Sometimes, navigating through the different types of retirement accounts can really be confusing because there is so much information about retirement accounts. In most instances, an individual will only have knowledge of the retirement accounts that are offered to them by their employers, which may be a 401K or a pension. These accounts are generally managed by a third-party administrator; although you are able choose which investment vehicles you want to invest your pre-tax dollars in, once you make that choice, you are stuck with it. This is not to say that 401Ks should not be invested into because if there is a company match then it would behoove you to take advantage of free money; however, just with any other investment it is always a good idea to diversify. A self directed IRA is an excellent way to manage your retirement dollars because you can choose whichever investment vehicles you would like to invest it, from real estate to raw land to high risk stocks.
There are two types of IRA, which stands for Individual Retirement Account: a traditional IRA and a Roth IRA. Roth IRAs are retirement accounts in which individuals can make after-tax contributions up to $5,000 per year for persons that are under the age of 50; for those individuals that are over age of 50, you have the ability to contribute up to $6000. There are several advantages for a person to invest in a Roth IRA, and some of those pros are: the qualified distributions are tax fee, investors have a wide variety of investment vehicles and securities that they can invest in, and anyone can qualify for a Roth account. However, be advised that the main requirement are that the contributions are what is called earned income and there is an annual income cap. There are some disadvantages to a Roth account, and they are the contributions to the account are not tax-deductible and there is the yearly contribution max-out; while this may be a lot of money for some people, others may regard it as not aggressive enough.
Then there are Self Directed IRA LLC and Self Directed Roth IRA; these accounts allow the IRA account holder to take control over their retirement accounts and make tax-free investments in whatever investment vehicle you choose. Additionally, after 59 ½ years old, qualified distributions are also tax-free.