Why Would I Need A Self-Directed IRA?

If an investor has made the decision to invest in precious metals with his or her IRA account, they must do so within a self-directed IRA account. What exactly is a self-directed IRA account, you might be wondering? A self-directed IRA is an IRA account in which the investor has control over what investments are made and in what.

This type of IRA account differs from a standard IRA account in which the investor only has limited investment choices that are determined by the custodian or trust company. For example, if someone has an IRA account through their local bank, chances are that the types of investments available to the investor in that account are limited to the traditional stocks, bonds, mutual funds and the like.

Self-directed IRA accounts have grown in popularity since their inception in 1975. This growth could likely be attributed to increasing investor desire to gain more diversification within their portfolios. Today’s investors are adding more and more investment vehicles to their portfolios. Some of the non-traditional investment vehicles that are available within a self-directed IRA include real-estate, precious metals, futures, limited partnerships and various notes. These alternative asset classes can potentially provide the investor with additional diversification, other potential growth opportunities and more.

Self-Directed IRA vs. Standard IRA

An interesting thing worth noting when it comes to a self-directed IRA account is that an investor can actually still do all of the same types of investments within it as a standard IRA. For example, if an investor wants to invest in precious metals, but also holds shares of company YYY, that investor can not only maintain his investment in shares of YYY but can also add precious metals or other alternative asset classes to his self-directed IRA account.

While a self-directed IRA account can provide an investor with access to more products and investment vehicles, these types of accounts are not problem free. A self-directed IRA custodian’s job is to act as a fiduciary and to generate account statements and take care of various administrative duties.

It is not the responsibility of the custodian, however, to advise investors on various investment choices and any potential tax consequences. For example, if an investor decides that they want to buy real-estate within their self-directed IRA account, there are many rules and regulations that must be strictly adhered to. If the rules and regulations are not followed to the letter, the investor may get themselves into a jam and possibly trigger a taxable event. Needless to say, this is the last thing that someone wants to have accidentally happen in a self-directed IRA account. Because of the additional choices within these accounts, there are also additional potential pitfalls if a mistake is made.

Self-Directed IRA at JM Bullion

JM Bullion has partnered with New Direction IRA to offer the lowest cost and quickest IRA setup and maintenance, so you can enjoy all the tax benefits of IRA investing. Our self-directed IRAs can be set up in three simple steps. To learn more about getting your IRA setup, please visit our IRA page or call us at 800-276-6508.

Because the investor must navigate the waters on their own when investing within a self-directed IRA account, it is imperative that they consult with their CPA or tax adviser about what types of investments they are looking at making and any potential tax ramifications involved.

A carefully planned out self-directed IRA account can potentially help investors further diversify their portfolios and seek additional potential opportunities not available in a standard IRA account.