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Self Directed IRA

I'm interested in converting a portion of my SEP IRA to a Self Directed (Checkbook) IRA. What is the best way to go about this? Are there any recommended/preferred firms that are good custodians for this approach? Thanks!


Answers and Comments

Matthew Sullivan
October 5, 2020

First all of the large firms have ample investments available for either an IRA or a SEP IRA.  I am curious as to why you have to change from the SEP to the Self Directed IRA?  At most firms you would have the same available investment options in either.  And the tax treament on distributions is the same on either.  Is there more to this question than originally asked?

Alan Goodstein
October 16, 2020

If you no longer need the Sep because you no longer have self employment income. you can roll it to an IRA 

by just have the IRA custodian transfer it in for you. 

The downside is the Sep has better protection, if you were to file bankruptsy. Once you mix with 

other funds in a regular IRA it loses some of that protection.

 

Richard Stumpf
October 16, 2020

I'm guessing you are asking this question because you want to buy an asset that most custodians won't hold, like real estate or precious metals.  Did I guess right?  If so, there are custodians who will hold those assets.  I know several.  But I won't give you any names, because I think holding those assets in your IRA account is a very bad decision, in spite of what the supporters say, and I won't help you make that bad decision.  Sorry.

If your question was for another purpose, I agree with the previous answer.  It's a simple process, just retitling the account, but there is really no need to do it.  The rules and investment options are the same for both types of registrations.  If your current custodian doesn't offer enough choices (ie the account is with a mutual fund or insurance company and all they offer is their own products) then move to a custodian that offers more choices.

A Michael Adams
October 16, 2020

Are you the employer or an employee? It sounds like you are an employee and wish to have another custodian for your funds. That is possible to do. 

If it is for non-traditional holdings there are custodians that will hold private equity, lettered stock, real estate, metals, wine, art, etc. It is your money and you can decide what you want to do with it. 

Mark Keramidas
October 16, 2020

You should have a conversation with a financial adviser to discuss the reason for your desire to convert your SEP IRA to Self-directed IRA. It may be as simple as contacting your current SEP IRA custodian to discuss your desire to convert to a Self-directed IRA. WIthout knowing any more details, it is not appropriate to provide specific advice.

Robert Bell
October 18, 2020

Many people want to do their own investing. They are of the opinion they can select better stocks than the "pros". Maybe you can but be positive you understand the basics of a Self-Directed IRA:

1) You need to be a Limited Liability Corporation. You should know the tax regulations, legalities,etc. of  a LLC.

2) Review all the fees involved. The trust company, custodian and others will be charging fees so calculate your costs.

3) You will not have complete control. Talk with the trust company to learn your limits.

4) Remember with a self-controlled IRA you cannot use the funds for life insurance or collectibles. 

Matthew Pescatore
Matthew Pescatore
October 19, 2020

Hello,

Before you decide to take action, I would recommending sitting down with a qualified advisor with a tax backround.  Each individual is in a different situation and we would never make any recommendations without knowing the complete situation with that individual.  That being said, we could easily tell you how to acomplish what you are asking, however it would be best to get more information to make sure what you are trying to do is in the best interest for you.  Feel free to contact us if you have any questions.

 

Best regards,

 

Matt

Tom Collins
October 19, 2020

The IRS treats a SEP IRA the same way it treats a rollover IRA and a Traditional IRA.  Transfer the SEP to the IRA if you want to get the additional compound interest vs. keeping the funds separate.  Just be sure you keep track of what contributions are considered SEP contributions each year.  Another poster mentioned bankruptcy and that is correct:  keeping money in the SEP will offer additional protection should you need to declare it personally.  

Destry Witt
Destry Witt
October 20, 2020

Enough of the self righteous BS.  I'll answer your question.  We currently use Community National Bank in Kansas and STRATA Trust Co. in Texas.  There are others with various levels of service.  Over the years we've found these two to be the right mix of cost and quality.  Hope that helps ... 

Todd Anderson
Todd Anderson
October 22, 2020

Destry is right, there seems to be a lot of rhetoric instead of answering the question.  First check with your custodian to see if you can get check writing priveleges on your SEP.  To the best of my knowledge Pershing and RBC both allow this.  Otherwise, ask your custodian to open a traditional IRA with Checkwriting privleges.  Then ask them to journal the invesments to your new account.  Journal is the key term.  They will move the investments as is.  Then you can see them as you need them.

Glen Harding
October 24, 2020

Check with your current custodian to see if they offer Check writing on IRA accounts, they may even offer it on your SEP IRA?? If they do not, I would suggest TD Ameritrade as custodian, open an IRA account with them, then Transfer whatever assets you want to transfer to them, however, to have check writting privelges you will need to be over 59 1/2. I have worked with TD Ameritrade as custodian for my clients for 14 years...great firm to work with. 

Christopher Meyers
October 28, 2020

IRA Financial Group. Lawyers on staff they do it all the time. Very few will. 


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