Frequently Asked Questions - Self Directed IRAs:
Is a Self-Directed IRA any different than a regular IRA?
Not really. With a Self-Directed IRA you are able to direct your own investments - You take charge and invest in ideas that you have expertise in or that you know others that are experts in. Unfortunately, many custodians place restrictions on what you are allowed to invest in like Schwab only wanting you to invest in stocks/bonds because that is mainly what they offer and make fees off of. An IRA that is truly self-directed allows you to invest without restrictions as long as you abide by the IRS Rules.
Is there any difference between a Self-Directed IRA and a Self-Directed IRA LLC?
A Self-Directed IRA LLC is truly self-directed and you are in total control of the account. With a Self-Directed IRA LLC you are responsible for managing the checkbook, don’t have to ask permission to make purchases, and may write checks for the IRA.
Are there advantages to using a Self-Directed IRA LLC when investing in real
Yes. You have total control over the finances of the IRA and this gives you far more freedom to make decisions quickly. A self-directed custodian requires you to get permission for just about everything you do. This can be a problem with a time sensitive investment like real estate, where a few minutes can make or break the deal. With a Self-Directed IRA LLC you have the checkbook and the ability to make the investment immediately, without someone else’s permission. An IRA with an LLC is also subject to lower and fewer fees than a one without it. The LLC also gives you the ability to advertise for renters, pay real estate bills, deposit rent checks, etc. This freedom helps you keep money in your IRA and make your retirement that much more comfortable.
How much are the custodial fees on your Self-Directed IRA’s?
The fee is between $190 and $200 a year. No matter how much money is in the IRA.
What type of retirement accounts can be moved into Self-Directed IRA’s?
Qualified Annuities, Profit Sharing Plans, Money Purchase Plans, Government Eligible Deferred Compensation Plans, Keoghs Traditional IRAs, SEP IRAs, Roth IRAs, 401(k)s, 403(b)s, Coverdell Education Savings (ESA) a.k.a. Educational IRAs. Most retirement accounts can be moved into a Self Directed IRA.
Are there any downsides to a Self-Directed IRA?
Only for people who don’t want to be involved in their own investments. If this is you, you don’t want a self-directed IRA.