A self directed IRA is an investment option for those who want to have more control over their retirement investments. Unlike traditional IRAs these type of investments allow you to diversify your portfolio, by using your retirement funds to invest in loans, businesses, real estate, and other opportunities.
There are many benefits to this type of IRA, but as with any type of investment, you should research carefully and consider all of your options before committing. This article will provide helpful information to help you decide.
IRAs were created in 1975, as part of the Employee Income Security Act of 1974, or ERISA, and self directed IRAs were also created during this time. Most investment choices during this time included real estate and notes. Technically, self directed IRAs are no different from traditional IRAs.
They differ in their investment options, since most traditional IRAs only permit investment options in approved stocks, mutual funds, bonds, and CDs. This type of IRA allows, in addition to the investment types mentioned above, for tax lien certificates and private placements.
Some of the benefits of this investment type include special tax deductions, estate planning and asset protection options. A self directed IRA allows you to have complete control over your Individual Retirement Account funds, with most people opting to be custodians of their accounts, which, depending on individual financial portfolios, may or not be a feasible option for everyone.
One of the popular features of this kind of IRA, in any case, is the limited custodial participation and reduced custodial fees. This means that self directed IRA holder does not have to pay additional special, asset based, holding, or other related types of fees, including transactional fees for each check from your investment that you draw.
If you are interested in pursuing this IRA type, you should be sure to learn and adhere to the rules and regulations that govern the management of these types of accounts. There are certain steps that you must follow in order to insure that your IRA will be official and that you will be able to qualify for the associated benefits and deductions.
It is crucial that you define your investment before you take any other action towards a self directed or traditional IRA. Your financial advisor can assist you in making sound investment decisions and should be consulted before you agree to any investment type. Your retirement fund is vital to your future, which is why you should always research your options when it comes to investing it.