3 Facts You Didn't Know About Self-Directed IRA

Have you finally made the decision to open up a retirement account? Your next step is to decide which particular account to go for. They all have their advantages and disadvantages, but it seems some retirement accounts are more favorable than others. It all depends on what you want to use the money for. If you want to invest in the traditional stocks, bonds and mutual funds, then you want to select the good old-fashioned 401k. If, however, you are more of a risk-taker and want to take your chances in earning higher profits by investing in real estate or a small business, then a self-directed IRA is what you are looking for.

Here are a few facts that you probably didn’t know about self-directed IRA:

1. You can conduct transactions as and when required

According to rules laid down by the Internal Revenue Service, every retirement account, including self-directed IRA must be held by a qualified custodian. The traditional retirement accounts require that you contact your custodian every time you want to make a transaction for investment purposes. There is a small fee for every instance which quickly adds up the more transactions you make. With a self-directed IRA, you have the option of having the checkbook in your own two hands. This eliminates the need to establish contact with a custodian and also does away with transaction fees.

2. You can transfer funds from other retirement accounts to a self-directed IRA without penalties

One of the reasons why the self-directed IRA is one of the fastest growing retirement plans is the lack of penalties for the rollover of funds from other accounts such as a Roth IRA or a 401k. Unlike those other retirement plans, you do not have to pay a single cent to transfer your funds to a self-directed IRA.

3. You can invest in almost anything that you think will earn you a profit

Gold bullion, a small business or a piece of land, Take your pick. As mentioned in the introduction, you can use the funds placed in a self-directed IRA to invest in anything that appears profitable to you. There are few restrictions in place, but it is unlikely you will have to deal with them. For example, you cannot personally use the property that you have invested in. Also, life insurance, alcoholic beverages and collectibles are off-limits.

A self-directed IRA is perfect for folks who consider themselves as experts in a certain field of business and consider themselves in some position to predict exactly when a certain business will be making profits. So if you consider yourself a person who can take a few calculated risks to live a comfortable post-retirement life, feel free to open up a self-directed IRA account. Remember that different brokerage firms have different conditions and price ranges, and you might not want to go for a certain custodian based solely on their low price.

3 Facts You Didn't Know About Self-Directed IRA