Understanding Self-directed Roth IRA

 

Most people who invest in a Roth IRA for retirement are invested in mutual funds, but you don't have to limit your investments to the stock and bonds purchased or recommended by mutual fund companies. If you want more freedom over your investments, you can get it through a self-directed Roth IRA.

 

Self-directed IRAs can be set up as Traditional IRAs or as Roths. As soon as you decide on either, you automatically have a sea of investment options at your disposal. You make all the decisions with a self-directed IRA, instead of your financial planner, but even with all the control you get, you are still bound to follow some rules.

 

Defining Self-Directed Roth IRA

 

A self-directed retirement account at irafinancialgroup.com is called by its name because that's exactly what it is. You, the investor, are the one who actually makes all the investment decisions, instead of your fund manager. And as we mentioned earlier, your choices go beyond stocks and bonds. The freedom to invest in categories is one of the best things about self-directed IRAs. By the time you retire, you can use the profits you earned from your self-directed account, just as you can from a typical Roth IRA.

 

If you are qualified for a Roth IRA, you can start a self-directed one, with the same income limits applying. Also, investors are covered by exactly the same annual contribution limits ($5,500 per individual or $6,500 for those age 50 plus).

 

Investments under a Self-Directed Roth IRA

 

Very few types of investments are prohibited under a self-directed Roth IRA. On top of the typical stocks and bonds, cash, mutual funds, etc., you will be able to hold assets which are not usually part of a retirement portfolio, such as real estate, partnerships and tax liens.  Learn more about IRA at http://www.ehow.com/how_5647261_calculate-pension-benefits.html.

 

Disallowed Investments under a Self-Directed Roth IRA

 

The Internal Revenue Service does not allow account holders to hold certain investments in self-directed IRA's, whether Roth or Traditional. Examples of disallowed investments are collectibles ad life insurance contracts. Collectibles can be anything, from baseball cards to jewelry to artwork and more. Remember that this will have an impact on the kind of gold that is allowed under a self-directed Roth IRA. If you're not sure, it's always best to consult a financial advisor so you don't inadvertently break any rules. The advice of the right professional can make a whole lot of difference for sure. Click!