Maggie Polisano, Principal of CAMA Self Directed IRA, is a third-generation real estate investor, a Certified Trust Specialist (CTS) and a graduate of Villanova University. With an extensive background in investing and development of residential properties in Pennsylvania, New Jersey and Florida, Maggie brings a wealth of knowledge and a track record for highly successful real estate investments to CAMA. Through her expertise in Computer Sciences, prior training as a financial systems consultant, and her systems analyst experience, Maggie assists clients in understanding tax avoidance strategies when dealing with notes, mortgages, options, and other real estate transactions, as well as helping individuals and business owners to select appropriate plans.
What exactly is a self directed IRA and who should be thinking of using one?
A self-directed IRA is an IRA in which the IRA owner directs all investments in the account. There is no legal distinction between a "self-directed IRA" and any other IRA, except with a truly self-directed IRA the account agreement allows the broadest possible spectrum of investments. Self-direction may not be for everyone. It is ideal for those looking to take control of their financial future and invest in both traditional and non-traditional assets that they understand and feel comfortable with.
What are the characteristics of the investor who can benefit the most from opening a self-directed IRA?
A self-directed IRA is truly for the investor who wants to take a more active role in the investment of their retirement funds. Having good information is critical when making investment decisions regarding your retirement plan. The investor who can benefit the most from using a self-directed account is one who is looking for alternatives to the stock market and has an interest and knowledge concerning non-traditional investments.
What are the advantages of establishing a self-directed IRA account?
Some of the key benefits of establishing a self-directed account include:
- Investing in what you understand and can control
- Using your expertise and knowledge to build wealth your way
- True portfolio diversification and asset allocation
- Reduced investment restrictions
- Your financial future is not tied to obscure events
- A reduced dependence on brokers who make a commission on product sales
What might be considered the "cons"of creating a self-directed IRA?
When investing with a self-directed IRA, one must be careful to watch out for violating IRA self-dealing (prohibited transaction) rules. For example, you cannot use your IRA:
- To buy stock or other assets from yourself or sell them to yourself
- To lease assets from yourself or to yourself
- To buy stock in a corporation in which you have a controlling interest
- To lend to yourself or borrow money from yourself
- To engage in transactions with certain related parties and/or family members
Furthermore, you cannot use your IRA to transact with certain disqualified persons. These include you as the owner of the self-directed IRA and other family members such as:
- Your spouse
- Your children & their spouses
- Grandparents, grandchildren and great-grandchildren
What type of investments can an investor with a self-directed IRA consider
making with these retirement funds?
Self-direction means that the account owner can select any assets for investment purposes (allowable by the IRS) of their choice. Allowable assets include but are not limited to:
- Businesses – LLC's and LP's
- Residential & Commercial Real Estate
- Raw Land
- Tax Liens/Deeds
- Precious Metals
- Hedge Funds
- Stocks, Bonds, CDs & Mutual Funds
What percentage of investor IRA accounts do you estimate are self-directed ones?
The Securities and Exchange Commission estimates that investors have $94 billion in self-directed IRAs, which is about 2% of the $4.7 trillion IRA market. This number continues to grow as retirement savers are increasingly turning to self-directed IRAs in search of more flexibility and control over their accounts.
Can investors roll over their current Roth or non Roth IRA accounts into a self-directed account?
A common approach to fund a self-directed IRA is to rollover funds from an existing 401(k) or other employer-sponsored retirement plan. You can do this whether you have a Traditional, Roth, or other type of account. A direct rollover will transfer your 401(k) to a self-directed Traditional IRA, without incurring a taxable event. The IRS allows you to do this at any time, regardless of your employment status. However, some employers will not allow their employees to do this while currently employed; they prefer to have you wait until retirement or parting ways with the company. You would first want to check with them to see if they will allow you to do the rollover without incurring a penalty. You may also withdraw, tax free, all or part of the assets from one Roth IRA if you contribute them within 60 days to another Roth IRA. It is important to keep in mind that the IRS does limit you to only one rollover during a 12-month period when rolling from one IRA account to another IRA.
What are the expenses involved in opening and maintaining a self-directed IRA account?
CAMA believes in providing superior service for fair prices. There is a $50 account establishment fee to get started. Unlike most custodians, CAMA offers our clients a choice between two fee options for the annual maintenance of their account. Clients may choose between asset-based and value-based options and may change their designation over time as their account grows and changes. Annual maintenance fees fall between $150 and $1,850. Additionally, CAMA does not charge an annual fee until there is a purchase made. We feel this is important because we never want clients to feel rushed into an investment decision simply because their account is open.
Tell us about CAMA Plan. How long has it been operating? Who started it and manages it? About how many self-directed IRA accounts do you have registered with you? What is the CAMA Academy?
CAMA Self Directed IRA, LLC specializes in the third-party record-keeping of self-directed retirement plans, including IRAs (both Traditional and Roth), SEP IRAs, SIMPLE IRAs, and Defined Contribution Plans. Since 2004, CAMA has provided administration and record-keeping services to individuals and corporations who wish to include non-traditional assets as part of their tax-deferred and tax-free portfolios. CAMA is also affiliated with specialists and professional organizations locally and around the country, allowing us to learn from recognized experts in the fields of tax-free and tax-deferred planning, compliance and administration. Maggie Polisano and Carl Fischer, Principals of CAMA Self-Directed IRA, LLC, opened the doors in 2004 and have been serving the financial community with their extensive knowledge of real estate investments ever since. CAMA's mission is to create more knowledgeable and confident investors by providing education, which we offer free of charge in CAMA Academy through various financial workshops and webinars. The CAMA Academy was established in 2010 and continues to make a positive impact on the financial literacy of our clients, empowering them to build wealth their way.
We have started to hear about the Alternative Investments Society. Briefly, what is that all about?
The Alternative Investments Society strives to provide educational information to clients who are looking for alternative investment options that are not directly tied to the performance of the stock market. The Alternative Investments Society brings together experts and representatives of institutions as well as fund managers and consultants to explore the roles of alternative opportunities and strategies. The goal of the Society is to aid investors in diversifying their investment portfolios. One of the easiest ways to accomplish this is to open a self-directed IRA and invest in alternative assets such as performing/discounted mortgage notes, precious metals, commercial real estate, hedge funds and private lending.