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Old 12-20-2008, 12:18 AM
 
Location: Great State of Texas
73,363 posts, read 33,555,639 times
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Default Self-directed IRA questions

Does anyone have any experience with a self-directed IRA and can recommend some good educational material and/or reputable custodial firms ?

Much appreciated..I'm on a learning expedition here to determine if it's a good thing to do.
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Old 12-20-2008, 12:52 PM
 
Location: Keller, TX
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I think this is a good place to start: What's an IRA? [Fool.com: IRA Center] (I think it's a little out of date -- the contribution limit is listed as $4000/month)

For an average person who makes, say, $50K/year and whose company offers a 401K match up to 5%, a common bit of advice would be to work it so that A) you're getting the 5% match, and after that B) making sure to max out the IRA (currently $5000/year), and then putting whatever else you can afford into the 401K as C) unmatched but tax deductible contributions and/or into a D) non-retirement brokerage account as after-tax money.

The main advantage of the 401K is the company match (and secondarily the ability to invest in a number of funds systematically). The main disadvantage of the 401K is the limited range of trading instruments and the limited number of trades allowed.

An IRA, be it Roth or Traditional, can be a regular brokerage account, allowing investing in stocks, ETFs and ETNs, index and equity options, other derivatives, mutual funds and bond funds, CDs, treasury and corporate bonds (munis would not be appropriate), gold, warrants and rights, preferred and convertible stock, closed end funds, UITs, REITs, IPOs, cash and money markets, and probably some things I missed... You can intraday trade, as long as you avoid good faith violations. You can trade every day if you want, there are no restrictions. You CANNOT utilize margin borrowing in a retirement registration, however.

One big decision is whether to open a Traditional IRA or a Roth IRA. The article goes over that a little.

Custodial firms... I'd look at Scottrade, E*Trade, TD Ameritrade, Schwab, and Fidelity. As for what to invest in in an IRA, that's a whole other topic and depends on a number of factors. How about 34% in a government income bond fund (such as FGOVX), 33% in DBC, a non-leveraged commodity index ETF with crude, gold, and agriculture exposure, and 33% in a fund that invests some in the broad equity market and some in bonds including corporate, muni, and treasury bonds.
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Old 12-21-2008, 02:45 AM
 
Location: We_tside PNW / CO / SA TX / Thailand
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I use Scottrade for ~ 4 IRA's, my kids each have 2 and spouse 2 there as well.

one of my kids is a financial analyst and finds Scottrade to be adequate for his IRA needs and likes their research, even tho he has tons of expensive services available as well.

I used to use Fool School many years ago, and should go back and review.
I like the above recommendations for investments. Keep it simple, keep it in low cost basis funds / etf, and keep it balanced. Find a method and stick with it (Don't change to another method unless you are certain you need to. Check it once / month and rebalance if necessary, but have some protective strategies for volatile times.
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Old 12-21-2008, 12:29 PM
 
Location: Great State of Texas
73,363 posts, read 33,555,639 times
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Thanks for the replies. A self-directed IRA is not like a 401K or traditional IRA or Roth IRA.
With a truly self-directed IRA you are not limited to stocks/bonds/CD's..you can buy real estate, invest in private companies, manage loans. Banks and brokerages typically do not offer self-directed IRA's; custodial firms do and I was looking for recommendations on the custodial firms.

Thanks anyway though.
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Old 12-21-2008, 01:25 PM
 
Location: Keller, TX
1,712 posts, read 2,152,886 times
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Ah, gotcha. Been a long time since the Series 7.

Self-Directed IRA - Wikipedia, the free encyclopedia

I wouldn't know about the custodial firms, not sure I've ever heard anything about any of them. Google did reveal quite a few links.

Self-directed IRA a good bet? (Page 1 of 3)

Self Directed IRA | IRA Custodian (http://www.mtrustcompany.com/services/ira/ - broken link)

Good luck!
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Old 12-21-2008, 01:30 PM
 
Location: Great State of Texas
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Thanks Nep..off to do some reading !
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Old 12-21-2008, 02:46 PM
 
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I own rental property in a self-directed IRA. You can find a local bank in your area to serve as trustee. The paperwork and recordkeeping are a little more complicated, but not bad. You do need to pay all expenses, etc., out of the account.

I had an attorney set mine up as part of the purchase process, but you don't have to have an attorney. I just wanted to make sure everything was in good legal order. Good luck!
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Old 12-21-2008, 05:43 PM
 
Location: We_tside PNW / CO / SA TX / Thailand
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I know a guy who wrote a book about alternative IRA investing;
IRA Wealth: Revolutionary Strategies for Real Estate Investment

by Patrick W. Rice (he just retired this yr, but still does some speaking. His book is a tad dated, but has the general info. There are new rules on business ownership within IRA

Lori can help you out, over here (They are not custodians, but are central in the loop, so have ~ 4-6 they recommend)

http://www.sageharbor-iraDOTcom/

As mentioned... ALL funds for the operation have to come out of this IRA for this type of investing or you can end up owing taxes as is a 'full distribution' BE CAREFUL. I also had a recommendation, and went through all the apps to enter one of these 2 yrs ago as a TIC, and they are now belly up. I was a little skeptical of their returns, and their CONTROL of you $$, so I chose to invest elsewhere after reading all the fine print (~ 200 pages). I do wish I would have allocated 30% of my retirement $ to a Realestate IRA (a year ago) or at least had it sitting ready to dump in. (Not quite yet).

AFAIK, the 'self directed' IRAs also include your own management of brokerage IRA accounts available at most trading joints and banks too. You choose the investment, and can do limited options trading as well.
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Old 12-21-2008, 05:53 PM
 
Location: Great State of Texas
73,363 posts, read 33,555,639 times
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Thanks folks. I spent some time googling this afternoon and found this site which has other links which I'll check out as well as a list of custodians for this type of IRA.

Self Directed IRA
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Old 01-02-2009, 10:36 PM
 
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A good custodian company is "Pensco Trust" ([url=http://www.penscotrust.com]Self Directed IRA - self directed real estate ira - PENSCO Trust, Inc[/url]). My company works with them to facilitate self-directed IRA's into Commercial Real Estate Investments.

Basically, they help you turn your current IRA or 401K into a self-directed IRA through a tax free rollover. Then, we help you purchase commercial property for the IRA. We do this as a syndicate (high value properties) or for smaller commercial properties such as office condos (hot market here in Atlanta).


--Mark Santiago, MBA
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