What is a Self-Directed IRA?
Most IRAs are set up with mutual funds or banks. They decide what investments to make and your decision is limited to whether or not you want to continue to do business with them. A self-directed IRA has a broker as a custodian, but you determine what to invest in.
How to Set Up a Self-Directed IRA
Setting up a self-directed IRA is a simple process: contact the broker who holds your current IRA and ask for the necessary forms to open a self-directed IRA. Fill them out, submit them, and wait.
There are three types of self-directed IRAs:
Simple account
You decide which investments you want to include in your portfolio and you direct the broker to purchase them for you. You cannot acquire the investments on your own. If you are following a “buy and hold” strategy and plan to make relatively few transactions, you may prefer this type of account.
