As the normal process for making financial decisions in life, going forward with opening a self-directed IRA will require you to put some thought and planning into action. Not only are you choosing a different kind vehicle for your retirement, you are choosing a different way to drive it. Having a self-directed IRA means that you have made the choice to have a self-directed retirement and as the famous saying goes “With great power, comes great responsibility”; but not to worry with great power also comes great results too. We have put together some of the main topics you should know about and consider when opening a new Self-Directed IRA.

Not all self-directed IRA custodians are created equal. Our Custodian of choice is Horizon Trust.

When opening a self-directed IRA means that you will have to use a special type of IRA custodian. Each of these custodians has a different amount of experience, services, and fee schedules. Ultimately, you should choose a custodian that you feel comfortable with and have done research on.

Choose an investment strategy that makes sense to YOU.
A self-directed IRA offers many more investment options than a traditional IRA. You can invest in real estate like trust deeds, hotel fund, and private residences, along with tons of other investment opportunities.

Step 1: Select a Self-Directed IRA custodian

In most cases, your current IRA or 401K provider does not allow for a self-directed IRA option. That means that in order to have a self-directed IRA, you will need to select a new IRA provider that does, in fact, offer the self-directed IRA.

Step 2: Liquidate your current account

Once you have a custodian picked out, the next step will be to liquidate your current IRA or 401k. This generally means to remove the money in the account from being invested in any active investments like a mutual fund or any stocks. This usually requires some paperwork to be filled out and a phone call to be made to your current custodian. This is one of the benefits of working with a custodian like Horizon Trust. Not only do they help you fill out the paperwork correctly (which saves you a ton of time and headache) they will also make the phone call to the current custodian with you to ensure all questions are answered and that the liquidation takes place correctly. The liquidation process can take about an hour or a couple days depending on what paperwork has to be returned and what calls need to be made.

Step 3: Open your Self-Directed IRA

Well, step 2 and 3 actually happen at about the same time. Once you have initiated contact with a self-directed IRA custodian and begin the liquidation process you will then start setting up your new Self-Directed IRA. Generally there is a account set up fee and an annual maintenance fee charged when you open the account. Most custodians allow you to pay that fee with the money from the IRA that you are transferring over or from a credit card. The advantage to putting the fee on the card is that you keep more money in your Self-Directed IRA and that fee is tax deductable. Once your Self-Directed IRA is open there is usually a waiting period for your funds to completely transfer over which depends on your current custodian. Every custodian is a little different and generally transfer periods could last 7 to 45 days.

Step 4: Invest

Once your account is set up and the funds have arrived then there is no time to waste, start earning interest!