Self-Directed IRA FAQs (Part 2)

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How does a self-directed IRA work?

Self-directed IRA investing is essentially a three-step process:

  • Open the Account - Choose the self-directed retirement plan that will best suit your needs and open an account. Our online application can be completed in a matter of minutes!
  • Fund the Account - You can move funds or assets from an existing retirement plan via transfer or rollover. You may also deposit personal funds via contribution.
  • Make Your Investment! - With your self-directed IRA open and funded, New Direction Trust Company allows you to incorporate alternative investment options into your retirement portfolio. Although the processes vary slightly between retirement and non-retirement investments, the self-directed approach allows you to follow a relatively familiar model. For instance, if you invest in rental properties with your non-retirement money and decide make the same investments with your self-directed IRA, you can expect a similar process. You can still qualify your potential borrowers, negotiate lease terms, and close deals on behalf of your account.

Are self-directed IRAs legal?

Self-directed IRAs are legal. The IRS enforces certain rules regarding prohibited transactions, but they have not disallowed alternative or hard assets like real estate, private equity, precious metals, or promissory notes.

Are self-directed IRAs a good idea?

While self-direction can afford a higher degree of flexibility over one's retirement strategy, whether or not it's a good idea is entirely up to the individual and his or her financial team. New Direction Trust Company encourages as much due diligence as possible on the part of investors as they consider a self-directed retirement approach.

Are self-directed IRA LLCs legal?

Self-Directed IRA LLCs are legal in most configurations. Having your IRA invest in a private entity (that is not owned or controlled by a disqualified person or persons) like an LLC is not prohibited by the IRS. However, you may find conflicting legal opinions on whether a "checkbook IRA" is an advisable strategy. It may be worth consulting with your financial team if you're thinking about a checkbook IRA.

Contact New Direction Trust Company at 877-742-1270 or for more information.