Brokerage account from Self-Directed IRA

[Rob K.]

My current self-directed IRA custodian does not have a brokerage account option. I have a self-directed Roth IRA that owns real estate and invests in notes but am considering diversifying into a brokerage account. As I understand it, I can do a partial transfer out of my Roth to a standard brokerage and basically set up an IRA with the new brokerage firm. Has anyone done this and are there positives or negatives to this approach? Once the brokerage account is established is it basically a separate IRA outside the self-directed custodian's control?

I know that this may be easier with checkbook control, but that is not really my question. Thanks to those that respond.

[Brian Eastman]

@Rob K.

A Checkbook IRA would provide the advantage of having those brokerage assets inside the one vehicle, and the ability to either quickly move back and forth between real estate and stocks as opportunity dictates, or keep the income produced by the real estate meaningfully deployed. It would also simplify the operation of your real estate investment, reduce your operating costs, and provide a better layer of asset protection.

You can, as you suggest, open another IRA for investing in conventional brokerage assets. This requires a trustee-to-trustee transfer between the accounts when you want to move funds in either direction. That can take a few weeks.

Holding the brokerage assets in a separate IRA is actually a good idea of this is a larger sum intended to be left in stocks for a reasonable period of time. By having them in a separate IRA, they are less open to liability exposure stemming from the IRA's real estate investment.

Bottom line is that you may have multiple IRA accounts and move funds between them relatively freely.