Selecting a Self Directed or Checkbook IRA
There are two types of Self Directed IRAs:
- Standard Self Directed IRA
- Checkbook Self Directed IRA
Most Self Directed IRA companies offer one kind or the other; hence they may suggest only the type they sell regardless of what is best for you. The IRA Club offers both types.
Each has advantages and disadvantages. An IRA Club representative will ask you how you plan to use your Self Directed IRA and what your goals are for your account. With that information the representative will discuss with you the features of each type of IRA so you can select the type that will help you best achieve your goals. Spending a few minutes speaking with an IRA facilitator that offers both types and can help you understand the differences and can save you thousands of dollars over the life of your account.
One type is not better than the other, they simply meet different needs.
| Standard Self Directed IRA | Checkbook Self Directed IRA | |
| Advantages | 1. Low set up cost (about $49 at the IRA Club) 2. Easy and relatively fast set-up. | 1. Annual account cost does not increase with the number of assets. 2. Almost instant availability of funds held in the checkbook. |
| Disadvantages | Annual costs are based on the number (and type) of assets in your account | 1. Set up cost about $1,850* |
In general most accounts find a Standard Self Directed IRA is both easy and economical.
If you expect your IRA to grow to hold many nontraditional assets such as a dozen houses or 25 separate tax liens or if your IRA will require instant access to funds, such as buying at auctions you may wish to consider opening a Checkbook Self Directed IRA.
See “Fees – What to Watch For”
