Many people are using their retirement plans as money pots to invest in start-up businesses, gold speculation and private equity investments. They’re missing the point that 401k plans and IRAs are for their retirement, not some get rich quick scheme. Sure there are big tax advantages to such moves, but more often than not, these plans fail and you’re screwed in retirement!
There are many advisers out there charging a fee to help you use your retirement plan to start businesses. The gist is that they will roll your funds into a plan that you can invest in a small business or franchise inside your retirement plan penalty free. The main strategy is to start a business and adopt a 401k plan. The existing plan is rolled into the new one, which is invested in the new business.
Often these are called Rollovers as Business Start-Ups plan or ROBS. An IRS study in 2009 found that many of these businesses fail, leaving you with nothing at retirement.
Another plan people tend to abuse is the self-directed IRA. These plans allow you to invest in so much more than your regular IRA. You can invest in precious metals, rental properties, oil and loans. The fastest growing investment is commodities, particularly gold bullion. Taxes are deferred for many years and if it’s a Roth IRA, the distributions are tax-free!
The basic principle of this article is to not be greedy with your retirement funds. You need a trusted financial adviser that’s looking out for you and not his or her own bottom line. The tax experts at the IRA Financial Group are here for you. Give them a call at 800.472.0646 or visit our website at www.irafinancialgroup.com for a free consultation.