Types of Self Directed Accounts

A Self Directed IRA is the “true” form of IRA. When Congress created the Qualified Retirement Plans (such as the IRA) back in 1974 the idea was simple: To allow you to grow your investment faster by giving IRA accounts TAX FREE STATUS during the accumulation period. However, some IRA companies have placed unnecessary restrictions on IRA owners, limiting the types of investments that their IRA can hold. It’s important to note that these limitations are not mandated by Congress and are instead artificial.

At IRA Club, we believe in empowering our clients to choose investments that align with their long-term goals. We don’t place any artificial restrictions on your investments, providing you with the opportunity for enhanced returns.

When selecting the right account for your needs, it’s important to consider factors such as your age, desired retirement age, tax bracket, and contribution capability. We recommend seeking the services and advice of a tax professional to help you make informed decisions. Trust us to help you build the retirement portfolio of your dreams.

Self Directed Investment	Traditional	Roth	SEP	SIMPLE
May make any investment that is not a prohibited transaction	YES	YES	YES	YES
Money In
Contributions	Are Income Tax Deductible	Are Not Income Tax Deductible	Are Income Tax Deductible	Are Income Tax Deductible
To make a new contribution to an IRA	Must have Earned Income	Must have Earned Income	Must have Earned Income	Must have Earned Income
Transfers from one IRA account to another IRA account	Unlimited Amount	Unlimited Amount	Unlimited Amount	Unlimited Amount
Earning Limits	Are Unlimited	Are Unlimited using a Backdoor Roth	Are Unlimited	Are Unlimited
Money Out
Qualified distributions are	Taxed as Ordinary Income	Income Tax-Free	Taxed as Ordinary Income	Taxed as Ordinary Income
Must take an annual Required Minimum Distribution	YES-Must start at age 72	NO Required Minimum Distribution	YES-Must start at age 72	YES-Must start at age 72
Passes to a beneficiary	As a Traditional IRA Account	As a Roth IRA Account	As a Traditional IRA Account	As a Traditional IRA Account
When You Pass Away
Can your beneficiary keep investing the funds in the Inherited IRA	YES	YES	YES	YES
Super Bonus for all IRAs Will the IRA be subject to probate?	NO IRAs do not go through Probate if there is a named beneficiary	NO IRAs do not go through Probate if there is a named beneficiary	NO IRAs do not go through Probate if there is a named beneficiary	NO IRAs do not go through Probate if there is a named beneficiary

 

Traditional IRA

• This type of account allows you to make tax-deferred contributions and offers an immediate income tax deduction. You can make a wide range of investments with a Traditional Self-Directed IRA.

Roth IRA

• With a Roth IRA, you can fund your account with after-tax dollars, meaning you won’t owe taxes on your investment gains or distributions. This type of account can be beneficial if you expect your investments to grow in value.

SEP IRA

• A Simplified Employee Pension (SEP) is a good option for small business owners or self-employed individuals. It allows for large annual contributions and a wide range of investments. The contribution limit for 2023 is up to 25% of your income or $66,000, whichever is less.

SIMPLE IRA

• A Savings Incentive Match Plan for Employees (SIMPLE) is designed for small businesses and self-employed individuals. It requires both the individual and the business to make contributions, and the maximum contribution for 2023 is $15,500 plus a $3,500 catch-up if you’re 50 or older.

Health Savings Account

• This type of account offers triple tax benefits. Contributions are tax-deductible, growth is tax-free, and distributions for qualified medical expenses are not taxable. You can also invest idle funds in your HSA, similar to a Self Directed IRA. If you have a compatible high-deductible health insurance plan, you can qualify for an HSA.

It’s important to consider factors like your age, retirement goals, tax bracket, and contribution capability when choosing the type of account that works best for you. Consulting with a tax professional can also be helpful.