Starting Small - Self Directed Retirement Accounts

Wouldn't it be nice to have a retirement account where you have the opportunity to choose a specific type of investment asset? Choose an investment you are very much interested in and you definitely prefer?  All of these could be done if a self directed retirement plan is started.

Self directed retirement plans are usually offered in Individual Retirement Accounts (IRA). One of the best plans where investors are given the chance to decide what specific investment to take part in is self directed IRA. Important information, rules and regulations are explained by account custodians who guide them. All transactions done to the account such as distribution of statements, filing required paper works and approval of investments are responsibilities of custodians.

For those who own small businesses, the ideal retirement plans to be taken are SIMPLE IRA and Simplified Employee Pension (SEP) IRA. If businesses are started small, there are fewer risks and have lesser possibilities to lose funds. SEP IRA is one of the self directed retirement plans wherein a lot of business owners take part in This type of IRA provides benefits to both the business owners and their employees and the maximum contribution for both is about 25% of the earned income.

Normally, custodian fees are deducted from the account nonetheless, there are no significant fees applied to business owners without employees or self-employed. If there are employees on the other hand, benefits of employers are directly proportional to the employees. Additionally, anyone who has been working at an employer for more than 3 years and are at least 21 years of age are qualified to take SEP IRA. Also, there must be a compensation of $500 per annum. 

One of the best self directed retirement account for small businesses is SIMPLE IRA retirement plans. Contributions in SIMPLE IRA are based on salary deduction which is sponsored by employers. It is also a requirement that the number of employees does not exceed to 100 individuals otherwise they would not be qualified. For employees to be eligible in this plan, they must receive at least $5,000 compensation a year. Individuals who are below 49 years must allocate 3% of their compensation a year. Nonetheless, catch-up contributions are options for those who are over 50 years of age.

The Internal Revenue Service (IRS) orders all IRA retirement plans to apply tax penalties. This applied if early withdrawals are taken (before 59 1/2 years). Prohibited transactions like rollovers have higher tax penalties which reach up to 25%. SIMPLE IRAs do not allow rollovers and could lead you to this tax penalty.


Other options are available aside from self directed retirement plans. More benefits are being offered by IRA retirement plans other than self direct. IRA holds a lot of types which could be chosen and there are various benefits offered based on your qualifications and preferences. Before making a decision, it is essential that you conduct a wide search to understand each plan.

Self Directed Retirement

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