Facts about Self Directed IRA
What is a self directed IRA? What are the benefits I can get from this plan? Do I have investment choices? If so, what are my investment options? These are just some of the questions that might be haunting your thoughts. Well, a self directed IRA is one of the Individual Retirement Accounts that has great benefits to offer. You are given the opportunity to select an investment you prefer as well as to ask assistance from account custodians who administers this plan.
Certain rules and regulations are mandated by the Internal Revenue Service or IRS and if not adhered to, your IRA account would be subjected to tax penalties. Though this IRA has complicated rules due to the broad investment options, anyone could take part in this type of plan. You may consider taking this type of IRA as long as you could contribute a maximum amount of $5,000 annually. If by any chance that your spouse is also an account holder of self directed IRA, your contributions must be done separately. Nevertheless, there are also restrictions and policies that are established by your custodian on top of the IRS rules.
In addition to that, IRA custodians are appointed by you and are accredited by the IRS. Their main duty is to process all paper works in your account and provide accurate information on certain policies. There are self directed IRA fees to be paid to your custodian and these fees vary depending on the level of service given as well as the type of investment you have chosen. Top custodians in terms of performance and knowledge usually have higher self directed IRA fees where your account would be charged as high as $50 a year. Rollovers also have additional self directed IRA fees where a minimal percentage is deducted from your account.
Now, benefits are in existence in self directed IRA that not all retirement plans offer. The common investment assets in retirement accounts are bonds, stocks and mutual funds. For self directed IRA on the other hand, more options are available. These include real estate, Limited Liability Companies (LLC), rental properties, hedge funds and the like. You would get the opportunity to select investment types that you are very much familiar with leading you to manage it extensively. These alternative investments would absolutely give you the chance to maximize investment returns. Another advantage you could get from this plan is that you are privileged to avoid bankruptcy as stated in the US bankruptcy code. You may protect your funds from complete failure with unlimited exemption to your IRA account. Moreover, certain cases such as divorce, fraud, deeds of trust or failure to pay taxes are reasons for your IRA not to be accepted in this bankruptcy protection code.
There are a number of factors you must learn about retirement plans and you may need to search for more of these through books or through the internet. Either way, do not close your windows of opportunities since basic information is not enough. More and more retirement accounts are changing both in their positive and negative ways. All you need to do is choose a plan wisely and invest in an asset that suits you best. The more knowledge you have, the better.