Self-Directing your IRA – FAQs

Self-Directing your IRA – FAQs

An IRA is merely a savings plan for the retired. The plan allows people who have not yet retired to invest a certain fraction of their retirement package without paying tax on the invested amount. This condition of an IRA is valid either prior to retirement or shortly after retirement. IRA stands for Individual Retirement Account. A Self-Directed IRA is unique because it has more investment options than any other type of IRA that is available on the financial market. Here are some important frequently asked questions related to the Self-Directed IRA.

What are some of the most notable benefits of a Self-Directed IRA? When you have an IRA, you will be entitled to tax deductions, asset planning and tax free profits. But, a Self-Directed IRA enables you to invest in various alternative assets, like real estate. The investment options in an IRA that is self-directed are more diverse than those which are associated with a standard IRA.

Is a Self-Directed IRA common? Self-Directed IRAs have been around since the early 1970s. However, they’ve received little attention because the custodian financial institutions do not usually allow alternative investment options that come with the self-directed plan.

How do self-directed investments work? There is a very slim difference between investing in a normal IRA and a self-directed one, other than the fact that you’re able to invest your retirement funds in other alternative assets if you so choose. The basic steps that are followed when investing in a normal IRA also apply to a Self-Directed IRA.

Disclaimer: The Company introduces general information and education concepts about self-directed retirement accounts (such as 401(k) and IRA accounts). Like any investment, there is risk in using retirement funds for investing in real estate assets. It is possible to lose a portion or all of an investment in real estate – including those purchased with retirement funds. Please review IRS Publication 3125 regarding the use of retirement funds for alternative investments. The document can be found at: http://www.irs.gov/pub/irs-pdf/p3125.pdf. Every individual is different, with unique circumstances. We do not offer tax, accounting, financial or legal advice. Prior to acting upon this information, you may consult your own accounting, legal and financial advisors to evaluate the risks, consequences and suitability of that transaction. The Company is not a retirement account custodian, trustee, or securities dealer.