan.

20 years of milestones, education and service excellence

Since its start in 2014 as a third-party administrator of self-directed IRAs and other plans, Next Generation has grown to approximately $700 million in assets under custody. In 2017, seeing the need to enhance client convenience, Raskulinecz established Next Generation Trust Company (a regulated financial institution chartered in South Dakota); the sister firm provides custodial services, bringing both sides of account management under one umbrella.

With client education a top priority, Next Generation offers webinars on various alternative investments and complimentary educational sessions for investors who wish to know more about self-direction as a retirement strategy. Next Generation is also active in several REIAs (real estate investment associations), as real estate and real estate-related assets are still among the most popular asset classes for self-directed investors.

While personnel changes have occurred over the past two decades, several employees are marking five or more years with Next Generation in 2024. They are Business Development Specialist Jack Malpass (five years), Client Service Supervisor Emma Olson (six years), Director of Finance Karen Jung (eight years), Operations Manager Kyle Schickram (10 years) and Compliance Manager Bill Wittler (11 years). More recent hires in the past three years are Assistant Client Service Supervisor Lisa DeSimone, and Robert Mathisen and Pamela Rodriguez, client service associates.

“Our team is dedicated to always providing the highest level of client service,” said Raskulinecz. “For example, rather than having a faceless auto attendant, our phones are always answered during normal business hours by a staff member who is well-trained and credentialed in our space.”

Raskulinecz also emphasizes professional growth for her team as an extension of that client service mission and her commitment to their career development.

• In 2020, she and Malpass, Wittler, Schickram, Olson and DeSimone earned their Self-Directed IRA Professional (SDIP) designations from the Retirement Industry Trust Association (RITA). This signifies that they attained comprehensive training in IRA alternative investments, prohibited transactions, UBTI, anti-fraud measures and disclosures; and demonstrated expertise in IRA documentation, reporting requirements, eligibility and contribution requirements, and IRA portability and distributions.
• Schickram, Wittler and Olson are also Certified IRA Services Professionals (CISP).
• Earlier this year, Wittler earned an internationally recognized certification as an anti-money laundering specialist from ACAMS, the Association of Certified Anti-Money Laundering Specialists.

Over the years, Next Generation has added services to its core business. It now has special services for advisors and advisory firms that offer advice on alternative investments, a robust platform and services for automatic rollover accounts and terminating pension plans, and qualified custody services for private funds.

“We are known in the industry for our unsurpassed customer service that extends beyond our existing clients to anyone who reaches out for more education or information, as well as to all our business associates and referral sources,” said Raskulinecz.

For more information about self-direction as a retirement wealth-building strategy, visit www.NextGenerationTrust.com.

About Next Generation

Founded on the philosophy that every person should have control over their retirement plans, Next Generation educates consumers and professionals about self-directed retirement plans and nontraditional investments, a strategy at one time reserved only for the very wealthy. Next Generation Services provides comprehensive account administration and transaction support, and its sister company, Next Generation Trust Company, acts as custodian for all accounts. The neutral third-party professionals at Next Generation expertly guide clients and their trusted advisors as part of their white glove, personalized service for a seamless transaction experience from start to finish. For more information, visit www.NextGenerationTrust.com, or contact Next Generation at 888.857.8058 or NewAccounts@NextGenerationTrust.com.

# # #

Saving for Retirement? Make Sure You Save for Long-Term Care.

If you’ve been saving diligently for a comfortable retirement, our hats are off to you! You can look forward to traveling, new hobbies, all those books you want to read, volunteering your time, and other ways you envision the perfect retirement.

One item you might not be considering is potential healthcare needs; are those factored into your retirement budget? Specifically, the costs of long-term care?

While medical insurance (Medicare plans, supplemental health plans) and funds from your health savings account cover many healthcare costs, the Nationwide Retirement Institute’s Long-Term Care Survey suggest concern among many U.S. adults about how they will handle the high costs of long-term care, should they need it.

 

Types of long-term care expenses

The National Institute on Aging outlines several long-term care models comprising home-based care by informal caregivers (family and friends) or by paid caregivers (nurses, home health aides, therapists, other professionals); and community and residential care such as adult day care and senior centers, assisted living residences, and nursing homes. Aside from personal care support that aging adults may require, there could be expenses associated with medical equipment, medication assistance, meal programs, housekeeping, and of course, the cost of living in an assisted living or nursing home environment.

