In this video, we’re going to discuss what is a self-directed IRA and taking self-directed IRA capital. Self-directed IRA capital allows individuals to invest in a wider range of investment options, allowing for more flexibility and control in their retirement savings. We’ll discuss the ins and outs of self-directed IRA accounts and explain the benefits of taking self-directed IRA capital.

Timestamps
00:00 Intro
00:43 Services offered by Midland Trust
01:32 How is a Self-Directed IRA different from a standard IRA or Roth IRA
04:23 Why Self-Directed IRAs are not offered by most large brokers
06:15 How Investment Fund Managers can utilize Self-Directed IRA Capital
12:32 What Investment Managers need to be aware of when taking Self-Directed IRA Capital
19:47 Other Things people should be aware of when utilizing Self-Directed IRAs
21:51 Where to Connect with Brad and Midland Trust…(read more)

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A self-directed Individual retirement account (IRA) is a type of retirement account that gives you complete control over your investment decisions. Unlike traditional IRAs, which limit your investment options to a selection of stocks, bonds, and mutual funds, a self-directed IRA allows you to invest in a wide range of alternative assets, such as real estate, private equity, precious metals, and even cryptocurrencies.

The appeal of a self-directed IRA lies in the ability to diversify your retirement portfolio beyond traditional assets. This can be particularly beneficial for individuals who have a deep understanding and expertise in certain investment areas or those who want to explore unconventional options to potentially increase their returns.

To establish a self-directed IRA, you first need to find a custodian or trustee who specializes in these types of accounts. This custodian will be responsible for holding and managing your assets, as well as ensuring that all transactions within the account comply with IRS regulations.

Once your self-directed IRA is set up, you can start investing in alternative assets. The process is relatively straightforward – you identify the investment opportunity, conduct due diligence, and then direct your custodian to make the investment on your behalf using funds from your self-directed IRA. It’s essential to note that you are not allowed to use personal funds or take any personal benefit from the investments made within your self-directed IRA.

One aspect that sets self-directed IRAs apart is the potential to take distributions or withdraw capital from the account. Just like with traditional IRAs, there are rules and regulations in place to ensure that withdrawals from self-directed IRAs follow the appropriate guidelines and avoid penalties or tax consequences.

There are two primary ways to access the capital in a self-directed IRA: distributions and conversions. Distributions involve taking money out of your self-directed IRA to use for expenses or other purposes. However, it’s crucial to understand that when you take a distribution before reaching the age of 59 ½, you may incur a 10% early withdrawal penalty, in addition to any applicable taxes on the amount withdrawn. This penalty is designed to discourage people from using retirement funds prematurely.

Conversions, on the other hand, are a popular method used to access self-directed IRA capital early without incurring the 10% penalty. A conversion involves converting your traditional self-directed IRA to a Roth self-directed IRA. While there are taxes due on the converted amount, once the conversion is completed, you can withdraw the principal from the Roth IRA without incurring any penalties or taxes. Keep in mind that earnings or profits generated from the converted amount must stay in the Roth IRA for at least five years to avoid penalties.

It’s important to note that self-directed IRAs require careful planning and consideration of both the potential benefits and associated risks. Taking control of your retirement investments can offer a great deal of flexibility and the potential for higher returns, but it also requires a thorough understanding of the assets you choose to invest in and the regulations surrounding self-directed IRAs.

If you believe that a self-directed IRA is the right choice for you, it is wise to seek advice from financial professionals who specialize in alternative investments to ensure you make informed decisions and maximize the potential benefits of your self-directed IRA.