With standard individual retirement accounts (IRAs), your investment options are usually restricted to 澳洲幸运5官方开奖结果体彩网:securities such as stocks, bonds, and 澳洲幸运5官方开奖结果体彩网:mutual funds. That means if you’re looking to branch out with more novel choices, such as real estate and precious metals, a 澳洲幸运5官方开奖结果体彩网:self-directed IRA is your ticket. You get more investmeꦿnt options and the same tax perks. The one catch: You have to find a custodian who handles these accounts, and there aren't that many of them.

As with other IRAs, you have two options.

• You can invest with pre-tax dollars and enjoy a tax deduction (澳洲幸运5官方开奖结果体彩网:if you qualify) and tax-deferred growth.
• Or, if you choose a 澳洲幸运5官方开奖结果体彩网:self-directed Roth IRA, you can use post-tax dollars to buy assets that won’t be taxed when you hit retirement. (There are also 澳洲幸运5官方开奖结果体彩网:incom🌟e qualifications for opening a Roth.)

The wider range of investment options with a 澳洲幸运5官方开奖结果体彩网:self-directed IRA gives you the opportunity to pursue assets that have the potential for higher yields over time. Among them: 澳洲幸运5官方开奖结果体彩网:tax lien certificates, 澳洲幸运5官方开奖结果体彩网:private placement securities, gold, and even restaurant franchises.

Self-Directed IRAs Carry Greater Risk

The catch? You’re also taking a much bigger risk. Many of the investment options that people tuck into a self-directed IRA are volatile by nature.

What’s more, the custodian—which may be a bank, a federally insured credit union, a 澳洲幸运5官方开奖结果体彩网:savings and loan association, a 澳洲幸运5官方开奖结果体彩网:brokerage, or an entity approved by the Internal Revenue Service (IRS) to act as a trustee—doesn’t vet the investments you undertake.

That’s where the “self-directed” part comes in. It’s your responsibility to conduct 澳洲幸运5官方开奖结果体彩网:due diligence on the securities and other assets you buy. You’re also accountable for understanding the tax consequences of these less♚ common investments. If your IRA includes a rental property for which you carry a mortgage, for example, some of your investment income could be taxable. A custodian won’t dig into those implica𓂃tions for you.

Choosing a Custodian

That’s not to say that all custodians are created equal. Over 50 companies are currently licensed by the IRS to provide these services. Some have better reputations—꧅a♔s well as more experience with certain investment categories—than others, so it pays to do your homework.

As self-directed IRAs are something of a niche market, you might not find your favorite company, such as Fidelity, in the mix. Therefore, it’s important to ask the right ques🤡tꦓions when you shop around. 

Here are some of the factors to consider.

Experience

Some custodian banks have been around for decades; others are new kids on the block. Age certainly isn’t the only criterion to be thinking about, but, all else being equal, a longer track record suggests stability and competent management. You can also see whether the custodian is included on the IRS list of approved nonbank trustees and custodians. 

Fees

Pricing arrangements vary from one firm to the next. Some charge based on the specific services they offer, while others levy a flat annual fee🐼. If a custodian offers a non-fixed fee structure, you’ll want to ask plenty of questions and get a solid estimate of how much the total annual cost will be.

Expect to pay more than you would with a traditional IRA provider, given the added complexi🎃ty of alternative investments.

Expertise

Some custodian banks specialize in specific types of investments, such as private placement securities that are available to 澳洲幸运5官方开奖结果体彩网:accredited investors. The more exotic y🐈our investments, the more you’ll lean on the expertise of a narrowly focused firm.

Cybersecurity

Hacks of valuable consumer information have been all too common in recent years. Ask what procedures the custodian has in place to make sure your data is secure. Any responsible bank will use up-to-date 澳洲幸运5官方开奖结果体彩网:encryption, ꦬfor example, to guarantee that customer records are pr✨otected.

BBB Rating

The 澳洲幸运5官方开奖结果体彩网:Better Business Bureau (BBB) is an invaluable tool when researching IRA custodians. Any consumer can for businesses by name. The BBB assigns each one a letter grade based, in part, on the number of complaints it has received and how well the company has resolved its disputes.

The Bottom Line

There are certainly advantages to a self-directed IRA, but t෴here are also some pretty serious risks. One of them is putting your trust in a custodian that you later find isn’t up to par. Asking the right questions ahead of time will help ensure that your assets are in good hands.