With a self-directed IRA, the term "self-directed" simply means that you, as the individual account owner, have complete control over selecting and directing your Individual Retirement Account (IRA) investments. A Self-Directed IRA (SD-IRA) gives you access to non-traditional assets, such as real estate, notes, limited partnerships, commercial paper, and many other alternative investments.
To comply with the law, every self-directed IRA must be overseen by a custodian. IRA custodians manage the paperwork, payments and records for your IRA. To receive the benefits of a tax-advantaged account, an IRA must be in the hands of a qualified custodian.
Why do Self Directed-IRAs and real estate work well together?
Many individuals choose to invest retirement dollars in real estate as both retirement investing and real estate investing share a longer investment horizon. Many real estate investments also rate tax-deferred (or free) cash returns, which is a great income source for retired individuals.
Advantages of Self-Directed IRAs:
- Individuals can earn commercial-real-estate-level returns in a tax-deferred basis, multiplying the rate at which a portfolio grows.
- Investments can grow on a tax-deferred basis, or on a tax-free basis with a Roth IRA.
- Self-directed IRAs allow you to invest in various alternative investments, including real estate, notes, limited partnerships and more.
- The use of commodities can also help to protect your wealth against economic fluctuations.
- Individuals can balance their portfolio with more diverse investments.
- Self-Directed IRAs are also afforded protection under federal bankruptcy laws to ensure assets are secure.
- Certain Self-Directed IRAs allow the passing of assets to beneficiaries after death with little or no tax implications, allowing you to stretch wealth over generations.
How can I fund my IRA?
There are two ways to fund your IRA: you can liquidate assets from an existing retirement plan and transfer the cash with a check or wire, or you can perform an 'In-Kind' transfer that moves assets from an existing retirement plan to your new self-directed IRA. In either case, all you need to do is complete a short form and your custodian will handle the rest.
How can I get started?
At Acquire, we've streamlined the formerly manual and cumbersome process of opening and funding a self-directed IRA. You can start your own self-directed IRA in these easy steps:
- Click the Open Your IRA Now button and select a custodian.
- Complete a new self-directed IRA investor profile.
- Complete the Open Account and Funder Transfer documents using DocuSign.
Your part is now complete. Your custodian will then:
- Place a confirmation call to you as a security measure.
- Open your account and initiate the fund transfer. (Some institutions may require a hand signature before transferring funds; your custodian will advise you if this is necessary.)
- Notify you once your funds have transferred and you're cleared to invest.