Are Self Directed IRAs for Everyone?
As the economic concerns that have gripped America start to level out, both the savvy investor and traditional IRA holders are looking for new ways to invest. Even though the economy continues to bounce along the bottom, things should level out soon according to common knowledge among economist. The opportunities to diversify your portfolio with a self directed (SD) IRA are vast.
During October of 2008, Congress’ budget analyst reported a $2 trillion dollar loss in traditional IRAs. Some investors are looking for a method to get away from mutual fund managers and take their investments into their own hands with the help of a passive custodian. Many of these investors are still suffering from a loss in their traditional IRA, but they aren’t sure how to roll over to an SD IRA.
The big question is exactly what kind of retirement accounts transfer over and what don’t? If you have invested in any of the following methods, you can roll over to a self directed IRA.
401(k) or individual (k)
Coverdell Education Savings Account (ESA)
Defined Benefit Plan
Health Savings Account
What You Should Know When You Take Your Retirement into Your Own Hands
Few people realize that self directed IRAs have been available since the birth of the traditional retirement account in the ’70s. Setting the account up is simple. You are required to have a custodian oversee your retirement funds. Once you have determined your investments, the custodian will be in charge of the documents for safe-keeping. So what can you invest in?
• TICs (Tenants in Common)
• Real Estate Options
• Tax Deeds and Tax Liens
• Notes, Loans, Mortgages
• Commercial and Residential Real Estate
• Life Settlements
• Limited Liability Companies
• Limited Partnerships
• Small Franchises and Businesses
• Publicly and Privately Listed Stocks
What are the Restrictions of a Self Directed IRA?
When it comes to self directed investment retirement accounts, the big question should be what can’t you do? When you take control of your investments, some may tell you the most important thing to keep in mind is what you shouldn’t invest in. If you can stay away from these things, you should be in the green.
• Rugs and Antiques
• Alcoholic Beverages
• Metal, Stamps, and Gems
• Alcoholic Beverages
• Life Insurance for Yourself
• Sub Chapter S Corporations
The Truly Self Directed Investment Retirement Account
When you open this type of account, your custodian will act as the passive partner in your transaction. Other than the restrictions mentioned above, the only other restrictions that you may encounter will be determined by self-interest on your custodian’s part.
Your custodian should be able to answer any of your legal and administrative questions about your self directed IRA. But when it comes to your investments, the decisions should be left in your hands. With that being said, you can achieve more financial security when your investment portfolio is sensibly carried out with a well-managed strategy.
About the Author
Established in 1974, Equity Trust is a leading self-directed IRA custodian. We specialize in the custody of alternative assets in self-directed IRAs, CESAs, HSAs and qualified business retirement plans. Visit our free e-library for more information at http://www.trustetc.com/.
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