Self-Directed IRA (SDIRA)
Definition of 'Self-Directed IRA (SDIRA)'
There are two main types of SDIRAs: custodian-directed and self-directed. With a custodian-directed SDIRA, you work with a custodian to manage your investments. With a self-directed SDIRA, you take on the responsibility of managing your investments yourself.
There are a few advantages to using an SDIRA. First, you have more investment options. Second, you can take advantage of tax breaks on your investments. Third, you can have more control over your investments.
There are also a few disadvantages to using an SDIRA. First, you have more responsibility for managing your investments. Second, you may have to pay higher fees than you would with a traditional IRA. Third, you may have to deal with more paperwork.
If you are considering using an SDIRA, it is important to weigh the advantages and disadvantages carefully. You should also consult with a financial advisor to make sure that an SDIRA is right for you.
Here are some additional details about SDIRAs:
* You can open an SDIRA with any custodian that offers them. Some popular custodians include Fidelity, Vanguard, and Charles Schwab.
* The contribution limits for an SDIRA are the same as for a traditional IRA. In 2023, you can contribute up to $6,000 ($7,000 if you are age 50 or older).
* You can withdraw money from your SDIRA at any time, but you may have to pay taxes and penalties if you do so before you reach age 59 1/2.
* SDIRAs are subject to the same rules as traditional IRAs when it comes to required minimum distributions (RMDs). Starting at age 72, you must take a minimum amount of money out of your SDIRA each year.
If you are looking for a way to invest in a wider range of assets and take advantage of tax breaks on your investments, an SDIRA may be a good option for you. However, it is important to weigh the advantages and disadvantages carefully before you make a decision.
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