In many ways, a self-directed IRA follows the same model as a standard IRA. You can choose to open a self-directed IRA like a traditional IRA or a Roth IRA, with the same pre-tax and after-tax contribution rules. In a standard self-directed IRA, your custodian disburses the funds at your request. Some custodians may take a month or more to send funds, and many charge a fee for this service.
Self-directed Roth IRAs have all the features of regular Roth IRAs, in terms of how much you can contribute annually and how withdrawals are taxed. Depending on the type of self-directed IRA you have, you would ask your provider to disburse the funds or you would transfer them yourself from a linked checking account. Being able to expand your investment options in a self-directed IRA can allow you to look beyond stocks and bonds. Collectibles include a wide range of items, including antiques, works of art, alcoholic beverages, baseball cards, souvenirs, jewelry, stamps and rare coins (note that this affects the type of gold a self-directed Roth IRA can store).
A checkbook IRA is actually a checking account of a limited liability company (LLC) that is funded by its self-directed IRA. The best self-directed IRA depositary for you will be one that meets your specific needs at an affordable price that is easy to understand. According to Scott Butler, a financial planner at Klauenberg Retirement Solutions in Laurel, Maryland, a self-directed IRA might not be the best account for everyone. Investing in a self-directed Roth IRA isn't right for everyone, and there are a few important things to know before you start.
However, the potential downside is that some of the things you can choose to invest in through a self-directed account could entail a greater degree of risk. If you have an investment plan that a traditional IRA doesn't support, a self-directed IRA may be your solution. Available as a traditional IRA (to which tax-deductible contributions are made) or Roth IRA (from which tax-exempt distributions are obtained), self-directed IRAs are best suited for experienced investors who are already familiar with alternative investments and want to diversify into a tax-advantaged account. A self-directed IRA (SDIRA) is a type of individual retirement account that contains alternative assets, such as real estate, commodities, tax liens, private equity placements and limited liability companies.
The difference is that a self-directed IRA gives you the freedom to significantly increase the diversification of your portfolio by holding alternative investments such as real estate, commodities, limited liability companies, and other asset classes. Contact IRA Financial at 1-800-472-0646 or complete the form to learn more about opening a self-managed retirement account. A checkbook IRA account requires the additional step of transferring money from the IRA to your LLC checking account. Although the account is managed by a custodian or a trustee, it is managed directly by the account holder, which is why it is called self-directed.