Are Self-Directed IRAs a Good Idea?

Are Self-Directed IRAs a Good Idea?


Written by John Rothans

Jul 22, 2020

Are you paying down debt? Smart. Want to spend more quality time with your family? That’s also a great idea. And saving for retirement? Another one! How about saving for retirement through a Self-Directed IRA? Learn why that’s an ideal option to add to your list of retirement strategies.

Self-Directed IRAs Offer Flexibility

A Self-Directed IRA is a member of the IRA family. These accounts provide tax benefits for people who are putting away money for retirement.

Among the most common types of IRAs are traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs. These IRAs—typically managed by brokerage firms, banks, and insurance companies—limit account holders to approved stocks, bonds, mutual funds, ETFs, and CDs.

A Self-Directed IRA, in the form of a traditional or Roth IRA, enables someone to go beyond those asset categories and choose alternative assets such as precious metals, real estate, promissory notes, and tax lien certificates.

Given that level of flexibility, someone can set up what’s known as a Self-Directed Precious Metals IRA. With a Self-Directed Precious Metals IRA, a custodian like U.S. Money Reserve buys and holds gold and silver on the account holder’s behalf. The account holder picks the precious metals that the custodian purchases.

A Self-Directed Precious Metals IRA can help you achieve portfolio diversification and help protect you from economic and inflationary fluctuations.

It’s worth noting that a Self-Directed IRA is not the same as a self-managed IRA. A self-managed IRA gives an account holder some flexibility in choosing which asset types to buy within certain boundaries. With a Self-Directed IRA, on the other hand, the account holder wields full control over how and where the money is spent, as long as IRS rules are followed.

Keep in mind that the IRS prohibits certified coins and certain precious metals (but not gold, silver, platinum, or palladium) from being included in a Self-Directed IRA.

Self-Directed IRAs Offer Freedom

Self-Directed IRAs not only give you access to alternative assets, but they also give you the freedom to take advantage of your interests and knowledge. For instance, you can capitalize on your know-how about gold and silver, your love of U.S. history (many gold and silver coins have fascinating backgrounds), or your longtime passion for coins.

“Knowledge gained through work experience, industry involvement, or even hobbies can often be translated into viable [asset acquisitions],” John Bowens, a retail sales manager for Equity Trust Company in Westlake, Ohio, told U.S. News & World Report.

Self-Directed IRAs Offer Tax Advantages

Just as other IRAs do, a Self-Directed IRA provides tax breaks when you’re saving for retirement. These breaks can be tax-deferred gains (within a traditional IRA framework) or tax-free gains (within a Roth IRA framework).

For 2020, the annual contribution limit for IRAs is $6,000. The limit goes up to $7,000 if you’re at least 50 years old.

All in all, a Self-Directed IRA “can be a phenomenal asset,” as Joseph Polakovic, owner and CEO of Castle West Financial in San Diego, told U.S. News & World Report. Can you put it to use for your benefit?

Learn more about the freedom and flexibility you can gain with a Self-Directed IRA. Call U.S. Money Reserve for a one-on-one discussion about your retirement goals.


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