Usually when investors think about a Self-Directed IRA, they might think about the fact that it makes it possible to invest in real estate, precious metals, and other alternative asset classes. But what about investors who want the self-control possible with a Self-Directed IRA, but none of these asset classes? The simple truth is that it is possible to open a brokerage account within an IRA, giving the investor the ability to pick and choose stocks and stock funds.
The question: why bother? Isn’t it just as easy to use a retirement program within your place of employment? The truth is that there can sometimes be more advantages within a Self-Directed IRA brokerage account than the ability to choose stocks. Here is what you will want to know.
The Advantages of a Self-Directed IRA Brokerage Account
Pop over to our section on Brokerage Accounts and you will see what we mean. There, we highlight four very specific advantages to opening an account like this:
- Less paid in fees. When you have a brokerage account set up already, it is possible to move funds within it without incurring the wire and check fees that sometimes plague investors. This makes for a convenient, fast way to handle money within your retirement account.
- This is not an “either/or” situation. As we note on our Brokerage page: “when you open a brokerage account, you can hold non-traditional assets and traditional stocks in the same Self-Directed IRA account.” As the person making the decisions, you will get to pick how and how much you diversify within the same account.
- Quick-moving funds. Let us say you initiated a custodian-to-custodian transfer of funds. This process alone can take up to 14 days. Meanwhile, that stock you might have wanted to purchase may have gotten significant gains with you participating. However, you can issue written direction to American IRA, for example, and retrieve funds from a brokerage account within 2 days for an investment you might want to make.
- Let us say you work with American IRA and Scottrade, for example. Since this is a national outlet with locations across the country, it would not be hard to find access to your brokerage account, including walking into local offices.
In other words, a general brokerage account within an IRA can be a robust, powerful way for investors to put their money in retirement.
Are There Limits to the Self-Directed IRA Brokerage Account?
Any account has limits. And within a retirement account, there are always going to be certain rules you have to apply.
For starters, you cannot use your IRA to make purchases using margin. If you had an idea of using your retirement fund to make massive bets on Wall Street using margin, remember that this is not a capacity of any retirement account, no matter who you work with.
Another example? Remember that an IRA is considered a separate entity from you. You cannot move funds between your personal account and your brokerage account as easily as you might with a taxable brokerage account, where you can move funds all the livelong day, as long as you pay all the proper taxes. With a retirement account, you have to be very conscious of how much money you are putting in, as this can create tax-relevant events that you have to pay attention to.
With that in mind, a general brokerage account within an IRA can be a powerful tool for investors who know how to use it. And many people do not even know they have that option. Interested in learning more about Self-Directed IRAs? Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation. Download our free guides or visit us online at www.AmericanIRA.com.