Prep Before Your Self-Directed IRA

A Self-Directed IRA shouldn’t be too intimidating. It’s a simple and easy way to invest—even if many investors think it sounds complicated. That said, it never hurts to prep for the first steps in your retirement investing journey. What will you need to do before you open an account? What kinds of decisions should you weigh? And what should you expect along the way as you open an account with, say, American IRA? Here are a few of the things you’ll want to keep in mind.

Before You Start: Familiarize Yourself with the Self-Directed IRA

The first step to prep is to learn what a Self-Directed IRA involves. In simple terms, a Self-Directed IRA is a retirement account you guide yourself. Rather than working with a traditional brokerage, you’ll be working with a Self-Directed IRA administration firm who administers the account. You get to choose what investments you pick—including nontraditional assets like real estate—and put in your retirement account. You can find out more about how it all starts at our page: What is an IRA—and How It Works.

Selecting the Type of Account

The first step in preparing for your Self-Directed IRA is to determine the type of account that suits your needs. Whether you’re looking to open a Traditional IRA, Roth IRA, SEP IRA, or SIMPLE IRA, it’s essential to understand the unique features and tax implications of each option. They’re all different—and their advantages may or may not apply to your unique situation. Weigh factors such as your age, income level, and retirement goals when selecting the right account for you.

Funding Your Account

Once you’ve chosen the type of Self-Directed IRA you’d like to open, the next step is to fund the account. There are several ways to do this. You can choose options like transferring funds from an existing retirement account, rolling over funds from a 401(k) or another qualified plan, or making regular contributions. Depending on your financial situation and investment objectives, you may choose one or a combination of these methods to fund your Self-Directed IRA.

Selecting an Investment for Your Self-Directed Roth IRA

One of the most appealing reasons to open a Self-Directed IRA is the ability to invest in a diverse range of assets. No more limitations with the public stock market. You’ll be free to choose from assets like real estate, precious metals, private equity, and more. Before opening your account, take the time to research and identify the investments that align with your risk tolerance, investment goals, and timeline. Consider seeking guidance from a financial advisor or investment professional to help you make informed decisions.

Submitting the Required Paperwork

Paperwork—we get it. It’s not a word everyone likes to hear. But we keep it as simple and straightforward as possible. Once you’ve selected your investments, it’s time to submit the necessary paperwork to open your Self-Directed IRA and make your chosen investments. This may include completing account application forms, providing tax documentation, and signing investment agreements. Carefully review and follow the instructions provided by your Self-Directed IRA custodian or administrator. We’ll help ensure that your paperwork is completed accurately and submitted on time.

It’s worth taking the time to prepare yourself for your IRA. By taking the time to understand your options, research your investment choices, and complete the necessary paperwork, you can set yourself up for success in building a retirement portfolio.

If you’re ready to take the next step towards opening a Self-Directed IRA, American IRA is here to help guide you along the way. Call us at 866-7500-IRA to speak with us today.