Bill's Story

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Sometimes you have to imagine.

Two decades ago, after 15 years as a CFO, consultant, and CPA working as an auditor in personal and business taxes, financial statements, and forensic accounting, I got a question that stumped me. Why can’t my IRA invest in real estate?

Hmm...I had never seen anyone do it, but I also had difficulty believing the IRS would limit tax-deferred investments to publicly traded stocks and bonds. It didn’t make sense.

The question came from a long-time real estate investor, who also happened to be my running partner, Catherine Wynne. She was almost at the point of withdrawing from her IRA – and paying nearly 45% in taxes and penalties - just so she could invest the remainder in rental real estate, an asset class she was familiar with. I asked her to pause and give me time to research.

The answer I found, as you probably suspect, is that the IRS does allow IRAs to buy and rent out property. Why then the mystery? To make the investment you need a willing IRA custodian, at the time a rare offering. Even now most IRA custodians are not willing to allow their account holders to make rental property investments. It simply isn’t a service they offer. Most IRA custodians make money through investments in stocks, bonds, CDs, and, like most of us, they stick with what they know. We weren’t satisfied with that answer, so we found a willing custodian and presto, Catherine’s self-directed IRA started buying apartment buildings...

Two years later, Catherine and I came upon an opportunity to form a new IRA provider. We saw it as way to spread the word about IRA investing as well as put the power of choice back in the hands of the investor, rather than in the hands of Wall Street. In 2003 we organized what is now New Direction Trust Company with a mission to educate and enable investors to invest in the asset of their choice with their retirement funds. That investor is the “Self” in what is now referred to as Self-Directed Plans. We still remember the first funds transferred in, $100,500. Curiously it was not for real estate but for a private note, that investor’s specialty.

Now almost 17 years later, focused from the get-go on education and more recently on making the process more intuitive and modern, New Direction Trust Company has grown to over 30,000 accounts and to over $2.5 billion in assets. A company that began with just Catherine and me now employs a team of over 70 dedicated individuals working every day to spread the word about Self-Direction, assist account holders with processing their desired transactions, and submit appropriate filings with the IRS. At the same time, we continue listening to our account holders and developing the tools they need. We offer IRAs, Roth IRAs, 401(k)s, Health Savings Accounts, Coverdell Educational Savings Accounts, and more.

We teach formal continuing education classes to CPAs, Lawyers, Financial Advisors, Real Estate Brokers and Agents and informal classes (in person and online) for our clients and prospective investors. But our mission is not yet accomplished - we continue to hear “My IRA can invest in what? Why didn’t anyone tell me?”

We have and we will. We can't wait to hear about your investment goals and help you achieve them!

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