A self-directed IRA is a retirement savings platform that puts you in control of your financial future. The Ultimate Self-Directed IRA gives you the most alternative asset options available—from real estate to business, gold, and more—which is why these plans are commonly referred to as “Alternative IRAs.” Add our Checkbook Control feature, and you gain the flexibility and freedom to invest your own wealth in real time, with no custodian fees.

If you’re ready to diversify your savings out of volatile Wall Street stock and bonds, and you’re interested in driving your own retirement account, an Ultimate Self-Directed IRA is for you.

Self-Directed IRA Eligibility Requirements

Any taxpayer earning an income is eligible, and can open an Ultimate Self-Directed IRA.

Self-directed retirement platforms are especially valuable to people with experience and expertise in fields suitable for retirement investing, such as real estate, business, gold, etc. Don’t let your investment options be limited to what your employer or brokerage firm offers. Translate your personal knowledge and experience into your retirement savings, and use your unique insight to drive your IRA investments in nearly any asset.

How the Ultimate Self-Directed IRA Works

IRAChart1Setting up a self-directed IRA with Broad Financial is easy.

We start the process by facilitating a new self-directed IRA as a registered self-directed IRA custodian. With the new self-directed IRA in place, funds from previous retirement accounts—IRAs, 401(k)s, Roth IRAs, SEP IRAs, 403(b)s, and profit-sharing plans like Keoghs—can be rolled over.  The account can also be started with an initial contribution.

Broad then sets up a Limited Liability Company (LLC) for the self-directed IRA, which will serve as the investing platform for the plan. Each LLC is customized to correctly adhere to the laws and regulations which govern self-directed IRA investment platforms.

The self-directed custodian then invests the self-directed IRA into the newly formed LLC, also known as ‘capitalization’. This is a process that is similar to buying stock: the self-directed IRA buys all the “shares” of the LLC. The self-directed IRA is now the sole owner of the  LLC.

Finally, the custodian sends you a capitalization check, and you open a checking account at the bank of your choosing in the name of your LLC. You can start investing immediately!

Advantages of the Ultimate Self-Directed IRA

The advantages to having a self-directed IRA go beyond the increased investment opportunities. What are your retirement funding fears? A volatile stock market? Too many fees? A self-directed IRA ensures a happy retirement in other ways, too:

  • True diversity—A self-directed IRA allows you to diversify your retirement savings with numerous options beyond Wall Street. A stock market crash won’t decimate your retirement savings if you truly diversify, and invest your money in more than one place.
  • Confidence in your investments—You can invest in areas where you have personal knowledge and understanding, instead of relying on bank or brokerage firm’s choices.
  • Maximum wealth for retirementA self-directed IRA with Checkbook Control means that you can directly manage your investments without having to go through your custodian for each and every change, eliminating the hassle and the hefty fees.

Acceptable and Prohibited Assets and Transactions

Your life experience is unique. The things that you have seen, done, and researched can benefit you in retirement if you are able to invest where you personally see value. With a self-directed IRA, you can invest in a lot more than the narrow range of brokerage-selected stocks, bonds, and mutual funds (though your self-directed IRA can include those choices as well).

The options available to you with a self-directed IRA include:

  • Real estate (both directly owned and public and private REITs)
  • Foreclosures
  • Mortgages
  • Precious metals like gold and silver
  • Private businesses
  • Private loans
  • Private placements
  • Commodities
  • Intellectual property like movies, books, and songs
  • Stocks, bonds, and mutual funds
  • Tax liens

There are, however, two classes of prohibited assets:

  • Collectibles (like baseball cards, stamps, and art)
  • Life insurance contracts.

There is also a short list of prohibited transactions.

Your self-directed IRA cannot:

  • Purchase property that either you or an immediate family member personally owns.
  • Purchase property from any persons who provide a service to your IRA plan, including investment advisors.
  • Lend money to a disqualified person (see below).
  • Do business with an entity in which a disqualified person owns 50% (or more).
  • You cannot personally guarantee a loan for a real estate purchase.

Because your retirement funds are being set aside on a tax-deferred basis to benefit you in the future, they cannot be used to benefit you—or anyone close to you—in the present. Disqualified persons include:

  • You
  • Your spouse
  • Your parents
  • Your grandparents
  • Your children (and their spouses)
  • Your grandchildren (and their spouses)
  • Your investment advisors
  • Anyone who provides a service to your retirement accounts

A purchase that benefits you or your loved ones today is considered a withdrawal from your retirement account, and is subject to taxes and penalties.

Taxes and Legalities Related to Self-Directed IRAs

All IRAs are subject to two potential taxable situations:

  • Unrelated Business Income Tax (UBIT)—When your self-directed IRA invests in a business, and that business produces a profit, that profit is taxable.
  • Unrelated Debt Finance Income (UDFI)—If your self-directed IRA borrows money to invest in real estate, the percentage of profit from the borrowed funds is taxable.

Self-direction has been the intention for IRAs since congress created the retirement platform in 1974. However, banks and brokerage firms that made IRAs available were only set up to deal in Wall Street-style investments, so that’s all they’ve ever offered. The stock market’s struggles in 2008 alerted many Americans to the importance of true diversification, and truly self-directed retirement platforms began to gain popularity.

If your accountant or lawyer questions the legality of the Checkbook IRA, you can point him or her to any of the following:

A Dynamic, Self-Determined Road To Retirement

A self-directed IRA offers the best of both worlds. You have the power and freedom to make your own investment decisions, and the support of an experienced, registered self-directed IRA custodian. With personalized service and a streamlined process, a specialist will first assess your situation and goals to see if a self-directed IRA is right for you. He will then guide you through the set-up process, and be available for ongoing support.
If you are ready to quit riding the out-of-control Wall Street waves, a self-directed IRA puts your retirement back into your own hands. Contact Broad Financial at (800) 395-5200 today —or use the short form in the sidebar— for an expert evaluation of your current financial plan and your future goals.