 

Concerns regarding caregiving costs

With many older Americans experiencing the conflict of trying to manage their retirement goals while juggling the responsibilities of caring for elderly relatives, it’s no wonder the survey revealed that 40% of U.S. adults are worried that long-term care costs (not necessarily their own) may keep them from retiring. Some statistics from the survey point to concerns about caregiving expenses:

• Forty-three percent are concerned that those costs will prevent them from retiring.
• Fifty-six percent are willing to take a loan from their retirement account to pay for a relative’s caregiving expenses.
• Forty-two percent reported they’ll probably have to use funds they’d earmarked for their children if they ever have to take on caregiving duties.
• Average monthly out-of-pocket expenses are $338 to pay for co-pays, medications, and transportation.

Additionally, only 17% of respondents had discussed long-term care planning with a financial professional and just 20% had purchased long-term care insurance (with many unclear or making wrong assumptions about the actual vs. presumed cost of those premiums). You can read the full survey results here.

Bear in mind that Medicare does not cover assisted living or nursing home expenses, and depending on your insurance plan, you may or may not have any coverage for paid care in the home. Estimates of how much a person needs in retirement to cover “ordinary” medical expenses are in the $150-160,000 range so health care—especially long-term care—is a critical budget line item!

 

Enhance your long-term care coverage—boost retirement savings with a self-directed IRA

You’re already saving for retirement; why not turbocharge your account and prepare for long-term care costs through self-direction?

If you are comfortable making your own investment decisions, doing the research and due diligence about investments, and already know and understand alternative assets, you can include these in your self-directed IRA. You’ll build a more diverse portfolio and a hedge against market volatility with non-publicly traded alternative assets that are not correlated with stock market performance.

Real estate, precious metals, private equity, commodities, unsecured and secured loans, and more are all alternative assets that are allowed within self-directed plans. In fact, if you’re already investing in these outside of your existing retirement plan, you’re already a step ahead!

TIP: You can also self-direct an HSA and after you enroll in Medicare, you can use the funds in the health savings account for non-medical expenses (although you be taxed on those distributions).

 

Give long-term care a run for its money

Open and fund a self-directed IRA and/or HSA today. At Next Generation, we make it easy, with starter kits that walk you through all the steps, and a helpful team of professionals available by phone at 888.857.8058 or email at NewAccounts@NextGenerationTrust.com. Need more information? Contact us today.

Americans’ Favorite Long-Term Investment is Real Estate – the Most Popular Asset Class in Self-Directed IRAs

A survey from Gallup showed that Americans feel the best long-term investment is real estate. The organization’s annual Economy and Personal Finance survey was conducted in April; 36% of this year’s respondents chose real estate over stocks, bonds, savings accounts, gold, and cryptocurrency. Real estate was selected by between 30% and 45% of respondents every year in the Gallup survey since 2014. The survey is intended to provide a look at sentiments among typical investors.

Real estate’s top rank is no surprise, given that returns on investments in this asset class have been about 215% since 2000; this is according to the S&P CoreLogic Case-Shiller home index, which tracks changes in residential real estate values nationwide. Historical rises in home values may feed the taste for real estate investments. Again from a Gallup poll, 68% of U.S. adults expect home prices in their area to increase in the coming year—up from 56% a year ago.

 

Real estate as a self-directed investment

Did you know that real estate is the most popular alternative asset in self-directed IRAs? Real estate investments include:

-Vacation property

-Multifamily property

-Private REITs

-Foreign property

–Distressed properties

-Farmland

-Raw land

-Rehabs

-Funds that invest in real estate

-Self-storage facilities

-Warehouses

 

Why real estate is such a popular investment

People who invest in alternative assets—such as real estate—know that these investments are an excellent way to diversify their retirement portfolios and hedge against inflation. Other reasons for real estate’s popularity are:

 

Buy & hold for long-term gains

Real estate investors that hold rental properties within their self-directed IRA typically fall within the “buy & hold” camp investing strategy, in which the self-directed IRA generates recurring rental income during the hold period (usually five or more years). This long-term strategy enables account owners to build tax-advantaged wealth within their retirement plan, as investors benefit from property appreciation and—as noted above—build a hedge against stock market volatility and inflation. This differs from the short-term fix & flip strategy of buying a distressed property to renovate and sell it right away at a higher market value.

