Common Self-Directed IRA Questions, Part 1

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Below are some commonly asked questions and answers about self-directed IRAs.

What is a self-directed IRA?

A self-directed IRA is an IRA (Traditional or Roth) in which the account holder chooses which assets the IRA buys and sells. The term self-directed IRA commonly refers to IRA accounts that can invest in alternative or hard assets such as real estate, precious metals, private equity, notes, and more.

Who regulates self-directed IRAs?

The IRS rules contained in the Internal revenue code regulate self-directed IRAs. Self-directed IRA providers, in most cases, are audited by state banking authorities, and help account owners understand the rules and regulations regarding their retirement accounts.

Where to invest a self-directed IRA?

Invest a self-directed IRA wherever you or your financial team's expertise lies. Account owners can invest a self-directed IRA in real estate, precious metals, private notes, private equity, raw land, stocks, and more. Opening a self-directed IRA provider allows investors access to the full range of allowable assets for retirement plans.

Where to open a self-directed IRA?

Investors can open a self-directed IRA with a self-directed IRA provider in order to access the full range of allowable assets for retirement plans. Opening an IRA with a bank or brokerage house typically limits the IRA's investment options to publicly traded securities. Account holders should match their desired assets (such as real estate, precious metals, private equity, etc.) with the assets provided by the account provider.

Who handles self-directed IRAs?

Self-directed IRAs are handled by self-directed IRA providers. Self-directed IRA providers handle the IRS-mandated paperwork and bookkeeping for self-directed IRA accounts.

Who offers self-directed IRA accounts?

Self-directed IRA providers offer IRA accounts. Banks and brokerage houses also offer self-directed IRAs, but often limit available assets to publicly traded securities. Self-directed IRA providers allow retirement investors access to the full range of allowable assets in IRA accounts.

Which banks offer self-directed IRAs?

The IRS allows banks and all IRA providers to choose whether or not the IRAs they provide will be self-directed. 

What is a self-directed IRA LLC?

A self-directed IRA LLC is an account structure which may provide account owners with closer control over their IRA funds. This control is achieved by the IRA buying 100% share of an entity (often a single-member LLC) that the IRA holder then manages. This setup allows investors to manage their cash and account assets directly as the LLC/entity manager. 

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