It may just be one of the most under-utilized tools in all of retirement investing: the SEP-IRA. Because the SEP-IRA requires self-employment as one of its key characteristics, not every investor knows about it. But if you do qualify, the Self-Directed SEP IRA is a powerful retirement tool that allows you to invest your retirement funds in a large range of alternative asset classes. In this post, we’ll cover why you should open a SEP IRA and how it can benefit you to take advantage of one of the best retirement accounts around.
Self-Directed SEP IRAs: The Basics to Understand Before You Start Investing
The Self-Directed SEP IRA is becoming a popular investment vehicle for retirement as more and more people are looking for ways to take control of their retirement funds. What’s involved? Let’s explain what it is first. The SEP-IRA is a self-directed retirement plan that allows for investments outside of the traditional stock and bond markets.
For starters, a SEP IRA works the same way as other IRAs, but with a self-directed twist. The IRS allows you to invest through a SEP IRA in stocks, bonds, mutual funds, CDs, and real estate. You can invest in small and large real estate properties, and you can buy and sell your investment properties, too. The investment options available with a Self-Directed SEP IRA are virtually limitless. With a SEP IRA, you can buy and sell investments at any time.
You can make your own decisions about what to buy and sell for your SEP IRA. The only limitations are your own investment knowledge and experience—as well as a few limitations as set by the IRS, such as not investing in collectibles through a Self-Directed retirement account. As a Self-Directed IRA administration firm, we won’t tell you how to invest your money—it will be up to you and the decisions you make within a Self-Directed SEP IRA.
The Advantages of Investing in a Self-Directed SEP IRA
Self-Directed SEP IRAs can be used to invest in a wide range of assets that may not be available to investors in a traditional SEP IRA arrangement. For example, an investor may not be able to put real estate or a small business into a SEP IRA. A Self-Directed SEP IRA allows the investor to put all of his or her assets into one account, managing them easily, and overseeing the arrangement of the entire portfolio in a way that appeals to investors who value more freedom and more investment responsibility.
A SEP-IRA also has high contribution limits, which is critical for investors who have large income and want to leverage that large income to put aside plenty of money for retirement. For business owners who have thriving businesses, for example, a SEP-IRA makes it possible to put aside a large chunk of money for retirement—in a wide variety of asset classes. This is not only a great way to incentivize more investment over the long-term but can mean investors get to choose more of where their retirement money goes.