 

Get started with a self-directed IRA at Next Generation

Next Generation provides full account administration and asset custody for the alternative assets our clients include in their self-directed IRAs. We also offer client education with webinars, white papers, and complimentary educational sessions, which you can schedule here. If you prefer, you can always contact us at NewAccounts@NextGenerationTrust.com or by phone at 888.857-8058 to get answers to your questions about self-direction as a retirement wealth-building strategy.

Prepare For Smaller Social Security Benefits When You Retire: Funding a Self-Directed IRA Can Help Shore Up Retirement Savings With Investments in Alternative Assets

The Social Security Bill was signed by President Roosevelt in 1935 during the Great Depression. It established two types of financial safety nets for old-age security: (1) federal aid to the states to provide cash pensions to their needy aged (immediate assistance to the financially destitute elderly), and (2) a system of federal benefits for retired workers (a preventive measure to assure workers of a life income and reduce the potential of future dependency among the aged).

That was a long time ago and a lot has changed over the past 89 years. The Social Security Trust Fund is not as robust as it once was. When the legislation was signed in the 1930s, the historic grey wave of baby boomers who began retiring and/or collecting benefits in 2010 hit the program hard and continues to drain the coffers; and the number of aging beneficiaries relative to younger workers contributing to the program is out of balance, further exacerbating the situation.

Current Social Security status

An analysis by the Committee for a Responsible Federal Budget (CRFB) projects a budget shortfall of 4.9% of taxable payroll over the next 75 years. That’s a long time horizon but the steps being discussed today will affect near- and current retirees.

Without legislative action, lower monthly benefits lie ahead. For most middle-income Americans and even the more affluent, reduced Social Security benefits in retirement will hurt. The Center on Budget and Policy Priorities notes that about half of all seniors get at least 50% of their retirement income from Social Security, so for many, it represents far more than a retirement supplement. This is especially true as employer-sponsored pensions (defined benefit plans funded by the employer) are being phased out.

 

Boost your retirement savings with a self-directed IRA

As Generation X nears retirement—and even as millennials look ahead a few decades—they are right to be concerned about how healthy the Social Security fund will be when it’s their turn to collect. The lower benefits will put more financial burden on them to save more for retirement.
Funding an IRA regularly with maximum contributions every year is one way to supplement Social Security benefits. And if you are savvy about alternative assets, you can open a self-directed IRA and provide an additional boost to your retirement savings.

Self-directed IRAs (as well as self-directed health savings accounts and education savings accounts) allow account owners to include a broad array of alternative assets within their plans—with returns that are not correlated with the stock market. This enables investors to use what they already know and understand about different asset classes to build a more diverse portfolio and retirement wealth through a tax-advantaged plan.

In a self-directed IRA, investors can include real estate, private equity funding, royalties, mineral rights, precious metals, cryptocurrency, and many more nontraditional investments. Want to know more about how you take control of your future through self-direction? Watch some of our webinars, sign up for our newsletter, or schedule a complimentary educational session. Our team is also available by email at NewAccounts@NextGenerationTrust.com or by phone at 888.857.8058.

Using a Self-directed IRA to Invest in Distressed Commercial Property

High-net-worth families can build multi-generational wealth through the alternative assets allowed through self-direction

From suburban office parks to metropolitan office buildings to shopping malls, it’s no secret that plenty of distressed commercial property is available on the market today. The work-from-home and online shopping trends that began before the Covid pandemic contributed to the emerging decline of commercial property tenancy; this accelerated greatly during and after the pandemic, leaving commercial property owners with real estate ripe for investment by other parties—including investors with self-directed IRAs

The downhill slide in the commercial property landscape

According to MSCI, declining asset valuations and transaction volume have also contributed to the growing pool of distressed commercial properties in the U.S., as have loans that are facing maturity (the Wall Street Journal reported that over $2.2 trillion in commercial mortgages is scheduled to mature by the end of 2027). Some statistics about commercial properties as shared by MSCI are:

Further, Crain’s New York Business reported in February 2024 that:

Additionally, a CoStar report cited increasing delinquency rates among office building owners, from .57% in January 2023 to 6.28% in January 2024. The firm noted this is the longest period of increasing delinquency rates since 2019.

