Unlocking More Freedom With Self-Directed IRAs


This article is presented by uDirect IRA Services. Read our editorial guidelines for more information.

Are you ready to take control of your retirement savings and explore the world of alternative asset investments? Self-directed retirement accounts help you step off the beaten path of Wall Street and into the exciting realm of alternative investments. Let’s talk about these amazing investments.

Getting Started

First, let’s talk about what a self-directed IRA is. The main difference between these and a traditional IRA is the type of assets you can hold in self-directed accounts. Traditional IRAs are usually limited to stocks, bonds, CDs, and ETFs. Self-directed IRAs open up the door to holding real estate, commodities, metals, and other assets, with the primary advantage being tax savings.

Embarking on your self-directed IRA journey is a breeze. The first step? Open an account. You fill out a form and send in a copy of your ID. Once that’s done, you can smoothly transfer or roll over your existing IRA or 401(k) into a self-directed one. For an easy IRA funds transfer, just complete a Transfer Request Form. 

And if you’re considering a self-directed solo 401(k) account, the process is much the same. Here are all the details you need to set up your solo 401(k). The solo 401(k) is different from the IRA in that you need to be self-employed with no full-time employees in any of the businesses you own.

When it comes to fees, it depends on where your account is hosted. At uDirect, we keep things straightforward—both incoming and outgoing wires incur a mere $15 fee.

Navigating the Investing Process

Now, let’s dive into the exciting part: investing in alternative assets through your self-directed account. The “self” in self-directed means you’re in the driver’s seat when it comes to asset selection.

Once you’ve chosen your asset, furnish the necessary documentation, such as an offer to purchase, subscription agreement, or invoice. The documents will be reviewed, and assuming all the criteria are met, your funds will be disbursed as per your instructions. It’s important to note that IRA custodians, such as uDirect, do not offer advice or consultation in regards to investments and asset management.

Here’s a crucial tip: All earnings generated by your IRA-owned assets must flow back into your IRA account. Resist the temptation to personally handle these earnings, as it could trigger a prohibited transaction.

Avoiding Common Pitfalls

While the freedom of self-directed investing is liberating, there are some pitfalls to avoid. One common mistake is reinvesting proceeds from one asset into a new venture without involving the custodian. Don’t fall into this trap! If your investment yields returns and you want to reinvest with the same asset sponsor, ensure the proceeds are directed back to your IRA account. 

From there, kick-start the investment process anew with the required documentation. Skipping this step could be seen as a “constructive use” of your IRA savings, potentially leading to a prohibited transaction.

Got questions or need guidance? Don’t hesitate to reach out to uDirect IRA Services! We’re here to provide answers and support your journey to financial independence. Contact us at [email protected], and let’s explore the limitless possibilities of self-directed investing together.

This article is presented by uDirect IRA Services

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uDirect IRA Services has helped thousands of Americans invest their IRA outside the stock market into real estate, land, private notes, and more to improve their financial future. Educating individual investors and professionals is the cornerstone of uDirect IRA. We do not promote any investments. Rather, we provide the knowledge, tools and information you need to make self-direction easy. At uDirect, we help you get started quickly and easily, and stay with you every step of the way.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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