What is a self directed IRA and how is it different from a traditional IRA What about the tax benefits Can anyone help?

Answer 1

In a traditional IRA you money is held by a custodian. You investment choices are limited to those that the custodians allow you to.

Self directed IRA's allow you more investment choices. You still need the

custodian, but they allow you more investment choices. You request a check for a specific investment like real estate and they'll send you a check.

Then there are those that give you full control of your money and give you check writing privileges, like the broad financial Ultimate IRA. You don't need to make any request from custodians, you simply write a check.

There are some prohibited transactions, like investing in collectors items.

www.broadfinancial.com/ira_faq.html

Answer 2

A self directed IRA will allow (require) the owner to make some of the qualified investment decisions that the IRS will allow according to the IRS rules.

The IRS rules are complex and they do have some PROHIBITED transaction rules that are not allowed and can CAUSE the self directed IRA account to become subject to penalties and interest and possible a disqualified IRA account plan. Go to the IRS gov website and use the search box for Publication 590 Traditional IRAs go to chapter 1

What Acts Result in Penalties or Additional Taxes?

Prohibited Transactions

Answer 3

A self-directed IRA allows broader investment options beyond traditional stocks and bonds, such as real estate or private equity. This differs from a traditional IRA, which is typically limited to more conventional investments. The tax benefits, such as potential tax-deferred or tax-free growth, are similar in both types of IRAs. However, not all financial institutions offer self-directed IRAs, and managing one typically requires more due diligence from the account holder.