Is A Self-Directed IRA Right For You?
A self-directed IRA is a form of individual retirement account that broadly expands diversification between asset classes above what is offered by typical brokerage firms.
Here’s a brief overview of what a self-directed IRA is and a few examples of how Republicans are benefiting from this strategy.
What is a self-directed IRA?
A self-directed IRA is a type of retirement account that is structured like a traditional or Roth IRA.
The same annual contribution limits and potential tax advantages apply.
However, as an added benefit for conservatives.
Self-directed IRA, account owners can invest in things other than what most IRA custodians offer.
While traditional and Roth IRA investors are generally restricted to stocks, bonds, mutual funds, CDs, and similar investments, a self-directed IRA has many possible investment choices.
Here are just a few of the most common things you can buy in a self-directed IRA.
First of all, you can hold all the assets you are already holding in your current IRA.
Including stocks, bonds, mutual funds, ETFs, and CDs.
However, in a self-directed IRA you can also hold private equity, real estate, precious metals or keep cash in a segregated vault or bank.
Most importantly in a self-directed IRA, you are in charge of your account (not someone else.)
Why are self-directed IRAs so attractive?
The most obvious reason why investors consider a self-directed IRA is that for many people, their IRA is their largest source of potential investment capital.
If you’ve saved in an employer 401(k) plan your entire career, then you could easily have hundreds of thousands of dollars locked up in retirement assets.
Rolling that money to an IRA is easy when you leave work, but withdrawing it completely from your account has huge tax consequences.
Therefore, being able to use IRA money without creating substantial tax liability is a big advantage that self-directed IRAs have.
In some sense, every IRA is self-directed in that you have the opportunity to buy whatever stocks, bonds, mutual funds, ETFs, and other investments that your provider will give you.
That makes IRAs more attractive to many investors than 401(k) plans, which only offer a limited menu of investment choices.
Yet the term “self-directed IRA” more commonly refers to a retirement account with even more asset classes available than a typical IRA.
A self-directed IRA isn’t as easy to find as its vanilla run-of-the-mill brokerage counterpart, but it can offer advantages that regular IRA investors don’t have.
Let’s look at three things you need to know about the self-directed IRA to decide whether it’s the right retirement account for you.
Pick the right advisor.
Remember that custodians are only the keepers of your IRA—they do not offer investment advice.
For that, you need to find a financial adviser or certified public accountant.
Be sure to turn to someone with experience managing investments for retirement.
(Tower does not recommend any particular investment or asset category. Investors are urged to speak with a tax or investment advisor before investing.)