Most IRAs are Traditional, meaning the investor took the tax break when they contributed or it was rolled over into a Traditional IRA when they changed or retired jobs. So whats the bad news?.... All that money is taxable when you take it out after 59 1/2. That's right, that tax defferal was just a interest free loan from the IRS. They want their money. At least it got to grow tax defferred all that time, but that profit is taxable too. the caveat.... i had a customer that was going to buy a retirement home with $400,000 of Traditional IRA funds. When she asked to take it all out, the custodian informed her that she would have to pay about $100,000 in taxes. So much for that $400,000 sale.
Now if it's in a Roth IRA, the money was put in the Roth with after tax dollars so its never taxed after the 5 year seasoning. But you don't have a Roth... so now what? Start rolling your Traditional over into a Roth before you retire. Not all of it at once, a little at a time. Roll it over on lower income years when you're in a lower tax bracket. You can't get away from paying the tax, but at least pay it at a lower rate. Then invest the Roth in real estate in this market and never pay tax on the huge profits you'll probably make over the next 10 years.
As always, talk with your IRA custodian to see what retirement plan you have and seek professional advise. Finding a self-directed custodain would be best.
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