How to Setup a Roth Ira Self Directed

by Allen Young ; Updated July 27, 2017
Saving For Retirement

Self directed Roth IRAs are a great way to plan for retirement. Roth IRAs have the advantage over traditional IRAs in that you can withdraw the earnings tax free subject to IRS rules.By setting up your own self directed IRA you have the further advantage of using non traditional investments such as real estate, mortgages, and even into a business. A custodian experienced in administering self directed Roth IRAs can help you direct your own investments.

Step 1

Tuck away a nest egg for emergencies. You don’t want to have to try to draw out of your IRA right after you set it up.

Step 2

Settle as much debt as you can before starting your IRA. Interest on credit card debt could cost you more than your IRA will make you.

Step 3

Decide how versatile you want your IRA to be, and how much you are willing to pay in fees. Some companies offer inexpensive IRAs, but have a very limited universe of funds or investment options.

Step 4

Figure out what your minimum investment will be, and attempt to earmark funds each month to add to your IRA.

Step 5

Open your account, fund it, and start investing. Get the advice of a professional at first, while you learn the ropes. Find a custodian which will allow you to self direct your investments.

Tips

  • Set up your Roth IRA so you can manage it completely online, from statements to automatic drafts each month to add yet more money to your account.

Warnings

  • Some brokers will hit you with lots of fees while others charge only an annual fee. Do your research and ask questions. Make sure you understand the fee schedules. High fees will eat into your investment returns over time.

About the Author

Allen Young is an experienced writer on such subjects such as real estate investing, mortgages, and personal finance. Young has also written on sports, travel, and parenting. Currently he is the president of Crestwood Capital Group.

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