Secure financial stability is something everyone hopes to achieve. With the roller coaster ride the stock market has been in past years, many people have become disenchanted with what traditional investments offer. However, they believe they are stuck having to invest in only theses types of assets When it comes to preparing for retirement and the future, these concerns become even more pressing. If you want to take control of your financial future and broaden the type of assets your IRA can invest in, then a self-directed IRA is for you.
If you haven’t heard of a self-directed IRA, you aren’t alone. Actually a self directed IRA is no different from any other IRA. Self-directed IRA is a descriptive term used to identify IRAs that invest in assets other than stocks, bonds, mutual funds, and CDs. What, you didn’t know you could invest in assets other than those. Well, you’re in the majority. Most people don’t know there are other assets available to invest in with their IRAs. Actually, a lot more assets. The IRS does not list what you can invest in but in what you CAN NOT. The only assets you can no t invest in are collectible, alcohol, and life insurance. That’s it!
The power of a self-directed IRA is that it gives the individual the ability to invest in alternative assets. You can invest in what you know, whether that’s real estate, private business interests, precious metals, or something else. Instead of a relying on a third-party broker or investor to care for your retirement investments, a self-directed IRA puts you in control.
Opening a self-directed IRA is simple.
First you have to know what type of assets you want in your account. as individuals are free to invest in what they know. Some of the most common assets are real estate, precious metals, private business interests, and tax liens, though there are many more out there. As part of having primary control over your self-directed IRA, investors are required to do their own due diligence. The administrator of your self-directed IRA is not obligated to provide investment advice.
Second, you have to find a custodian that is willing to administer a self directed IRA. They are out there but there aren’t many of them. Make sure when you talk with someone they are willing to let you invest in the fukll breadth of what the IRS allows.
Finally, open and fund your self-directed IRA. All IRAs that can be self-directed. While the most common are the Traditional and Roth IRAs, SEPs and SIMPLEs and even Health Savings Accounts and Coverdale Educational Savings Accounts can be self-directed . Funds for your new self-directed IRA can come from a few sources. You can rollover or transfer funds from an existing IRA or 401(k), or you can make a direct contribution.
There are a few rules to keep in mind as you begin to invest.
There are certain people that your IRA can not work with, these are known as disqualified persons. Disqualified persons include anyone in your direct family line(ascendants and desendants), your spouse, investment professionals (fiduciaries, advisors, managers, etc…), people servicing the IRA, and corporations in which the beneficiary has a 50% or more stake. Prohibited transactions include any transactions made involving a disqualified person, as well as investing in assets disallowed in an IRA.
As long as these rules are followed, investors are free to take control of their financial futures. If you’re looking for an administrator, IRA Innovations allows you to invest in all alternative assets.
If you are interested in determining if a self directed IRA is the right solution for you, give us a call at 205-985-0860 today!