What is a Self-Directed IRA?

A self-directed Individual retirement account is an IRA which allows alternative investments for retirement savings. For regular IRAs, these options usually include stocks, bonds, and mutual funds.

With a truly self-directed IRA, the term “self-directed” refers to the unlimited options of alternative investments available to you.

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The term self-directed simply means that the owner of the IRA has control over what alternative investments the IRA makes.

By doing so, IRA owners are completely managing their own retirement futures … by investing in what they know and understand.

Traditional IRAs and Roth IRAs are the two major kinds of individual retirement accounts and the prime difference between the two is the time at which they are taxed.

SEP IRAs are plans utilized by the self-employed business people.

A SIMPLE IRA is a retirement plan designed for small employers to offer their employees.

An individual(k) plan is a profit-sharing plan with a 401(k) option, but designed to be less complicated and not as costly as a traditional 401(k).

HSAs were created to help individuals and families save for qualified medical expenses on a tax-free basis.

A Coverdell ESA is an account similar to a Roth IRA, except funds must be used exclusively for paying education expenses for the beneficiary.

Self-directed IRA investment options include real estate, mortgages and notes, private placements (such as LLCs and trusts), precious metals, foreign currency and futures trading, and other investment options.

These plans can certainly hold the traditional stocks, bonds, and mutual funds, but the myriad of alternative investments are what attract owners of these accounts.

Advanta IRA is a self-directed IRA administrator that provides superior customer service and educational tools to assist you in realizing the maximum benefits possible within your IRA.

We offer free educational events, such as seminars and webinars, as well as other innovative educational tools created to help you learn and navigate the freedom of self-direction.

We make no commission and we do not sell investments. Instead, we offer valuable tools for you to use when making non-traditional investments.

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For many individuals, retirement planning is a major concern. They want to ensure that they have enough funds to live comfortably and enjoy their golden years. One way to take control of one’s retirement savings is to set up a self-directed individual retirement account (IRA). In this article, we will discuss what a self-directed IRA is and how to set one up.

What is a Self-Directed IRA?

A self-directed IRA is a type of retirement account that gives the account holder complete control over the investments in the account. Unlike traditional IRA accounts, where investments are limited to stocks, bonds, and mutual funds, a self-directed IRA allows investors to invest in a wide range of assets, including real estate, private equity, and precious metals.

Setting Up a Self-Directed IRA

Setting up a self-directed IRA is a fairly simple process. The first step is to find a custodian or administrator who specializes in such accounts. A custodian is an organization that holds and manages assets on behalf of the account owner. There are many custodians to choose from, so it’s important to do your research and find one that meets your needs.

Once you have chosen a custodian, you will need to fund the account. This can be done by transferring funds from an existing IRA or by making a contribution to the account. The maximum contribution limit for self-directed IRAs is the same as for traditional and Roth IRAs.

Investing with a Self-Directed IRA

Once the account is set up and funded, you can begin investing in a wide range of assets. Some popular options include real estate, private equity, and precious metals. While the investment options are virtually unlimited, it’s important to note that not all assets are eligible for investment in an IRA.

It’s also important to remember that self-directed IRAs require a higher level of due diligence than traditional IRAs. You are responsible for researching and vetting the investments yourself, or with the help of an investment professional. It is highly recommended to consult with a financial advisor who is knowledgeable about self-directed IRAs before making any investment decisions.

Conclusion

A self-directed IRA offers investors the flexibility to invest in a wide range of assets beyond the traditional stocks, bonds, and mutual funds. It’s important to work with a custodian who specializes in self-directed IRAs and to research all potential investments thoroughly before making any investment decisions. With proper planning and due diligence, a self-directed IRA can be an effective tool for retirement savings.