Self Directed Iras

Written by Johnny Kitchens
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A self-directed IRA is simply one in which you are allowed to control the direction and timing of your investments without having to convince a committee to do so. You still must follow the rules set forth by the federal government but you get to take a much more active interest in your retirement planning. Such an arrangement may not be for everyone. Some people prefer to just put the money in, sit back, and let their IRA administrators make the decisions.

Even though the rules do not allow you to hold your own IRA (it must be held by a third party) there are vast differences between self-directed IRAs and traditionally held IRAs. Under a self-directed IRA, you are more likely to be able to invest in things like commercial properties, rental properties, and venture capital investments. Your choice of IRA providers can have a great impact on what types of investments are open to you and how much control you have.

Banks, insurance companies, and brokerage companies all usually offer IRAs. Of these, brokerage companies are the most likely to offer self-directed IRAs. Attorney groups and other financial institutions may also offer self-directed IRAs, but you should be certain they offer the level of control you desire and that their fees are within acceptable limits. An IRA that gives you complete control can still kill you with fees, so ask about them.

Is Self-Direction Right for Your IRA?

A self-directed IRA usually requires much more work on the part of the IRA holder. Additionally, non-traditional investments (such as real estate) can require even more paperwork and coordination between involved parties. If you do not have the time to spend, you may want to consider a traditionally held IRA. However if you take the time and do your research, you may see significantly more substantial growth in your IRA than you might otherwise.


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