Are you curious about alternative ways to save with your individual retirement account (IRA)? A self-directed IRA (SDIRA) offers the tax advantages of an IRA plus the opportunity to invest in more than just traditional assets like stocks and bonds.
SDIRAs require an administrator and custodian. If you’re interested in exploring the possibilities these accounts offer, several questions can help you choose a self-directed IRA provider who will help you make the most of your retirement funds.
Exploring Self-Directed IRAs
A key advantage of either rolling over your IRA to a self-directed account or opening a new SDIRA is the ability to invest in alternative assets. Self-directing your account enables you to invest in property, gold, silver and much more.
Alternative investments diversify your portfolio, which can reduce risk by spreading your money across different types of assets. Diversifying can also increase your enjoyment of the investment process. If you’re enthusiastic about race horses, gold coins, flipping houses or other investments that better reflect your expertise and passions, SDIRAs are right for you.
What Investors Need to Ask Their Self-Directed IRA Provider
To open an account, you must find an SDIRA administrator and custodian qualified to manage non-traditional assets. Here are some vital questions to ask before opening a self-directed IRA with the provider of your choice.
Who Is the Custodian for the IRA?
You need a qualified custodian to hold your self-directed IRA. While some SDIRA providers are also custodians, others will use an external custodian for the IRAs they manage. It’s essential to have as much information as possible about the custodian, as they must meet the IRS standards for a qualified custodian and follow regulations.
Your custodian will be responsible for holding your assets, processing transactions and reporting to you and the IRS. Custodians are generally required to be impartial and act in the best interests of the IRA owner. Accuplan Benefits Services uses our licensed and bonded sister company, American Estate and Trust, as our IRA custodian.
What Is the Size and Experience of Your Company?
While it’s good to know about the size and experience of your potential provider, there isn’t a clear-cut preference. A larger company may have more resources, but also may have less time to answer its many clients’ questions. Ultimately, you want to find a provider that prioritizes responsive customer service and dedicated support, regardless of its size.
What Asset Types and Investment Choices Do You Offer?
While self-directed IRAs open up investment opportunities, there are some prohibited investments and transactions to be aware of. For example, investing in S-corp stock, life insurance contracts and collectibles like art and antiques with an SDIRA is not allowed. Here are some specific alternative assets you can ask your provider about:
- Select precious metals
- Real estate — for investment purposes only, not personal use
- Cryptocurrencies
- Hedge funds
- Private equity
- Intellectual property
- Limited liability companies (LLCs)
- Pre-initial public offering (IPO) companies
- Private loans
- Oil and gas rights
- Livestock
If any of these assets pique your interest, confirm their availability with your provider and ask about potential limitations.
What Is Your Fee Schedule, and Are There Any Hidden Costs?
Fees are typically unavoidable when investing, but understanding them is key to maximizing your returns. The fees charged by an SDIRA provider will affect your long-term wealth, so it’s essential to evaluate and compare fee structures carefully.
Ask for a complete and transparent fee schedule and inquire about any potential hidden costs or charges. Although looking at fees is important, avoid choosing the cheapest company without considering their expertise in handling alternative assets and their commitment to compliance and responsive service.
How Do You Ensure Account Security and Protect My Investments?
When entrusting your retirement funds to an SDIRA provider, you want to feel confident in their security practices. You want to determine a provider’s security procedures before partnering with them. The ideal answer to your question should include information about the measures they take to protect your investments, such as data encryption, multi-factor authentication (MFA) and regular security audits.
Do You Offer Both Roth and Traditional IRAs?
IRAs are known for their tax advantages, but these benefits depend on the type of account you choose. For individual investors, the two primary tax-advantaged personal savings plans available are traditional and Roth IRAs.
If you select a traditional IRA, you contribute pre-tax dollars, deduct your contributions on your tax return and pay income tax on withdrawals in retirement. Roth IRAs are funded with after-tax dollars, but offer tax-free withdrawals in retirement. Since you can convert a traditional IRA into a Roth IRA, choosing an SDIRA provider who offers both options is advisable to have flexibility within your retirement strategy.
How Transparent Is Your Reporting and What Compliance Processes Do You Follow?
When it comes to reporting and compliance, look for a provider who emphasizes proactive measures. Your retirement funds should be managed by a professional self-directed IRA administrator who is well-versed in the intricate rules and regulations that accompany SDIRAs. Your SDIRA administrator should also provide detailed statements, easy access to your account information and valuable resources to help you understand your reporting obligations.
How Fast Are Transactions Processed?
Transaction processing should be approached with efficiency and clear communication. The right provider should be able to outline their typical processing times for various types of transactions, such as buying or selling assets, and explain their procedures to keep you informed throughout the process. A desirable SDIRA provider will have systems in place to expedite transactions and minimize delays, ensuring you can act quickly on investment opportunities.
What Kind of Customer Support and Regulatory Updates Do You Provide?
Customer support is key when dealing with alternative assets, as alternative investments require specialized knowledge and expertise. Look for a provider that offers multiple communication channels so you know you’ll have access to help when you need it. Self-directed IRAs have specific rules that must be followed carefully, or you could risk disqualifying your IRA status as a retirement account.
Additionally, certain asset types occasionally have particular rules, requiring niche expertise. Because it can be complicated, you need to find a provider with knowledge and experience who will always remain current on the IRS code.
Get Started With Accuplan
Now that you know what to ask before opening a self-directed IRA, you’re ready to partner with a provider. Accuplan Benefits Services is an experienced SDIRA administrator partnered with a trusted custodian. We enable our clients to choose from an extensive selection of alternative assets, and have served our clients as a self-directed IRA administrator since 2007.
Our industry experience has allowed us to develop an intuitive investment platform built with investors’ unique needs in mind. Accuplan’s world-class SDIRA experts can help you take control of your financial future. We prioritize customer support and will guide you step-by-step through opening and managing a self-directed IRA.
Ready to take the first step? Create an account to begin your journey with Accuplan today! If you have any questions or would like additional information, contact us, and our reliable team will get back to you.
Our information shouldn’t be relied upon for investment advice but simply for information and educational purposes only. It is not intended to provide, nor should it be relied upon for accounting, legal, tax or investment advice.
