American Airlines Pilots Turn To Self-Directed IRAs As Deadline Looms

The self-directed IRA industry keeps growing, and more people than ever are looking for ways to diversify outside of the stock market. While the stock market looks great …

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The self-directed IRA industry keeps growing, and more people than ever are looking for ways to diversify outside of the stock market. While the stock market looks great now, investors have yet to forget what transpired on Black Monday back in August of 2011—or  for that matter any number of days over the past several years.

Self-directed IRAs allow investors the freedom of investing in pretty much whatever they want. There are some limitations set by the IRS of course, but for the most part investors are free to pursue whatever opportunities they feel offer the best potential for their IRA account. That means investors can buy stocks and bonds, right alongside a piece of rental property or private placement. Naturally this type of investment account, which puts the account holder in complete control, is going to be appealing to people like pilots.

Back in November, American Airlines declared bankruptcy, and as a result of that outcome, thousands of their senior pilots are now being forced to make decisions regarding their B-Fund retirement accounts. Their tentative deadline for declaring their choices is reported by many sources to be “early April,” with the funds available to roll through June.

Here are the options the pilots were given:

  1. Take a lump sum distribution.
  2. Roll it into the American Airlines Super Saver 401(k).
  3. Roll it into an IRA.

Because the lump sum would trigger tax penalties and the 401(k) would only allow for a limited choice of investments, more and more pilots are investigating the benefits of IRAs – including the self-directed IRA variety.

Some self-directed IRA firms like Guidant Financial are even offering special deals exclusively for American Airlines pilots. Guidant’s special offer includes things like free setup and expedited service. David Nilssen, CEO and co-founder of Guidant Financial, responded via email, that his company has seen a large influx of pilots utilizing their self-directed IRA services over the past few weeks. Given the looming deadline, it is expected that business is only going to increase.

In all, it is estimated that around 9,000 pilots will be rolling their funds over-so naturally providers are jumping at the chance to capture a slice of this business.

As with anyone, pilots should consult with a financial professional before deciding the best route for them, but self-directed IRAs certainly seem to be a compelling option.

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