Self Directed IRA

Opening a self-directed IRA by comparison is a simple process. You should still take some time with it, however, just to make certain everything is understood. Your IRA custodian will provide you with paperwork to fill out and file. If you have an IRA advisor, then he or she will also give you paperwork. And as in anything else, be sure to read everything thoroughly and understand it before you sign.

Investing with a self-directed IRA gives you much more freedom of action as to the types of investments you make and reduces the amount of time required to make many of those investments. With checkbook control of a self-directed account, you usually are not required to pass every investment decision by your custodian first. This allows you to move more quickly on investments with limited windows of opportunity.

Self-directed IRAs and traditionally custodied IRAs differ in several areas. You still have to comply with the federal tax laws governing IRAs but your plan document is usually far less restrictive, allowing for all sorts of real estate investments (both foreign and domestic) and other complex transactions. A self-directed IRA will also usually have far fewer fees attached to actions within the account.

Securing Good Advice
Since you will be making most, if not all, of your investment decisions without interference from your custodian, you will want to be sure you have access to good advice. Many companies that can help you set up such an account will also serve as advisors if you need their assistance. Self-directed accounts are usually better for investors with some experience and a admirable account balance (around 30 thousand dollars or so).

Written By Scott Janko, The National Association of Financial and Estate Planning (NAFEP)

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