• May 23, 2022

Advantages With Using Self Directed IRA Custodian Companies

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Self-directed IRA custodian companies have seen an increase in popularity over the years by retirement investors. Many see this type of investment account as a good alternative to stocks and bonds because it gives them control over how their assets are invested. Understanding what self directed IRA custodian companies can offer is important if there is a plan to use one for retirement savings. Here are some advantages that come with self-direction:

Income Tax-Deductible

With a self-directed IRA, they can deduct the earnings from a retirement account when tax season arrives. This is unlike investments like real estate or notes that do not have this benefit; therefore, these types of accounts are often referred to as passive income. The distributions in a Roth IRA fall into this category because they can be withdrawn at any time and without penalty. They will also want to keep in mind that money invested into your traditional IRA isn’t taxed until it’s taken out of the account.

Saving on Fees

The custodian company that acts as an intermediary for all activities with the investment account usually charges an administrative fee based on the value of assets under management or the annual amount of the account. However, fees range and depend on the company you choose to work with. These fees are in line with standard investments; they can be a little higher for self-directed IRAs due to additional services provided by the custodian company (like preparing tax forms).

Self-Direction Allows for Flexible Investment Options

Self-directed IRAs fall under this category because those who invest can decide how their funds should be invested without any outside influence. They can also easily switch from one type of investment to another without restriction from someone else or a financial institution.