Self Directed IRA Custodian Allows You To Control Investments

2007-03-08 10:33:40

( Financial )



If you are investment savvy, you may not want others to have great control on the type of investments for your IRA. You would want to decide for yourself when to buy and sell your investments, and the span of time to keep and sell them. This has already become possible through opening a self directed IRA with a self directed IRA custodian, trustee or administrator.

There are now a number of companies, which offer self directed IRAs. You have to take note though that not all self directed IRAs are the same. There are investment companies which only gives you pre-selected investment options. In this kind of scenario, you don't have complete control and management of your funds.

A typical self directed IRA custodian is not under the obligation to check the investments to which you direct your funds. However, the IRS requires self directed IRA custodians to strictly follow their guidelines in handling your funds. Otherwise, they will lose their certifications to act as self directed IRA custodians. IRA administrators, on the other hand, do the paperwork and accounting tasks to assist you in facilitating investments, particularly in real estate.

Unlike securities broker dealers who may have some proprietary investment products, self directed IRA custodians don't make a lot of money out of a single account. Generally, self directed IRA custodians will only ask you to pay a modest fee for maintaining your accounts, usually in the form of a percentage on your account value. You may try negotiating fees on a per-transaction basis. Some other custodians will probably ask for a combination of both.

Although you have the freedom to choose the type of investment, the law prohibits you to invest your self directed IRAs in collectibles, life insurance policies, stocks in an S corporation, limited partnerships engage in trade, and other party-in-interest transactions.


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