Self Directed IRA

A self directed individual retirement account, or self directed IRA, is an individual retirement account that requires the account owner to make investment decisions and actual investment on behalf of the retirement plan. It is mandatory, according to IRA regulations, for a qualified trustee or custodian to hold the IRA assets on behalf of the owner.

A self directed individual retirement account, or self directed IRA, is an individual retirement account that requires the account owner to make investment decisions and actual investment on behalf of the retirement plan. It is mandatory, according to IRA regulations, for a qualified trustee or custodian to hold the IRA assets on behalf of the owner.

The self directed individual retirement account is not limited to a particular asset type. Some investors mayopt for an IRA LLC structure, under which the account owner directs the IRA custodian to invest into a limited liability firm that the owner himself manages.

How Does Self Directed IRA Work?

In a self directed individual retirement account, the assets are maintained by the authorized custodian. This trustee also performs all transactions and maintains the records that are related. The trustee also files the IRA reports, assists the clients to understand the rules and regulations and issues the client statements. He also performs all related administrative duties on behalf of the owner of the account. This is done for the duration of that account.

The investment is made according to the wisdom of the trustee. The investment can be made in all permitted assets. Thus, the possibilities of investing are substantial, including investing in real estate. Other permitted investment types in self directed IRA include mortgages, stocks, partnerships, franchises and private equities. The possibility of investing in such varied options allows the account owner to diversify the IRA portfolio.

It is notable that the custodian of the self directed IRA cannot ensure the compliance or offer legal or tax advice to the account holder. Therefore, it is advisable to seek such information from unbiased sources.

Benefits of Self Directed IRA

A self directed IRA allows an individual to plan his/her financial future. It offers the facility of informed investing and financial security during old age, without getting too involved in the details and complexities of actual investing.