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IRA
Self-Directed IRA Plans
by Chris Parry (Write for us!)
(Click on the links within the article to get definition of that word)
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 individualbroker instead of with a mutual fundcompany. 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withdrawn your IRA funds, and make you pay at least twelve percent of the money in taxes.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 realestate, to better diversify your portfolio. Taking control
of your financial future is a step in the right direction toward retirement.
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