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IRA Question

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John Stafford
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IRA Question  Reply with quote  

Hello,

Does anyone know any banks that do
Self Directed IRAS? I've heard they were
available but haven't found any just
yet.



John
Post Wed Sep 19, 2007 3:00 pm
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pf101
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What do you mean by self directed? I'm just asking because a lot of people use that term when what they really want is just a standard IRA. A standard IRA that you can get through any broker will let you do almost everything. However, if you want to buy Real Estate within your IRA then you'll need a special account. Personally I don't recommend them since they're hard and complicated to set up, expensive to manage and the rules are incredibly strict and if you mess anything up you can disqualify your entire account.

Personal Finance 101
Post Wed Sep 19, 2007 4:21 pm
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Fern1
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A self-directed IRA is simply an individual retirement account that you control and manage, not some other third party.

You don't need a "broker" to get an IRA. IRA is simply a label that refers to the tax treatment of this retirement vehicle. You can have your IRA in a bank CD, a mutual fund or a stock.
Post Wed Sep 19, 2007 7:36 pm
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efflandt
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Unless you just want to start out with an IRA CD until you save up enough to diversify, banks (or insurance companies) are not where you want to have your IRA unless totally clueless. They may tend to put you into loaded mutual funds to earn themselves commissions. Admittedly my first IRA was a bank CD, but at that time (long ago) I initially locked in 10% APR for 5 years.

If you want to learn how to invest for yourself, look for a discount broker with a selection of no load mutual funds that you like, and that pays decent money market interest on core cash until you figure out where to invest it. If you think you may want to eventually get into ETF's or stocks, also consider trade fee. But brokers with lowest trade commissions usually pay less interest for your cash. If you get to that point, you could always open an additional IRA account at a broker with lower trade fees.

Look for other threads in these forums from people asking about brokers.
Post Thu Sep 20, 2007 11:20 pm
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pf101
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quote:
Originally posted by Fern1
A self-directed IRA is simply an individual retirement account that you control and manage, not some other third party.

You don't need a "broker" to get an IRA. IRA is simply a label that refers to the tax treatment of this retirement vehicle. You can have your IRA in a bank CD, a mutual fund or a stock.


Actually, there are things called self-directed IRAs which allow you to purchase real estate and other non-traditional IRA investments and those need to be set up by a broker so that they are compliant.

And I agree with efflandt that investing at a bank is a horrible idea. And putting retirement money into a CD would be pretty foolish.

Personal Finance 101
Post Fri Sep 21, 2007 3:09 am
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BlankenshipFP
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pf101 is (as usual) right on target - although many people refer to your traditional IRA (at a bank, broker, or whatever) as self-directed because it allows you the freedom to choose from most all publicly-traded securities available through the broker (or bank, you get it), as opposed to the restricted universe of options available within most qualified plans (401(k), 403(b), etc.).

But true self-directed IRAs are a special brand of IRA, which allows you to purchase many different kinds of things, including real estate, aircraft, and other things, and own them within the IRA. She's also right about the restrictions and costs - you have to treat anything owned by your IRA strictly as an investment, no personal use is allowed (including your family), or you've disqualified the entire account and tax plus penalties will be immediately due. In addition, you need to employ a special custodian for your account if using this option, as the record-keeping is dramatically more complex than the standard account.

Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
Post Fri Sep 21, 2007 3:35 pm
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