How to Start a Self Directed IRA
A self directed ira is a great way for investors to make nontraditional investments in a tax-advantaged retirement account. When you have a self directed IRA, you can invest in stocks, mutual funds, CDs, bonds, and other traditional assets, as well. But you also get the freedom to invest in real estate, franchises, private equity, tax liens, and other investments that would not be allowed in a Roth IRA, traditional IRA or a 401k plan.
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Instructions
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Establish a self directed IRA account with a self directed IRA custodian. These companies can be found on the Internet by searching for "self directed IRA". You will need to distinguish whether you want a traditional self directed IRA or a Roth self directed IRA.
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Fund your self directed IRA. You can either do this by funding it with cash or by rolling over assets from an existing IRA or 401k. This is a transfer of assets and will not be taxable unless you move from a pre-tax account (such as a traditional IRA) to a post-tax account (such as a Roth IRA).
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Begin investing in your self directed IRA. Some IRA custodians will recommend a self directed IRA LLC. This is where your IRA invests in an LLC that you direct. That gives you more flexibility on your transactions and lowers fees. Talk to your IRA custodian and tax advisor for advice and implications.
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Tips & Warnings
If you are only going to invest in traditional assets (such as stocks, bonds, mutual funds, and CDs) you are better off with a mainstream IRA. Self directed IRA fees will almost always be higher than those charged for mainstream IRA accounts.
