Take charge of your IRA

More and more entrepreneurs are using their IRA funds to invest in real estate, private equity and even their own businesses.

By Jeanne Lee, FSB Magazine
May 30 2007: 10:32 AM EDT

(FSB Magazine) -- Last November, Dave Hanrahan, 37, of Vineland, N.J., decided to try something different to improve the returns in his retirement account. Rather than putting his money into the latest hot stock or biotech fund, Hanrahan used $60,000 in his self-directed IRA to purchase a small residential building lot. Thirty days later he flipped it for a tidy profit.

Ordinarily such a move would result in a capital gains tax. But because the property was held by his IRA, Hanrahan will owe no tax on the gain until decades from now when he starts taking distributions on the account. "Otherwise I would have paid about 30 percent tax on the sale," he says.

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