IRA Financial’s Adam Bergman walks you through what a Simple IRA is and how you can make it work to your advantage.
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About IRA Financial:

IRA Financial Group was founded by Adam Bergman, a former tax and ERISA attorney who worked at some of the largest law firms. During his years of practice, he noticed that many of his clients were not even aware that they can use an IRA or 401(K) plan to make alternative asset investments, such as real estate. He created IRA Financial to help educate retirement account holders about the benefits of self-directed retirement plan solutions.

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A Simple IRA, or Savings Incentive Match Plan for Employees Individual retirement account, is a retirement plan designed for small businesses with fewer than 100 employees. It allows employees to contribute a portion of their salary to the plan, and employers can choose to match contributions up to a certain amount.

One question that arises when it comes to Simple IRAs is whether they can be self-directed. The short answer is yes, it is possible for a Simple IRA to be self-directed. However, there are certain limitations and requirements that must be met in order to do so.

Firstly, it is important to understand what is meant by a self-directed IRA. A self-directed IRA is a type of retirement account that allows the account holder to invest in a broader range of assets than traditional IRAs, such as real estate, private equity, and precious metals. In order to self-direct a Simple IRA, the account must first be opened with a custodian that allows for self-directed investments. Many traditional financial institutions, such as banks and brokerage firms, do not allow for self-directed investing in Simple IRAs.

Once a self-directed Simple IRA is established with a custodian, the account holder has more control over where their contributions are invested. This can include traditional investments such as stocks, bonds, and mutual funds, but also more alternative investments such as real estate or private equity. However, it is important to note that self-directed IRAs come with greater risk and responsibility than traditional IRAs, as the account holder is solely responsible for their investment decisions and must adhere to IRS regulations and reporting requirements.

In order to self-direct a Simple IRA, the account holder must also ensure that their investments are compliant with IRS regulations. This includes avoiding prohibited transactions, such as investing in collectibles or transacting with disqualified persons. It is also important to keep detailed records and documentation of all transactions and investments made within the account.

In conclusion, while it is possible for a Simple IRA to be self-directed, it is not a decision that should be taken lightly. Before deciding to self-direct a Simple IRA, it is important to thoroughly research custodians that allow for self-directed investments, understand the potential risks and benefits, and ensure compliance with IRS regulations. As with all retirement accounts, it is important to consult with a financial advisor or tax professional before making any significant investment decisions.