Using Your Retirement Account to Produce Income Now

rnYou may have though that an IRA or 401k plan is just a retirement asset. But it can be a very valuable tool for you to use to generate money right now. In this article we will reveal to you some of the little known financial secrets that are not readily available to the general public. But first lets make sure you have a basic understanding of what we are dealing with. rn401K: A 401 is a plan that is administered by employers to eligible employees so that they may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. This plan also allows employers offering a 401(k) plan to make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan (earnings accrue on a tax-deferred basis). rnIRA: An (IRA, Individual Retirement Account) is a plan that is established by individual taxpayers, whom are allowed to contribute up to 100% of their compensation (self-employment income for sole proprietors and partners) up to a set maximum dollar amount to this account. The most popular form of these accounts are CD, and bonds. Most of the contributions to a traditional IRA may be tax deductible depending on the taxpayer's income, also their tax and filing status. In addition earnings accrue on a tax-deferred basis until after retirement when disbursements are made from the IRA which are expected to be taxed a lower rate. Note that early withdrawal penalties apply. rnLets say you have these accounts established and now you have all this money waiting for your retirement. Would den it be nice if you could put this money to work now, earning money for you now. rnBy adding the benefits of your retirement accounts with the benefits of real estate investments you can have a very powerful income producing combination. The government allows you to realize a tax rebate for every dollar you put into your IRA account in the year that you put it in, and you don't have to pay any tax on your profits until you withdraw the money in your retirement years. This means you have the power of compound interest working for you over and over again. The best thing is that the ROI is in your control and not on the wildly fluctuating effects of the stock market. rnLets look at the following hypothetical scenario using an IRA as the vehicle for our investment strategy. Here is a simple 3-step process using an IRA to make a real estate purchase: (1) Open a self directed IRA account with a trustee, and fund the account through a rollover, cash contribution or money transfer from existing accounts. (2) Find the property you want to invest in, making sure to follow all the self directed IRA rules. (3) Make sure that all payments to and all expenses go through your IRA. When you are ready to sell your investment in your property, your brokerage or bank will supply all the paper work, and will work with you and your title company/closing attorney to complete the transaction. All the profits from the sale are tax-free and they go back into your IRA for your next investment. rnAt this point please note the following prohibited transactions with a self directed IRA: • You cannot buy property for personal use (present or future) with IRA funds. • You cannot buy property from any of your family members or relatives. • You cannot use your IRA as security for a loan. • You cannot borrow money from your IRA. • You cannot sell property to your IRA. rnThis is one of many strategies that we have available for you to use your retirement account to produce income for you now. There are many other profitable and important items to consider, such as emerging markets, the benefits of commercial, and multi family real estate, Private placement investments, etc.