Self Directed IRA questions, anyone?

Question

I'm just wondering if anyone here can recommend any reputable self-directed IRA/401k companies out there... ? I have a simple IRA that was started through a previous employer that I think I would like to self direct. I'm just not real sure what to expect from a company that will "manage" the account for me and possibly help with suggestions on investment choices.

Anybody currently have a self-directed retirement plan of some sort that you could share some insight on? If not, does anyone know of some reading material that might help me decide if this is something I might want to consider for my funds?

Account Closed · Answer

Jill, I created an account with TD Ameritrade for my self directed IRA.  I moved my IRA from my previous employer.  I actively manage the funds myself.  I read the book "Rule 1 Investing"  That gave me some strong guidelines on investing and choosing investments wisely.  I hope this helps.

Justin Windham · Answer

@Jill Johns

If you are within the 2 year period after having the SIMPLE IRA, you are correct- you can only transfer to another SIMPLE IRA. After the 2 years, that restriction is removed. Here is a link to the IRS rollover chart: https://www.irs.gov/pub/irs-tege/rollover_chart.pd...

Your employment elsewhere does not affect your eligibility for a Solo 401k. You can have a full time job and still have a Solo 401k for your self-employment activity.

Brian Eastman · Answer

@Jill Johns

An account at TD Ameritrade may be "self directed", but it will still be limited to investing in the stock market.  Truly self-directed IRA's are held by specialty providers with different paperwork and staff training focused on non-traditional assets such as real estate, private mortgages, etc. (though you can also hold conventional stocks).

Simply put, it is still an IRA, just the institutional restriction on the type of investments sold goes away.

There are two business models:

An IRA held by a 3rd party trust company as custodian.  Check out Kingdom Trust Co or IRA Services Trust Co.  In this case, the institution holds the funds an processed all transactions.  Processing can take a few days and there are per transaction and or per asset fees.  This model works well for infrequent transactions that are not too time sensitive.

A Checkbook IRA LLC.  In this case, an IRA like above is invested into a specially created LLC that the investor can manage directly.  This allows the investor to control the IRA funds in a business checking account and administer investment transactions themselves without need for a 3rd party.  This is a better tool for more frequent transactions.

If you are self-employed but have no employees, there is a 401k based program that also provides the above type of checkbook control known as a Solo 401k.

There is a lot of good info here on BP on the topic.  I'd suggest you identify one or two firms of each type to get a feel for the nature of the services available and the differences in the companies themselves.  There is a pretty wide range of services from just processors/document providers to more full-service advisory firms that can help you utilize your self-directed IRA successfully with guidance related to IRS rules.

Jill Johns · Answer

Thank Account Closed for your responses! I will check into all of this information over the next couple weeks. I really appreciate your suggestions.

Justin Windham · Answer

@Jill Johns

As mentioned above, if you want access to alternative assets such as real estate (a popular option around here), you will need a truly self-directed IRA or 401k. One of the first things to consider is whether or not you are eligible for a Solo 401k. There a couple reasons for this. Number 1, if you are eligible for a Solo 401k, you can get many benefits that no IRA can offer and you may very well do so while saving money compared to an IRA structure. Secondly, if you're not eligible for a Solo 401k, you know you can narrow the scope of your research to help you stay focused on the setup that will work best for you.

Solo 401k eligibility requires that you have a business or self-employment activity but no full time non-owner W2 employees. If you don't meet this criteria, you will want to start your search with self-directed IRA custodians, as a custodian IS required with IRAs, unlike with 401ks. If you want checkbook control, there are firms that setup IRA LLCs and usually have a self-directed IRA custodian they recommend or work with most frequently. These firms can be great sources of information as well.

Mike Delprete · Answer

@Jill Johns Check out udirectira.com as a custodian. Reading material check out Mat Sorensen's book "The Self Directed IRA handbook" Also if you head to the front page of my website (link in signature) I have a short guide you can download where I discuss the possibilities you have with a SDIRA.

Hope this helps.

Jill Johns · Answer

@Brian Eastman @Justin Windham

Thank you both. I think, if I'm not mistaken, the only thing I can do with a Simple IRA is roll it over into another Simple IRA. The question of traditional or non-traditional investment options didn't even cross my mind (LOL). I definitely want to be able to invest in alternative assets, otherwise, I should probably just not try anything different with it.

As for being eligible for a Solo 401k, well, this is first time I've heard that term so I'll have to check that out. It sounds like it's probably not an option since I do have an employer that I report to 40 hours a week, outside the home, but I'll still check it out (for when I get to the point where I don't Have to report to that "outside the home" job). I'm not really cracked on this being a Simple IRA, but it was a small business that spun off a company we all worked for & I personally liked the fellow making this happen so when he asked me to come work for him at his "new" company, I didn't hesitate. I'm not sure why he chose a Simple IRA as our form of company matched retirement plan, but that's what I've got.

Self Directed IRA questions, anyone?

Most Popular Reply