Tax lien investing was once a delicious little secret, but increasingly people are discovering this efficient tool for making substantial profits. What you may not know is that you can use funds from your retirement account to purchase tax lien certificates.
The "Secret" Is in the Plan
The key is to have the right type of retirement plan. Most Americans are fed up with their retirement accounts…and they should be…because they feel that they have no control over it. A retirement plan can be a great investment tool if it is understood and managed right, but you must be the one who manages your own account.
If it is out of your control, with some faceless money manager making the investments and handling the mutual funds, you have no one to blame but yourself. It is time to educate yourself about your choices. When many people talk about a "self directed retirement account," it makes me crazy because they think that means going down to a bank or to Fidelity or to any of the "big" money people and opening what is sold as a "self directed retirement account." The problem is that it is anything but "self directed." The account manager is actually doing the directing by making you buy the investment product that his firm offers.
With a QRP, You’re the One in Control!
To resolve this, I set up a Qualified Retirement Plan (QRP). The key is for you to be the administrator and the trustee. At that point you can go to
any bank and set up a trust account and…"bingo"…you have a retirement account that is a TRUE "self directed account." You can roll money over from old accounts, invest in houses, stocks, bonds and, yes, Tax Lien Certificates!
Now, this is just a brief overview, but my support staff can provide you with all of the pertinent information. Be careful if you talk to a retirement "expert" because they don’t like the QRP. Why not? There is no fee structure set up for them to make money within the QRP, and you can invest in almost anything, including those investments that they don’t sell!
Qualified vs Non-Qualified…Know the Difference
The initial intention of Congress was for you to invest your retirement money, with just a few restrictions, in almost any asset that made logical sense, whether it be real estate, businesses or mutual funds. Once Wall Street and other financial industry analysts moved into the picture, however, they promoted their own products and services to increase their own profits. But now the proverbial cat is out of the bag. So take some time to review your retirement plan. Make sure that it is a Qualified Retirement Plan, as opposed to a non-qualified plan. In other words, it should meet the requirements of Internal Revenue Code Section 401(a) and the Employee Retirement Income Security Act of 1974 (ERISA), which makes it eligible for favorable tax treatment. Then find out just how many different ways you can make it pay off for you.