How to Fund a Self-Directed IRA
With a self-directed IRA, you can invest your retirement funds any way you see fit, from individual stocks and mutual funds to exchange-traded funds, bonds and even certificates of deposit. Setting up a self-directed IRA is a good way to fund your retirement, but be sure to follow the rules set forth by the IRS when you fund your account.
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Instructions
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Check your Form W-2 or pay stub to make sure your wage income will cover the funding of your IRA. For the tax year 2010, you can contribute up to $5,000 in a self-directed IRA, plus another $1,000 if you are age 50 or older That money must not exceed the amount of taxable wages you have, and you cannot make up the difference with unearned income like capital gains, interest and dividends.
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Contact the administrator you want to use for your self-directed IRA. You can open an account at an online brokerage firm, mutual fund company or bank. Choose your administrator based on the assets you want to use for your IRA. If you want to buy primarily individual stocks, choose an online discount broker as your administrator. If you prefer to use certificates of deposit, open a self-directed IRA with your local bank. If you prefer to use mutual funds, select a quality mutual fund company as your administrator.
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Obtain an application for the IRA account and fill it out completely. You will need to provide your name, address and Social Security number, and you might be asked to provide information about your job and income as well
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Submit your completed application, along with your annual contribution, to the address listed on the form. If you prefer, you can set up an automatic monthly investment directly from your bank to the IRA account.
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Tips & Warnings
Keep copies of all your IRA contributions with your tax records. You will need this documentation when you file your taxes.
