Many people who lost hugely on investments during the Great Recession are looking for better ways to invest. With the economy still struggling to right itself, traditional IRAs are not as attractive as they may have been in the past. Thats one of the primary reasons for the rise in popularity of self-directed IRAs. These individual retirement accounts dont act like IRA 1.0. Instead, they have a wide range of other features that are popular with investors, like those listed below.
Options
This is the biggest benefit and attraction for many people who are considering self-directed IRAs. Unlike traditional IRAs, self-directed IRAs arent limited to bank offerings as investments. With the self-directed variety, you can purchase real estate, precious metals, debt, tax liens, and countless other things that are simply not available with standards IRAs.
Unfortunately, bank controlled and custodian controlled IRAs often limit those options to some degree as well. True freedom of choice is most common with the checkbook control IRA the one thats growing so much in popularity. There are quite a few reasons that the self-directed IRA LLC, or checkbook control IRA, is so popular among todays investors.
Checkbook Control AKA Self-Directed IRA LLC
This is a big deal among investors especially those still wearing the scars of yesteryear when you made the investments in your retirement account but someone else had authority or control over those funds. That isnt all checkbook control allows users, though.
It also provides…
* Access to funds once locked away with trustees – Your funds can be held in local accounts so that you have access to the funds when you need them.
* Fewer fees – Since you dont have to consult a custodian every time you want to make an investment, you pay fewer fees in order to make investment transactions.
* Speed – Since you dont have to consult with a custodian or seek approval to make investments, you can get the wheels rolling much faster.
* Simplicity – There are few steps to take and hoops to jump through in order to make investments with this type of IRA. However, you must follow the rules the IRS sets out or you could find yourself facing substantial penalties.
* LLC protection – Assets held outside the LLC are shielded from attack.
* Privacy protection – Investments are made in the name of the LLC rather than the owner of the IRA. This is opposite of self-directed custodian or bank controlled IRAs that make the asset owners name public.
Of course with greater freedom comes greater responsibility. The IRS has very specific rules on how self-directed IRAs can and should function. Its important to examine every investment carefully in order to stay on the right side of the IRS and to build bigger and better future investments based on the returns on your initial investment.