Why Self Directed 401K Is An Excellent Investment Option For Realtors

Self-employment is a common practice in the real estate industry and it is quite often when you find a self-employed Realtor. There is no doubt that being self-employed is a reward in itself considering the choice of working hours and picking up your own assignments. However, most of the self-employed real estate professionals would get a bit uncomfortable if you initiate a retirement discussion. The regular retirement plans are excessively small for them and they do not consider retirement as a matter that requires immediate attention.

Another common problem with real estate investors is the limitations in traditional retirement plans. Most of the plans offer a contribution limit of $5,500 and these investments are primarily made in the stock market or mutual funds. All of these factors make conventional investment options unattractive for Realtors. However, a self directed 401k is a retirement plan that offers much better investment opportunities.

What are the benefits of Self directed retirement plans?

Self directed 401k plans offer complete investment freedom to the account owners and they can self-manage the account. Realtors® often work with their spouse or work alone, which makes a self directed 401k the perfect retirement solution for them. Another interesting aspect of these retirement plans includes investment options such as mortgage notes, real estate, tax-liens, and investment in precious metal. Further, real estate professional can use their retirement funds for real estate investments.

In addition to the control over self directed 401k plans, these plans come with large contribution limits. For an instance, Realtors can make annual retirement contributions of up to $53,000 annually in 2015. If they are working with their spouse then even the spouse can make additional contributions of up to $53,000. For individuals above 50 years of age, there is an additional catch-up investment of $6,000 in 2015.

Another excellent feature of a self directed 401k is the ability to borrow 50% of the available funds with maximum cap of $50,000. Most of the real estate professionals require financial aid in regular deals and they can borrow money from their self directed retirement account. The borrowed money comes with reasonable interest rate and you are actually paying interest to yourself. Borrowing from your retirement account does not have any impact on your credit history as well.

Managing these retirement accounts is easy and takes only a few hours to setup the account. One can choose banks, financial institutions, or even private companies as their custodian. These accounts come with minimal maintenance fees.

With self employed retirement plans, you can enjoy your golden years knowing that you have saved enough for your retirement.