While this all sounds dire for commercial property owners, the current environment lays the foundation for savvy investors interested in commercial real estate—an alternative asset allowed in a self-directed IRA.

Including distressed commercial property investments in a self-directed IRA

Real estate provides a long-term investment with returns derived through asset appreciation and the potential income from investment properties. It is also the most popular alternative asset in self-directed IRAs. As our CEO Jaime Raskulinecz shared in this recent Forbes Finance Council article, one can invest in various types of commercial real estate using a self-directed IRA. In addition to office buildings and multifamily properties (condos and rentals), warehouses and industrial properties, self-storage facilities, strip malls and shopping centers, and hotels are other types of commercial property ripe for investments.

While many investors include vacation property, rehabs, farmland, and raw land within their self-directed IRAs, they can also add commercial real estate classes in several ways, both directly and indirectly.

1 – The self-directed IRA invests in the property using cash from the account or with a non-recourse loan

2 – The self-directed IRA issues a mortgage loan to a commercial property owner (mortgages are another alternative asset allowed in these plans)

3 – The IRA invests in a real estate fund

4 – The IRA partners with another account or individual to make the investment.

5 – The self-directed IRA participates in private equity funding that focuses on commercial real estate

6 – The IRA invests in debt funds associated with real estate assets

As with all self-directed investments, the income and expenses related to the assets flow through the account (no self-dealing allowed!). In the case of loans, the terms are worked out between the lender (the IRA) and the borrower (the property owner). When selling a hard asset (property vs. shares in a fund), the account owner must agree on the price and terms with the buyer. Once an agreement is reached, the account owner sends instructions to the IRA custodian (such as Next Generation Trust Company) to sell the property on behalf of the self-directed IRA. The proceeds go into the IRA as tax-deferred or tax-free income (depending on the account’s structure).

Investing in real estate? Next Generation is here to help.

At Next Generation, we work with many clients who include real estate investments within their self-directed plans. We also provide client education about investing in alternative assets through self-direction. We invite you to watch this webinar, which details how to leverage your retirement plan with real estate investments.

Need more information? Contact us today.

Why Family Offices Should Consider Investing Through Self-Directed IRAs

High-net-worth families can build multi-generational wealth through the alternative assets allowed through self-direction

One of the prime activities of family offices—the private wealth management firms that work with high-net-worth individuals or families—is to help clients preserve and generate wealth for current and future generations. This may include financial planning and advice, asset management, estate planning, and lifestyle management for the wealthy.

As part of their financial services, high-net-worth family offices can incorporate self-directed IRAs as part of their clients’ investment strategy.

 

Benefits of Self-directed IRAs for family offices

As with any IRA, all self-directed IRAs may be Traditional or Roth and are tax-advantaged accounts. That’s where the similarities end.

 

 

 

 

Considerations regarding self-direction for family offices

As the name connotes, “self-direction” means that investors make all their own investment decisions. Whether family members or trusted advisors are the ones calling the investment shots, bear in mind that this strategy requires more due diligence by the account owner when it comes to selecting investments. This includes knowledge about particular asset classes.

Members must be careful about self-dealing and prohibited transactions, which will disqualify the IRA’s tax-advantaged status.

Family offices—like any investor—are advised to select a custodian with experience handling self-directed IRAs and the alternative asset classes they allow. When researching custodians, don’t be afraid to ask questions about the services offered, assets under management, or expertise with certain assets.

 

Working with Next Generation

As a custodian of alternative assets within our clients’ self-directed retirement plans—and a sister firm that specializes in comprehensive account management—Next Generation Trust Services provides expert custodial services and client education about the many options and benefits of these plans.

We have 20 years of experience working in the self-directed IRA space and with the many alternative assets our clients invest in. Our team executes all transactions upon clients’ instructions and our transaction vetting system is in place to flag any potential issues that may violate IRS regulations. We file all mandatory paperwork associated with the accounts and prepare the required reports for tax purposes.

Our convenient starter kits are always available online with step-by-step instructions on how to open and fund a self-directed IRA.

Need more information? Contact us today.