ted (04/27/83)
Where are good places to look for self-directed IRA's? Here is my problem: I want to buy a mortgage bond from a church and keep it in an IRA. One of the major reasons I want it in an IRA is that it pays full principal and interest at maturity ... and I don't want to have to fool with paying taxes on interest I have not received every year for the next 15 years. In calling around to various firms (trust companies, stock brokerage firms, banks), I have gotten several different (and often wrong) answers. To wit: TRUST COMPANY: Interest earned on church bonds is tax-exempt ... why do you want to put it in an IRA? [Interest on church bonds is taxable, just like corporate bonds.] STOCK FIRM 1: If it doesn't trade on a stock exchange, the IRS won't allow you to invest in it. [Wrong, again.] STOCK FIRM 2: We can't handle anything we don't normally trade. [At least this firm admitted that it was their problem, not mine or the IRS's.] STOCK FIRM 3: There is no such thing as a bond issued by a church. STOCK FIRM 4: The IRS specifically disallows investments in a church bond. (1) Have you had any experience in "unusual" self-directed IRA investments? (2) What kind of fees were you charged? (I consider $100 for setting up the account, the first year's custodial fee and transaction fees to be a bit steep, but those appear to be quite normal for self-directed IRA's.) (3) Are the firms that I have tried the best ones for me to patronize with IRA accounts? Should I try other types of firms? Any suggestions? Ted Aseltine BTL-Columbus cbosgd!ted
mikem (04/28/83)
You have one basic flaw in your original premise: You don't need to worry about when interest is paid on a self directed IRA; that is why you have an IRA, to protect from taxes any income your investment may make. All income, whether it is interest, capital gains, distributions, dividends, or whatever, must be paid to the IRA, and are only taxable when the funds are withdrawn; and the taxes are based on treating those withdrwals as ordinary income, provided you wait until you are 59 1/2, or whatever that age was. The best info I have seen in one place on IRAs, is the IRA annual put out by MONEY Magazine, available on newstands everywhere for $2.95 (tax-decuctable investment expense). For weird IRA investments, consult a recent back issue of Business Week; in the Personal Business section is mention of someone offering a booklet containing "weird" or unconventional ideas, and how to do it. All of the stock brokers are basically right, if its not traded, they usually don't know about it. Just remember that a broker will always try to sell you something to make a commission. If a broker opens an IRA for you, he must make some money somehow; either thru the commissions on the transactions, or on the maintenance fees as custodian of the account. A question I have, is whether brokerage commissions and fees related to an IRA in a self directed account, are deductable in the tax year done, or do they just subtract from the funds in the account. As for finding a custodian for your idea for an IRA... Check with a bank, or with a firm called ADP ( a dataprocessing payroll service). Locally, in the Portland, OR area, there is a firm offering medical factoring that pays 30% interest on funds invested. Someone from the local ADP place offers a custodian service for self directed' IRAs, which in turn are being opened by people wanting IRAs invested in the medical factoring investment. Medical factoring is a mechanism of buying accounts receivables from doctors awaiting payment of claims from insurance companies. The return results in the payback on the discounted sale of the account. These are "unregistered", unsecured, unregulated transactions; caveat emptor. DISCLAIMER time: I am not an investment advisor; all information gleaned from magazines, newspapers, etc. I am not trained in financial matters. I will be glad to answer any questions that might come to mind after reading this. None of this has anything to do with what I do at Tektronix, where I am in engineering. Mike Mihalik MDP Engineering Tektronix Inc. ...tektronix!tekmdp!mikem