Leveraging Commercial Real Estate For Retirement
Strategies for Diversification and Passive Income
The RealtyMogul platform allows investors to use retirement funds from their Self-Directed IRAs (SDIRAs) to purchase shares in public, non-traded REITs. By allocating to real estate, investors diversify their portfolios and potentially generate income that can grow and compound within a tax-sheltered IRA over time.
REITs are known for their objective of regular, passive income, because they are required to distribute at least 90% of their annual taxable income to investors on a yearly basis through distributions. Another characteristic of commercial real estate is the potential to protect against inflation. This benefit arises because property values and rents have historically been correlated with growth in inflation.
Many investors would agree that successful retirement planning requires a holistic strategy – one that seeks both income and appreciation. To accommodate this approach, each of the following REITs offer a different objective.
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How do I get started?
Can I automatically reinvest my distributions?
Yes. If you elect to participate in our distribution reinvestment plan (DRIP), any distributions are automatically reinvested, giving you the potential to realize a compounded return.
Will the distributions I receive be taxable as ordinary income?
REIT distributions may be treated as ordinary income, capital gains, and/or return of capital for tax purposes, each of which may be taxed at a different rate for different investors. As each investor’s tax considerations are different, it is recommended that you consult with your tax advisor. You should review the section of the offering circular entitled “U.S. Federal Income Tax Considerations,” including for a discussion of the special rules applicable to distributions in repurchase of shares and liquidating distributions.
Can I invest in RealtyMogul REIT offerings using an SDIRA (Self-Directed IRA) or other type of retirement account?
Yes. We accept retirement funds into our REIT offerings so you can use your Self-Directed IRA (“SDIRA”) to make investments.
What is a self-directed Individual Retirement Account (SDIRA)?
A self-directed Individual Retirement Account is a retirement account that may provide investors with certain tax benefits for retirement savings. Self-Directed IRAs are held by a trustee or custodian that permits investment in a broader set of assets than is permitted by most IRA custodians, such as real estate.
How can I fund my Individual Retirement Account prior to making my investment in a RealtyMogul offering?
You can fund your IRA account in three different ways:
- Transfer retirement funds from your current custodian
- Rollover funds from a 401(k) or another qualified plan
- Make a contribution within the annual limits defined by the IRS
What types of accounts are eligible for transfer into a self-directed IRA?
You can transfer funds from a 401(k), 403(b), 457 or other qualified retirement plans into a self-directed IRA.
What is a custodian and which custodians may I use?
A custodian is defined as a bank, federally insured credit union, savings and loan association, or an entity approved by the IRS to act as a trustee or custodian. RealtyMogul works with a variety of custodians, including our preferred custodian, IRA Services Trust Company.
Can RealtyMogul support required minimum distributions?
As REIT offerings are illiquid securities, there is no guarantee that there will be annual distributions in an amount that would cover your required minimum distributions. Therefore, you will need to look to your other retirement fund investments to meet your required minimums. Not all retirement accounts require minimum distributions so please check with your tax adviser to determine if this is a requirement for you