What to Know About Self Directed Roth IRAs Before Opening Your Account

by | Aug 19, 2021 | Investment Services

There are many more choices for building retirement wealth today than there were just a few decades ago. One option that’s gaining momentum is the self-directed Roth IRA. A self-directed Roth IRA, also known as a SDIRA, is preferred by those who are interested in holding investments that cannot be included in a traditional or Roth IRA. The account holder also maintains control over the account, even though it’s managed by a trustee. Here are a few more things to know before contacting self-directed Roth IRA companies to help you open this type of retirement investment account.

Choose an Experienced Trustee

The trustee or custodian you choose should be experienced in handling SDIRA holdings. Since this usually involves adding nontraditional assets to the account, such as real estate, the custodian should know how to manage these investments. They should also be able to advise you on what types of investments are not permitted to keep you from breaking any relevant tax or investing laws.

Learn How a SDIRA Can Be Used

While it’s possible to borrow from a retirement account, this is usually not the case with SDIRA. In this type of account, there are laws prohibiting an account holder from loaning money to themselves or to loved ones. You are also prohibited from using your self directed Roth IRA funds to buy property for your own personal use.

Learn About Possible Investments

While there are still some types of investments that can’t be included in an SDIRA, this type of account is more flexible in what investments you can include. For example, you can invest in real estate and cryptocurrency. Talk to self-directed Roth IRA companies to learn about other types of investments that are available to you.

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