When you want to exercise more control over your retirement finances, what can you do? For many people, it means just taking a closer look at their accounts and figuring out the best way to move forward. But many investors don’t know just how flexible their options can be. Case in point: a Self-Directed IRA makes it possible for investors to broaden their investment horizons and enjoy different types of assets within a retirement portfolio. But how does it work, and when you’re sure that this is the path for you, how do you choose the best possible Self-Directed IRA Provider? Here are a few of the facts you’ll need to know.
Why a Self-Directed IRA Provider?
First things first: why a Self-Directed IRA Provider at all? Isn’t it better to manage your own account through a brokerage and call it a day? Well, there’s certainly nothing wrong with this—but it will depend on your specific goals and needs. For instance, let’s say that you want to establish a retirement portfolio that includes the regular income generated by a rental real estate property. It’s going to be difficult to do that if you don’t have a Self-Directed IRA.
A Self-Directed IRA, on the other hand, means that you work with a custodian who administers the account. Under this arrangement, you’ll be able to invest in a wide range of assets—yes, including real estate. Once you’ve established an account with a Self-Directed IRA administration firm and you’re ready to get moving, you can simply direct the custodian to make the purchase on behalf of the IRA. Then the real estate purchase will go into the IRA, where it will wait for you until you either sell it through the IRA or reach retirement age.
What Does a Self-Directed IRA Provider Do?
Perhaps a better way to answer this would be to explain what a Self-Directed IRA Provider is. For example, take American IRA. As a Self-Directed IRA administration firm, we can help you set up an account and establish us as the custodian on the account. Once that’s happened, you can work through us to manage your own retirement goals. For example, let’s say you want to purchase precious metals in the IRA. You would then make sure you had the proper funds inside the IRA, then direct us, your Self-Directed IRA administration firm in this scenario, to make the purchase of the precious metals on behalf of the IRA.
This is key, because not many retirement investors know what goes into administrating an account like this. For example, if you do invest in precious metals, you’ll have to know about the approved insured depositories in which you store those metals—it’s not as simple as keeping those metals within your safe at home, because this would then potentially include the metals among your personal assets.
Once you understand this distinction—between retirement assets and personal assets—you’ll understand what it is that a Self-Directed IRA custodian does. A custodian helps administer the account so you can keep it in good standing, which prevents you from suffering taxes and penalties if the IRS deems that you’ve taken an early withdrawal from a retirement account. With a Self-Directed IRA administration firm in your corner, you can have confidence that the retirement moves you make are within the legal and regulatory bounds, giving you peace of mind for the future.