How to Start a Self-Directed IRA and Invest in Alternative Assets

There is a growing class of individuals who have control of their retirement funds and make their own investing decisions. They don’t rely on retirement plan administrators and brokers to invest for them. They don’t lose sleep at night over the stock market’s performance. They invest in alternative assets that aren’t subject to the ups and downs of Wall Street. If you want the ability to do the same, it’s time for you to learn how to start a self-directed IRA.

Self-directed IRAs have the potential to be especially helpful in our post COVID-19  economy. Since the pandemic started, the stock market has been particularly Middle aged man sitting at table on his laptop learning how to open a self-directed IRA.unreliable. It’s been up one day and down the next, which has caused fear and uncertainty for many individuals whose retirement savings depend on the market’s success.

Self-directed retirement plan owners aren’t on that roller coaster. The assets they invest in aren’t dictated by Wall Street, and don’t lose the total sum of their value overnight.

This article explains how to start a self-directed IRA in 2020 so you, too, can invest in safer alternatives to stocks and secure the retirement you deserve.

Why Use a Self-Directed IRA?

Self-directed plans use alternative investments to build retirement income. You can invest in real estate, private loans, cryptocurrency, private equity, and much more. These assets create critical diversity in your retirement portfolio to help offset potential losses on the stock market.

Self-directed IRAs allow you to:

  • Take control of creating the retirement you desire
  • Build tax-advantaged wealth for retirement
  • Achieve true diversity in your portfolio
  • Enjoy the power of making your own investment choices
  • Invest in assets besides stocks, bonds, and mutual funds

When you self-direct your retirement plan, you have the freedom to invest in nearly anything you want to, at a pace that makes you comfortable. Don’t worry about how the stock market may perform on any given day. If you invest in real estate, you can rest easy knowing that property won’t lose its value overnight.

When you understand the assets in your plan, you can make educated decisions on how to manage them. Whether you buy and hold assets or invest in options you can turn for a quick profit—the choices are yours to make.

The Process to Start a Self-Directed IRA

The process is simple. In fact, it’s easy to start a self-directed IRA. You can open an account and start choosing investments in three steps:

  1. Choose a plan that suits your needs

These are the different retirement plans you can self-direct:

  • Traditional IRAs
  • Roth IRAs
  • 401(k)s
  • SEP IRAs
  • Recordkeeping Plans

Health savings accounts (HSAs) and education savings accounts (ESAs) can also be self-directed.

  1. Fund your new self-directed account

There are a few ways to fund your self-directed plan.

  • Transfer or rollover funds and/or assets from an existing account into your self-directed plan. To avoid taxation and/or penalties, work with the administrators for your existing plan and the self-directed plan to make sure these transactions are performed properly.
  • Make an annual contribution to your self-directed plan. As long as you haven’t already maxed out your contribution limits for the year in an existing plan, you can make a cash contribution into your new plan.
  1. Explore the world of alternatives and start investing

As we mentioned, there is an incredibly large number of alternative investments you can choose for your self-directed plan. The only things the IRS prohibits in retirement plans are life insurance contracts and collectibles. Other than those items—the sky is your limit.

Use your own knowledge and expertise to invest in:

How to Choose a Plan Administrator

Before you start a self-directed IRA, you must choose a plan administrator. Not all self-directed plan administrators are alike. Some only allow certain alternative investments. Others—like Advanta IRA—allow every alternative asset available. For example, some custodians are not set up to oversee cryptocurrency assets. Others may not have much experience in the various aspects of real estate investing. So, when interviewing self-directed IRA custodians, make sure you find out their area of expertise and which assets they allow in their plans.

What Sets Advanta IRA Apart from the Rest

As a leader in self-directed IRA services with nearly $2 billion in client assets under management, Advanta IRA excels in providing professional service with a personal touch. If you start a self-directed IRA with us, you receive the following benefits.

  • A streamlined, simple process to open an account.
  • For the lifetime of your account, you work with a dedicated account manager.
  • Your account manager helps you through every step to start a self-directed IRA and assists with the details of every investment process.
  • We keep detailed records, provide accurate reporting, and ensure compliance with IRS regulations.
  • We help you understand the rules for prohibited transactions and disqualified persons to help you maintain the tax-advantaged status of your account.

Advanta IRA oversees the administrative details of your account so you can concentrate on identifying promising investments.

If investing in alternative assets interests you, get in touch with us so we can talk more about how to start a self-directed IRA. We offer one-on-one consultations, and we also provide free webinars every week to help you understand how valuable self-direction can be to help you save for retirement.

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About Scott Maurer

Scott Maurer, Vice President of Sales for Advanta IRA, is a recognized expert in the field of self-directed IRAs. With a law degree from the University of Florida and as a designated Certified IRA Services Professional (CISP), Scott’s keen understanding of rules and regulations fuels his passion to educate others on the power of investing in alternative assets using self-directed IRAs. Scott is a frequent guest on retirement and investing webinars and podcasts, and he has shown thousands of individuals how to achieve financial freedom by teaching them how to use their retirement funds to invest in private placements, real estate, private lending, and more. Throughout his two decades in the industry, he has watched numerous unique investments unfold, giving him great perspective of what is possible when people take control of their retirement funds and investing decisions.