With trust deed loans, you can use your self-directed IRA to make private loans to a borrower of your choice, generally secured by real estate investments as collateral. The trust deed market isn’t limited to IRAs. Pension funds and other savings vehicles also use trust deeds to diversify their portfolios and hedge against the volatility of the stock market or more traditional forms of investing.
The main difference between a secured mortgage note and a trust deed loan is that the deed is handed over to a third party, who is given specific instructions about what should happen to the deed if there’s a default or the loan is paid off. While you can tailor the loan terms to suit your needs, terms of one to three years are common.
How You Can Generate Income With Trust Deeds in Your Self-Directed IRA
Investing in trust deeds through your self-directed IRA generates a tax-free, passive income to support your future growth. Although the loaning process might seem complex at first, trust deed investing through a self-directed IRA is fairly simple:
- Execution of a promissory note: Your borrower will sign a promissory note payable to you as the private real estate investor, backed by a deed of trust on the property.
- Repayment terms: The borrower promises to repay the loan amount, plus interest, with monthly payments over a specific period you set.
- IRA income: The borrower’s monthly payments are deposited into your self-directed IRA, resulting in a higher return.
Why Self-Directed IRAs Are Ideal for Trust Deed Investments
Trust deeds in a self-directed IRA are considered excellent investment vehicles due to their tax advantages. The income generated within your self-directed IRA is tax-deferred or tax-free until you reach retirement age or decide to take distributions, depending on your account type.
Typically, income from trust deed investments is taxed as regular income. However, by investing through your self-directed IRA, you benefit from the tax status of your IRA, which can lead to substantial savings.
Want to learn more? Find out how self-directed IRAs work, what accounts you qualify for and contribution limits.
How to Get Started With Trust Deed Investing Through Accuplan
Investing with trust deeds is easy with Accuplan. Just follow these steps:
- Open and fund your account: Start by opening an account with Accuplan Benefits Services, and put money in that account.
- Find a borrower: Once you’ve found a borrower, agree on an interest rate and secure collateral. Due diligence is also essential, so consider working with an attorney or a trust deed investment company to ensure all documentation is in order.
- Fund the loan: Let us know where to wire the funds to complete the loan.
- Receive payments: All loan payments are deposited back into your self-directed IRA. You must inform the borrower or escrow company that all funds are to be paid to your self-directed IRA. Otherwise, you may cause an accidental distribution, resulting in taxes and penalties of up to 10% of the total amount in the IRA.
Investing in trust deeds through your self-directed IRA can be a lucrative choice. They often yield 2%-3% higher annual returns than other interest-earning assets.
Why Choose Accuplan for Your Trust Deed Investments
As one of the leading providers of self-directed IRA administration, Accuplan has been integral to the success of thousands of investors since we started as an estate planning business in 1985. Our transition to Accuplan Benefits Services in 2007 and our partnership with American Estate and Trust solidified our role as experts in self-directed account administration.
Our Dedicated Experts
Our team brings years of experience in the retirement account industry and is deeply knowledgeable in all aspects of self-directed IRAs. Our experts are passionate about self-directed accounts and stay up to date on IRS compliance rules to ensure your investments are secure and compliant.
Intuitive Dashboard for Self-Direction
We have designed our platform to prioritize ease of use for individual investors and businesses. Whether you’re looking to diversify your retirement portfolio or offer investment opportunities to clients, our intuitive dashboard allows you to navigate alternative investments quickly and efficiently.
Commitment to Security and Trust
With over $2 billion in assets under management, we prioritize your security and trust. Our state-of-the-art systems and experienced team manage your investments with the utmost care and discretion.
Start Your Trust Deed Investment Journey With Accuplan
Ready to take the next step? Schedule a free, no-obligation consultation with one of our trust deed experts to discuss how you can enhance your retirement portfolio. If you don’t have an account with Accuplan yet, open your self-directed IRA today and start experiencing the benefits of working with a trusted leader in self-directed IRA administration.