Each owner with a self-directed retirement account or SDIRA is unique. You might be a professional investor with years of experience or you’re a Traditional businessman. Maybe doing IRA investments. Or you might be a novice in the world of IRA, and you prefer having more control over your investments.
Regardless of the reason for choosing SDIRA, below are the three things you should know before starting your journey.
1 – Select your IRA custodian carefully
Yes, it’s feasible to open your IRA with any financial institution out there. But, very few of them know how to hold alternatives assets in SDIRA. A reliable custodian can help you with the complexity of owning an SDIRA.
They can also help you learn about potential risks like prohibited transactions and red flags, etc. If you’re looking for a reliable custodian, then you should consider approaching NuView Trust Company.
2 – Pick among the Traditional IRA or Roth IRA
You might not know, but the IRS doesn’t identify the term ‘self-directed IRA.’ Since SDIRA is nothing but a Traditional or Roth IRA where you are managing or self-directing the investments. So, when you’re going for SDIRA, you have to pick between a Traditional IRA and Roth IRA.
3 – Don’t make prohibited transactions
When you are making investments in an SDIRA, you have to avoid making transactions considered as prohibited by the IRS. Otherwise, you might end up paying for inevitable tax consequences. Such transactions may involve using IRA money to purchase a property for personal use, or lending money to yourself or family from your IRA, etc.
Those were three things to know before opening a self-directed IRA. You need to choose the IRA services trust company carefully and avoid making prohibited transactions at all times.