What is a Self-Directed IRA or 401K and Why Do You Need A Provider?

You might be wondering - “what is a Self-Directed IRA or Self-Directed 401K and why would I need a Self-Directed Retirement Account Provider?” That’s a question I wondered myself when I first heard about self-directed retirement accounts a few years ago.

An SD-IRA or an SD-401K are types of individual retirement accounts that give you complete control over your investment choices.

Most people have IRAs or 401k’s in plans offered through their employers or through one of the bigger financial institutions – Fidelity, Ameritrade, Charles Schwab, etc. In these accounts, there is a limited set of options of what you can invest in – generally a limited menu of mutual funds and bonds.

Using a Self-Directed Retirement Account provider, you can convert these accounts into an SDIRA or SD401K that will enable you to invest in real estate (and pretty much anything else in which you might want to invest).

There is a small list of prohibited transactions (basically you can’t invest in collectibles, life insurance, or things that personally benefit you and your family), but you can invest in nearly anything else.

Because you can’t use your Self-Directed account to “personally benefit you and your family,” you can’t use these funds to buy a house you’d live in, but it is a perfect vehicle to buy an investment property.

So if you have been wondering “how do I find any money to invest?” Well, you might be sitting on tens or hundreds of thousands of dollars in your retirement account that could be bringing you much better returns in a much safer investment if you invest in real estate.

If you own your own business you can convert those funds not just to an SDIRA, but to a SD401K. My husband used his SD401k to passively invest in a 516-unit property in Atlanta.

An SD-retirement funds provider will help you convert your funds, so they are available for your use.

About Monick halm

Monick Halm, founder of Real Estate Investor Goddesses, is an educator and advocate for female real estate investors, Her mission is to help 1 million women achieve financial freedom through real estate investing. To find out more about Monick and connect with her, go to www.reigoddesses.com.