Some Of You Out There May Be Wondering: How Do You Set Up A Self Directed Retirement?

There is a varied selection of different retirement plans available to any interested participant today. There is the traditional or simple IRA, the Roth IRA and 401(k) accounts set up by employers. There are also of course different variations of these methods like the participant-directed accounts. Although some individuals maybe content just putting money into retirement accounts and saving up on tax payments, some prefer to take it to the next level. Retirement accounts or IRAs are usually set up by banks and other financial institutions like insurance companies and mutual funds. These institutions will handle all investment related transactions when it comes to the fund. The alternative is self directed retirement plans. How do you set up a self directed retirement account?

The US department of Labor have set rules that allow depositors to manage their own investments. Once it has been established under these rules that the account is self directed, the account custodians or plan officials are then absolved of any fiduciary responsibilities and liabilities regarding the consequences of the decisions made by the depositor. The custodian or trustee in charge of such accounts should inform the participants of this stipulation. Participants cannot sue the custodians or trustees for any investment losses that may be incurred by the actions they themselves have decided to take. The custodians have the responsibility of providing atleast three varied investment options for the participants which also includes risk and return factors. Participants should also be given enough information about their possible investment options to help them come to better decisions. They should receive even without asking the following:

• Detailed information regarding investment options including potential risks and gains
• Information about investment managers
• Information on how to direct investments and also any restrictions.
• Statement of the fees that maybe charged from transactions and investment trading
• An explanation regarding voting and shares of stock
• The contact information of the plan fiduciary upon request

These are the conditions regarding a participant directed account. But how do you set up a self directed retirement account? There are several steps participants should take in setting up a participant directed or self directed account.

•  The participant should register a limited liabilities company or LLC. Having multiple members is not a requirement even a single individual can register.
•  Read and understand policy rules regarding all transactions and transfers. Lawyers are not needed for this.
•  A certified custodian is needed to hold the account in trust. A participant is not allowed to hold the account himself. They will pass on their decisions to the custodian who will then carry out all transactions regarding the account.
•  After deciding on a custodian and financial institution for the account, you can start transferring funds from your retirement plan into the self directed account.
•  The custodian will present possible investment opportunities along with the potential risks and gains. The custodian is not required to give you his own opinions regarding the participant's decisions but he is required to present everything that the participant needs to know.
•  After looking at potential ventures the participant may now then decide on where to put his funds.
•  All gains and losses sustained are all strictly for the account only and may not be used personally. Check the IRS list of prohibited transactions to be avoid penalties.

I think that answers the question of "how do you set up a self directed retirement account?" for interested individuals out there.