CREPN #178 – Self Directed IRA with Terry White

CREPN #178 - Self Directed IRA with Terry White

CREPN #178 – Self Directed IRA with Terry White

Self Directed IRA is an option available to all investors, yet it is not widely understood.

If fact, every IRA is self directed.  It is the custodian that limits your options, ie: stock brokers and wirehouses limit your selection to marketable securities offered.  To take advantage of non traditional assets, you need to seek out a custodian that supports investing in non traditional assets.

Employer sponsored plans, ie 401k’s usually have a limited number of investment options that are set the administrators.

Terry White is the founder and CEO of Sunwest Trust, a custodian for almost 10,000 Self Directed IRA’s with an average account balance of $130,000.  

Sunwest Trust provides an option for investors looking to invest in non-traditional assets. Unlike traditional broker custodians who charge based on the assets under management, Sunwest Trust charges an annual flat fee for their services.  

Who is eligible for a Self Directed IRA

Individual Retirement Accounts, IRA’s, are non employer sponsored retirement plans.  You choose the custodian. They can support traditional or non traditional assets.

Employees who leave an employer have two options.  They can leave their 401k with their prior employer, or they can roll over the plan to a Self Directed IRA.  

What can you invest in?

The IRS does not provide a list of categories you can invest in.  Rather it specifies a few things you cannot invest in. The list is short.  It includes life insurance and collectibles.

Who cay you invest with or in?

Again, the IRS does not list all of those potential investors you can invest with.  Rather, they specify the those “disqualified” parties which are prohibited: you, for personal use, your ascendents and descendents; your parents, grandparents, children or grandchildren.  You are not prohibited from investing in a brother or uncle, etc.

How it works:

It is crucial that any purchases in your Self Directed IRA be structured properly to avoid potential taxable event or penalties.  You must have the purchase and sale agreement signed by your custodian. If you act as the buyer individually, then fund with your IRA, you will engage in a prohibited transaction.  

When property is purchased, the custodian does so at the direction of the IRA.  The property is then titled to the IRA in care of, the custodian, ie: My IRA, c/o Custodian.

All operating income and expenses go through the custodian who deposits, withdraws from your IRA.  It is best to use a property manager that pays directly to the IRA.

You are prohibited from using the property personally.


Using Leverage

Your IRA can elect to use leverage to purchase a property, provided that the loan is non recourse.  Keep in mind, using leverage triggers, Unrelated Debt Financed Income, UDFI. This is a tax. It is equal to the percentage of the income that is attributed to the leverage.  Ie; if you put 25% down, and have a loan for 75%, then, 75% of your income will be taxed at Trust rates.

Lending from your IRA

Lending from your IRA is a very clean way to generate substantial gains.  Hard money, interest only loans, as long as you don’t loan to yourself, parents, or children, is one of the most popular ways to utilize a self directed IRA.

Reporting to the IRS

Each year, the assets or property held in your IRA are reported to the IRS on a form 5498 by your custodian.  The non traditional assets, property, are valued at the year end and compared to last year. All income paid to you by your custodian is reported on a form 1099.

Required Minimum Distributions

When you turn 70 and ½, the IRS requires that you take minimum distributions from your IRA.  This requires planning to do properly. Your options include:

  • Sell a property as you near 70 yrs old
  • Make distributions from the cash flowing income
  • Take a loan against the property
  • Take out an ownership percentage of the property via tenants in common TIC.

Is a Self Directed IRA right for you?

A Self Directed IRA is not for everyone.  If you do not understand what you are investing in, don’t do it.  Get educated, learn the ins and outs, and know what you are doing before you invest.

For more go to:


and request Terry’s book,

When all You have is a Hammer

Sunwest IRA is a YouTube Channel

J. Darrin Gross
[email protected]