Self-Directed IRAs: Know the Difference

One option for investing with Enact Partners is through a Self-Directed IRA (SDIRA). When most people hear the term Self-Directed IRA, they think of a Charles Schwab account where individual investors can go online and trade stocks, bonds, mutual funds, and exchange-traded funds with the click of a mouse. A Self-Directed IRA is a type of traditional or Roth Individual Retirement Account that allows investors to save for retirement with assets that are off-limits for conventional IRAs, including precious metals, real estate assets, startups, and cryptocurrencies. They allow investors to diversify their retirement savings beyond the typical stock market options. SDIRAs are held by a custodian such as a bank or trust company, which charge small fees to manage the IRA. The same annual contribution limits apply to SDIRAs as standard IRAs. Advantages of SDIRAs:
  • Greater flexibility
  • Diversification beyond the stock market
  • Potential for higher returns
  • More control over your investments.
Disadvantages of SDIRAs:
  • Account maintenance fees
  • Certain investments are prohibited (collectibles, life insurance, owner-occupied residential real estate)
  • Penalties or taxes if IRS guidelines are not followed.
If you decide an SDIRA is right for you, we can recommend a custodian who will help you set up the account and ensure all IRS guidelines are followed. And remember, you can contribute to your IRA for the current tax year until April 15 of the next calendar year.

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