AZ Estate Planning News

AZ Estate Planning News

Knollmiller and Arenofsky Trust and Estate Planning

Introduction to Self Directed IRAs

English: Phillippine stock market board

Self directed IRAs (SDIRA) have been around since the early 1970s.   In spite of their history, they haven’t been all the rage until more recently thanks to media attention.  The biggest press was on former Republican candidate Mitt Romney’s SDIRA.  It shouldn’t be believed that only the most wealthy can use SDIRA as part of their total retirement financial and estate planning.

SDIRA give everyone more control and investment options vs. regular IRAs. This is due to the individual being able to control the investments instead of a brokerage firm or bank.  More than just being in control of the IRA, the SDIRA permits a whole lot of investments options instead of just traded securities.  Examples include real estate, private equities, precious metals, and much more.

Not all is rosy with SDIRA.  The assumption is that the manager of the IRA, the individual investor him or herself, needs to have some experience in the investments they are managing.  Too often a manager or adviser is hired to assist the individual on the investments.  This is an added cost.

Further drawbacks on tax and legal regulations.  Provisions against self-dealing and avoiding too much involvement in the operation of a business are just a couple of the potential pitfalls.

SDIRA can be a part of a person’s financial and estate planning but care should be taken before taking hold of the wheels of this type of IRA.

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