Are Self-Managed Retirement Plans Right for You?
Checkbook IRA’s and Solo 401k’s

By Peter Rizzo

Life Settlements in a Retirement Account? Think Again.

Lately, I’ve been seeing online many ads for IRA’s and Solo 401k’s that expound on their flexibility and minimal cost.

Curious as to what they were about, I have found they aren’t that flexible, for you have a small choice of investments and as the account grows or as transactions grow from asset direction changes, the costs accelerate.

I have also read numerous posts on social media expounding the virtues of advisors from the major brokerages who will simplify your life. It gave me pause, for a broad-brush statement usually is more marketing than reality.

We have never claimed to be right for everybody and believe that you should fully inform yourself of the process and what your goals are to decide which system is right for you.

A Checkbook IRA or Self-Managed Solo 401k is right for you if:

1. You want COMPLETE CONTROL over your retirement accounts.

2. You want to invest in a myriad of different investments without having to open separate IRAs.

3. You are a good record keeper and document your transactions.

4. You want to be a direct money lender by bypassing the banking community.

5. You want to invest in real estate where local control is necessary.

6. You want to invest in transactional investments.

7. You want to invest in opportunities not offered by brokerages.

8. You have private investment opportunities.

A Checkbook IRA or Self-Managed Solo 401k is not right for you if:

1. You are a bad record keeper.

2. You want to have only one investment and it will cash out at the end.

3. You want to invest and forget just checking balances periodically.

4. You have an investment advisor you completely trust and they do not offer these plans.

5. You only want to invest in offerings from large brokerage houses.

The above are just a few things that you should consider. What you should know is if your financial advisor is your fiduciary (legally charged with operating in your best interest) or just a representative of the investment house. There are very good captive financial advisors, but you should be aware of what your relationship is.

The bottom line is that if you’re considering a self-managed retirement plan, be aware of all the nuances and don’t be sold. Be educated and make the decision that is best for you and your families’ future.

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    1. George Crawford

      I have a self-directed IRA Roth with Equity Trust, but only have a small amount of funds in it. I have been planning for a long time to move it and convert it to a checkbook IRA. What would be the procedure, and what would be the cost?

      • Jordan Sheppherd

        Hi George, we’ve emailed you the cost and procedures of setting up an IRA LLC structure. Let us know if you need anything else.

    2. Carmen Eubanks

      Excellent article and advice!

    3. Jerrold D Alexander

      I have an upcoming 1031 exchange that I am trying to get the best advice as to the tax consequences of setting up a retirement account into a Checkbook plan. My portion of the sell of the land will be $500K. Is there anyway for my business partner and I to cash out and set up an IRA. My partner seems to want to cash out. I do not want to pay the taxes to cash out.

      • Jordan Sheppherd

        Jerrold, if you own your portion of the property personally, then theres really no way to get that property 1031’d into an IRA. As the IRA owner and disqualified person, you’re prohibited from selling, gifting, or any in any other way transferring ownership of the property into your IRA or other retirement plans.

        So, you can 1031 exchange into another property, but there’s just no way of involving a retirement plan in this situation, without it triggering a prohibited transaction.