Jeff Dixon, MBA, CISP, SDIP
When I speak with people about opening an account, I often start by asking them what type of retirement account they are considering moving to us. Primarily, the tax basis of the account is one of the key determinants of what type of account they will need to open. A pre-tax retirement account such as a Traditional IRA will be suitable to transfer into another type of pre-tax account. An after-tax account like a Roth will transfer into another Roth-type account. Additionally, I will ask whether they are self-employed or not as it plays a crucial role. Some of the accounts for self-employed people include the SEP and SIMPLE IRAs and the Solo 401(k).
What is a Self-Directed IRA?
In discussions with prospective account holders, I cover Traditional, Roth, Simple, and SEP IRAs. However, I am often met with the response, “No, I want a Self-Directed IRA.”
Importantly, it should be noted that ‘Self-Directed’ is a marketing term; it is not a distinct type of IRA account. Essentially, every account we offer is a Self-Directed IRA or Solo 401(k). Specifically, the type of IRA will either be a Traditional, Roth, Simple, or SEP. Moreover, there are also Inherited IRAs, applicable if you were the beneficiary of someone else’s retirement plan and they have passed away.
Regarding eligibility, anyone can open a Traditional or a Roth IRA. However, there are income limits that apply to making a Roth contribution. Conversely, you must be self-employed to be eligible to open a Simple or a SEP IRA. Furthermore, if you work for a company that offers a Simple IRA plan to their employees, you would need to open a Simple IRA. Similarly, if you are employed by a company offering a SEP IRA to their employees, you would need to open a Traditional IRA.
For more detailed information, you can read about the differences between a Roth and a Traditional IRA. Additionally, you can find insights about a Simple IRA and learn about a SEP IRA.
Fiduciary Duty
As a final note, uDirect IRA Services, LLC is not a fiduciary and does not provide professional advice regarding tax, legal, accounting, or investment matters. Therefore, it is advisable to seek expert advice when exploring SDIRAs and real estate syndications. For further assistance, feel free to contact us at (866) 447-6598 or info@uDirectIRA.com. To begin, you can complete an online application [HERE].
