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Five Easy Tips for Self-Directed Beginners

Published on March 17, 2015

So you’ve heard about self-directing your retirement account and really like the idea of this retirement savings strategy … but perhaps you don’t know where to start. If that’s the case, here are five things to keep in mind as you enter the world of self-directed retirement plans.

1 – Know and understand your target investment

As we often explain in our blog posts and on our website, self-directed retirement plans allow for a broad array of investment vehicles (both traditional and nontraditional). The nontraditional investments are the ones that usually get people interested in opening a self-directed IRA because of their diversity: real estate, commodities, precious metals, hedge funds, shares in entertainment entities and a whole lot more. Although no one can ever really foretell how a certain type of investment will go, it’s critical that anyone self-directing their retirement should already know and understand these alternative assets.

2 – Research your alternative asset

Self-directed investors are those who are comfortable making their own investment decisions. Part of that means making sure you thoroughly research the investment target asset you wish to include in your account, so that you are making that nontraditional investment with eyes wide open. Whether through lots of prior investing experience, through reading or webinars, or by consulting a trusted advisor, it is vital that you do your due diligence in advance.

3 – Find a third-party administrator you can build a long-term relationship with

Although you will be making all your own investment decisions, your self-directed retirement plan must be opened with and managed by a self-directed retirement plan administrator. The administrator handles all the transactions, holds the assets, and manages all the paperwork and mandatory IRS reporting. Be sure to find an administrator who you are comfortable with in terms of asking questions about self-direction, and who provides guidance and education about this retirement strategy.

4 – Open an account

Once you are ready to start, you simply open a new self-directed retirement account. This can be a self-directed Traditional or Roth IRA, SEP IRA, SIMPLE IRA … even a self-directed HSA for medical expenses (or for other expenses during your retirement years) or a Coverdell education savings account. You can roll over funds from an existing retirement plan or open an account with “new” funds. For Next Generation clients, our Starter Kits provide account holders with all the information needed to get on the self-directed retirement road and our professional team is available to answer any questions.

5 – Send instructions to the administrator of your retirement plan

Now that you have opened your self-directed retirement account, it’s time to start including those investments. Remember, you make the investment decisions and you can invest in many alternative assets. You must send instructions about the target investment to the administrator, who will expedite the transaction and handle all related details. At Next Generation Trust Services, we provide all the forms you need to instruct us about your self-directed investments.

Here’s another tip: contact Next Generation Trust Services today to discuss your self-directed retirement account at (888) 857-8058 or Info@NextGenerationTrust.com.