If you're aiming for a future in which you can live off investment income, you could go the standard route, opening a traditional 401(k) and or individual retirement account. But real estate professionals Debi Hensley and Leeatra Vaughn found that there were limitations to such accounts that prevented them from saving for the kind of retirement they desired.
Hensley and Vaughn wanted a better way to save—one that enabled them to take advantage of their real estate expertise—and they found it through a program that offers discounts to National Association of REALTORS® members.
Limitations of IRAs, SIMPLE IRAs and SEPs
Many real estate professionals opt for SEP accounts or IRAs to save for retirement. There are some brokerages, too, that offer 401(k) options to their agents and employees. As Vaughn, an associate broker and property manager for Big Fish Real Estate Group, serving the Lake Martin region of Alabama, found, there are limitations on how much you can contribute every year to an IRA.
Here are the current limits for 2025:
- IRA (traditional and Roth): $7,000
- IRA catch-up contribution (age 50+): $1,000
With either, if you put too much money in, then it needs to be withdrawn before April 15 of that investment year. Otherwise, the excess will be subject to regular income tax as well as a 6% excise tax.
The IRA contribution limit makes a couple of different options more popular with real estate pros:
- Savings Incentive Match Plan for Employees Individual Retirement Account (SIMPLE IRA): $16,500, with a catch-up contribution (age 50+): $3,500
- SEP-IRA: 25% of your compensation, up to a maximum of $70,000.
SEPs and SIMPLEs are designed specifically for self-employed individuals, including sole proprietors and those in partnerships. There are tax advantages to using both, and you can reduce or stop contributions during lean years, then catch up again when business is good.
Still, these options come with limitations as well, not only on the amount of money that can be invested but also on the kind of investments allowed.
Generally speaking (and considering you should always consult with a financial specialist before investing in any fund), investments are typically limited to stocks, bonds, ETFs (Exchange Traded Funds), and, in some rare cases, real estate.
However, Hensley, an agent with Robertson Realty LLC, the residential real estate sales arm of a fully integrated real estate development firm serving Dallas-Fort Worth, Texas, wanted something more:
- Better returns
- The ability to choose investments
- The opportunity to put in as much money as she wanted
- The ability to invest in something that she knew a lot about—property
- More control over her investments and retirement accounts
If you’re like Hensley and Vaughn, then you may want to look beyond traditional retirement options. One option is the self-directed retirement account. A self-directed IRA or 401(k) gives you significantly more control over your investments in comparison to traditional retirement accounts. While standard retirement accounts typically limit you to mutual funds, stocks, bonds and CDs offered by your plan provider, self-directed accounts allow you to invest in a much broader range of assets.
Through the NAR REALTOR Benefits® program, members have access to a discounted flat annual fee on self-directed retirement accounts from the IRAR Trust Company.
Advantages of Self-Directed Investing Through the IRAR Trust Company
Both Hensley and Vaughn were introduced to IRAR through their NAR membership.
For over 20 years, Hensley benefited from corporate and personal contributions to a 401(k) account through her previous employer. When she left that company, she rolled her 401(k) into an IRA.
However, the kind of control and flexibility she wanted in diversifying her assets was still lacking. That is, until Hensley was introduced to self-directed investing through the IRAR Trust Company.
Vaughn, who owned and operated numerous short and long-term rental properties around Lake Martin, faced a different issue.
“I’d been maxing out IRA contributions for years, but those numbers weren’t looking big enough for my husband and me to retire comfortably,” Vaughn said. “I still needed to do a lot of catching up, which is one of the problems with 401(k)s and IRAs.”
Both women envisioned something different when it came to retirement. They wanted more flexibility and freedom to plan for the future, but they didn’t quite know where to start.
Build a Retirement Portfolio With Real Estate
After watching NAR-sponsored webinars and reading more about self-directed pensions and investments, both Vaughn and Hensley felt confident enough to roll over IRA funds into a range of investments sourced through the IRAR.
The breadth and depth of IRAR’s experience and expertise in supporting customers with self-directed IRAs is one of the reasons they both felt confident opening accounts with them. IRAR staff were able to answer complex questions, making sure that Vaughn and Hensley had the confidence to take the steps required to convert IRA accounts into self-directed IRAs.
One of the things that Hensley loves is that “you have a lot more control over your investments.” She and Vaughn needed information on their options, and they wanted educated support to get their accounts opened and transferred.
Though IRAR’s team couldn’t provide financial or investment advice, it made sure their paperwork was filled out properly and that they didn’t fall foul of IRS penalties or unexpected taxes.
The difference these accounts have made to both of their lives and finances has been remarkable.
Until she started working with IRAR, Vaughn was buying, managing and renting out properties on her own. She was building wealth but wasn’t maximizing her returns.
“I’ve seen my investment accounts flourish and can buy and invest in more properties than before,” she says. “And even though it’s self-directed, it’s good to know I’ve got people who can support me.”
She has very happily introduced numerous clients, brokers, agents and property investors to IRAR.
For Hensley, investing in real estate is an opportunity she’s keen to pursue. It’s an area she feels confident in, but doesn’t want to flip properties herself.
“Thanks to the IRAR, I’ve been able to invest alongside private equity (PE) investors in consortiums, generating much better returns than my old IRAs”, she says.
“This isn’t something I’d have been able to do with an IRA, and it’s given me much greater confidence and control in my investments and retirement savings,” Hensley says.
With help from the IRAR, they’ve both been able to make sensible and high-yielding investments and have been able to avoid any IRS penalties.