Saving for the future with an IRA? It can be hard to watch an investment in your future grow only under the guidance of someone else. No one understands your unique needs the way you do, and your advisor may not be able to make the best decisions for your retirement. If you want to have control over your IRA, consider rolling that money over to a self-directed IRA.
A self-directed IRA means that the custodian allows the owner more control over his or her investments. This is an account you will open with an individual broker instead of with a mutual fund company. While the term “self-directed IRA” doesn’t mean anything legally, and it doesn’t invite any new regulations from the IRS or even qualify as yet another kind of IRA plan, it does mean that you will get to make the investment decisions that will guide your future and instruct the custodian to act on your decisions. The level of control you may have over your self-directed IRA, though, can vary. Should you choose to open an IRA that is deemed “self-directed”, with some brokers you may not have as much control as you would like, which means that adding non-traditional IRA investments to your portfolio may or may not be allowed with that particular firm. An IRA that is truly “self-directed” means that your account allows you to add things like real estate to your plan. Keep in mind that no matter what you place in your IRA, you have to adhere to the IRS rules that guide your investments.
If you do decide to roll your current IRA funds into a self-directed IRA, there are several steps that you must follow in order to do it correctly. Keep in mind that if you make a mistake, the IRS may deem that you have withdrawn your IRA funds, and make you pay at least twelve percent of the money in taxes. Your first step in rolling our funds into a self-directed IRA is to contact your current broker and/or the mutual fund company. Let your broker know about your plans. Remember that some brokers don’t offer this program, so you may have to find a new broker. However, if self-directed IRAs are offered, your broker will send you some paperwork. What you should get will be an application for an IRA. The second thing you will get is the paperwork that will liquidate your current IRA investments, and send them to the new account. From there, you will be able to start taking control of your retirement investments.
Once you have taken control, be sure to watch the market carefully. If you are inexperienced with regard to managing your finances, ensuring that you have a good broker on your side is essential. You should also consider some alternative investments, like real estate, to better diversify your portfolio. Taking control of your financial future is a step in the right direction toward retirement.