In today’s video, Emily Egan, Client Support Specialist at Madison Trust Company, teaches us all about the basics of the Self-Directed IRA and how you can use it as a tool to invest in your retirement!

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Learn more about the world of Self-Directed IRAs:

What is a Self-Directed IRA?

A Self-Directed IRA is like any other retirement account.

You contribute funds, choose assets, and get a tax break in the process.
Hopefully, at the end of the road, your retirement account will have enough to support you when you actually retire.
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What makes a Self-Directed IRA different?

What makes a Self-Directed IRA different is the choice of assets.
In a standard IRA or 401(k), you’ll be investing in stocks or mutual funds or something similar.
In a self-directed IRA, you have a much greater choice. You can invest in real estate, start-ups, crowdfunded projects – the sky’s the limit.

If you have a great idea for an investment, chances are you can do it with a self-directed IRA.
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Are Self-Directed IRAs new?

Self-Directed IRAs have always been possible, they’re just not well known.

The reason is because most big brokerages deal exclusively with stock market products. By opening an account with a specialized self-directed custodian, you get the freedom to invest in what makes sense to you.
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How do you set up a Self-Directed IRA?

Setting up is easy. Fill out a short application, roll over your existing retirement funds, and then tell Madison what you’d like to invest in. It’s that simple.
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Thank you for watching The Self-Directed IRA Made Easy, powered by Madison Trust Company! Madison Trust is the industry’s highest-rated Self-Directed IRA Custodian. Every client receives a streamlined investment process that is optimized for alternative asset success. This includes live customer support, straightforward fees, and industry-leading knowledge. Our CISP trained specialists are always available to get clients the information they need. Currently, Madison has over 11,000 clients across all 50 states growing their funds in alternative assets like real estate, private placements, promissory notes, and more.

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LEARN MORE ABOUT: IRA Accounts

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TRANSFER IRA TO SILVER: Silver IRA Account

REVEALED: Best Gold Backed IRA

A self-directed Individual retirement account (IRA) is a type of retirement account that gives you full control over your investment decisions. Unlike traditional IRA or Roth IRA accounts, which typically allow investments in mutual funds, stocks, bonds, and other conventional assets, a self-directed IRA permits a much broader range of investments, including real estate, private equity, precious metals, and even cryptocurrencies. This flexibility and freedom to invest in alternative assets make self-directed IRAs a popular choice for individuals seeking to diversify their retirement portfolios.

So, how does a self-directed IRA work? It operates similarly to other IRAs in terms of tax advantages and contribution limits. Contributions made to a self-directed IRA may be tax-deductible, allowing you to lower your taxable income for the year. Alternatively, if you opt for a Roth self-directed IRA, your contributions are made after-tax, but the growth and withdrawals are tax-free.

The key differentiator of a self-directed IRA lies in its investment options. Once you establish your self-directed IRA with a custodian or a specialized self-directed IRA provider, you gain the authority to invest in a wide variety of assets. This could range from purchasing rental properties to investing in private businesses or even acquiring precious metals like gold and silver. The possibilities are almost endless, giving you the freedom to leverage your expertise and knowledge in various investment opportunities.

However, it is vital to note that a self-directed IRA has certain guidelines and regulations to ensure compliance with retirement account rules. For example, prohibited transactions, such as using the IRA to benefit yourself personally or transacting with disqualified individuals (e.g., family members), must be avoided. It is essential to thoroughly understand these rules to continue enjoying the tax advantages and avoid any unnecessary penalties or tax liabilities.

To navigate the complexities of a self-directed IRA, many individuals choose to work with self-directed IRA custodians or administrators specializing in alternative investments. They can provide the necessary expertise and guidance to ensure compliance while enabling you to explore a broader range of investment options within the boundaries established by the Internal Revenue Service (IRS).

The appeal and benefits of a self-directed IRA lie in its ability to potentially yield higher returns and diversify a retirement portfolio beyond traditional asset classes. However, it is important to consider the risks associated with investing in alternative assets, as they often come with increased volatility, lack of liquidity, and potentially longer investment horizons.

In conclusion, a self-directed IRA represents an innovative way to take control of your retirement investments. By opening up opportunities to invest in alternative assets, it offers the potential for higher returns and diversification. However, it is crucial to thoroughly educate yourself on the rules and regulations governing self-directed IRAs and consider seeking professional guidance to ensure compliance and maximize the potential benefits. With proper knowledge and strategy, a self-directed IRA can be a powerful tool in building a robust and diversified retirement portfolio.