The answer was always No, I had no idea!
Not many people had heard of this concept
including some financial planners and the majority of loan officers and realtors. Although it may not be for everyone, at least you should be made aware of it! The fact is, Wall Street brokers make so much money from us buying and selling stocks, bonds, and mutual funds that they arent going to mention other options for our $5 trillion worth of IRAs. And really, who could blame them?
Of course, there are plenty of restrictions
with every silver lining comes a word of caution! Because this involves our IRA and potential tax-deferral, the government has made a list of rules that we must follow to have a valid transaction in the eyes of the IRS. PLEASE seek the advice of self-directed IRA professional BEFORE you try to do anything.
Rule #1
IRS rules do require you to have an approved third party custodian for your retirement funds. You cannot serve as your own custodian.
You may convert any of the following types of existing IRAs to a self-directed IRA:
Traditional IRA
Roth IRA
SEP IRA
401-K
403-B
Profit sharing plan
Money purchase plans
Keogh
Coverdale Education Savings IRA (ESA)
Some qualified annuities
Government eligible deferred compensation plans
The process is simple! You just identify a custodian who holds self-directed IRAs and transfer some or all of the assets held by one of the above accounts to the new custodian.
Make sure you follow their instructions on transferring because you do not want to trigger any tax penalties! You are not making a withdrawal, you are simply changing custodians. This is more commonly referred to as a Trustee to Trustee Rollover or Conversion.
Self-directed IRAs are becoming more popular and growing at a rapid pace! More and more self-directed IRA custodians are becoming available.
Each custodian charges different fees and has different levels of customer service. Please make sure you do your own research before transferring your retirement funds to one of them.
Here are a few companies that are currently offering self-directed IRAs. This market is expanding rapidly, and more companies will sure be coming on board soon!
Entrust Administration (888-340-8977)
Equity Trust Company (888-382-4727)
Guidant Financial Group (888-472-4455)
IRA Financial Group (800-472-0646)
Lincoln Trust (800-962-4238)
Pensco Trust (866-818-4472)
Polycomp (800-572-4122)
Sterling Trust (800-955-3434)
Trust Administration Service Corp (Subsidiary of First Regional Bank) (800-455-9472)
uDirect IRA Services (866-538-3539)
