Ep 212 - How to Open a Self Directed IRA Account

Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And we also have Ben with us today. So if you haven't watched the last few episodes, we have asked Ben to come join us because he's way more of an expert on this topic than, well, everyone's way more of an expert than I am, but on these topics. And so that's why we've asked him to join us. But this is another episode of our.

Podcast which is called Freedom through Passive Income.

That's right. And this is the last day. This is happy birthday day. This is the end of fun shirt, Flippy. Yes, today is my birthday and so I wore this one. This one. We just got this one at Frosty's at Put in Bay. And this. It's a beautiful birthday shirt.

Happy birthday, Flip.

Happy birthday to me. And so tomorrow, back to the boring shirts. But welcome to another episode. And this episode is entitled how to Open a Self Directed IRA Account.

And there's not much for me to say because I've said it on every episode, so hopefully you have listened in. I really like the series the way that he started it off all the way to where we are now. So he's given you a lot of education. He taught me something on yesterday's episode because I was like, I didn't know you could negotiate those fees. So if you missed yesterday's episode, it was very, very powerful. There was more things that he taught me in that episode, but that was the key that I just had no idea. I just thought, it's an admin fee, you gotta pay it. But anyways, floor is yours. Ben, thank you so much for being with us in this series. It's very, very educational and we appreciate your time.

Great to be here. The theme for this podcast and for the next podcast is simply this time this month is your friend. But every month that follows after this time is going to start to work against you. And that's a good introduction. As we talk about how to open an account, the first point and the first takeaway from this podcast is it takes time to open a self directed IRA account. So it's not something we just go in to a bank, you fill out paperwork, write them a check, and boom, you're done. It takes some time for you to be able to talk to the people that the potential custodians, but also to fill out the paperwork for them to process it, for you to send in your funds, etc. So because it takes time, then the second takeaway is it's A good day to start is today. So get started today. And it starts as we talked about in previous podcasts. It starts with clarifying in your mind what are your investing objectives. That's what this whole 365 podcast. It helps you to think through that and find out investments, particularly the investments that we offer at the Freedom Companies and Freedom Capital Investments that's the best fit for your retirement and your self directed type of objectives that you have in this. So start today by object, you know, just clarifying what your objectives are. Then have a conversation with your tax professional to make sure that whatever input that he or she has for you that you're moving in the right direction to be able to fit your specific situation. The third then is to be able to get that list of IRA custodians which you get by Google search and start to call them up and ask the questions we talked about previously in the previous podcast. So do a little bit each day. So takes time. Start today. The third thing is as these Just a few simple steps to open up your self directed IRA market. The next step on your calendar and use your smartphone. The smartphone alarms are one of the greatest parts of your phone. So when it comes to okay, well I'm going to send this in and your IRA custodian says, okay, it's going to be, you know, a couple days before we process this. Then the next step is, you know, to be able to make your investment. It's going to take step like say six days for your check to clear. Put that into your smartphone, have the alarm so it goes off six days from now and you know, and you're able to take the next step on this. Now let's talk about three basic scenarios for opening your account. The first basic scenario is that you're starting from scratch. You call up your IRA custodian. You choose your custodian. You don't have any other IRA accounts, you're just adding money to that account. They will typically after you have the conversation with them, they'll send you a form by email. You fill it out, sign it, send it back to them and then they'll ask for the funds. And they usually have the instructions for the funds. So it's very simple to do that. And it's typically pretty fast from the time that you send your funds into them and it clears probably within a week or so, 10 days and you're ready to roll. So the first scenario is you start from scratch. The second scenario is that you then have to transfer funds from a Current IRA custodian. And by current, we're probably talking about one of the big names that you recognize. Schwab, TD Ameritrade, Fidelity. So you have an IRA account that you are switching over to a self directed IRA account. As we talked about in one of our first podcasts in this series, the typical IRA account that you have with Schwab or Fidelity or TD Ameritrade or some of the others, you can trade only within their platform. So when you open up a self directed ira, it opens up a whole new world of investment possibilities that you can trade with when you transfer from them. The process typically is you talk to your IRA self directed IRA custodian. You fill out the form, sign it and send it back to them. And then they will send the request for your funds when you fill out the form with them to your current IRA custodian. So it goes from your self directed IRA custodian to your current IRA custodian. Then your current IRA custodian will send over the funds, oftentimes unless you specify them to wire the funds, which is a $30 fee. Typically it'll take about a week or so for them to mail them a check. So the choices for you is do you want to just pay the wiring fee, have the funds sent over that day, or do you want them to? The cheaper option is go ahead and mail a check and then Schwab, Meritrade, whoever they mail a check to your self directed IRA custodian. So that's the second scenario. The third and final scenario is if you're with another self directed Iraq. So you've already got your self directed IRA account set up for whatever reasons, because of the fee structure, because you don't like their service or whatever, you decide to change IRA providers. What I simply say about this is if you already have your self directed IRA set up, you need to have a pretty good reason to be able to want to change. Because it's going to take a few steps. You have to find a new self directed IRA custodian to transfer to. You have to fill out the paperwork, you have to wait for them to transfer over. Now if that's the case, one of the questions you want to ask your new self directed IRA custodian is this. Do you accept can I transfer the assets that I currently have set up? Whether it might be, for instance, an investment in our debt fund, it might be if you're doing tax lien, or might be if you actually own a house within your self directed IRA or your own gold can I transfer those assets to you, the new self directed IRA custodian. Some of them will say yes, some will say no, we don't accept that. So if they don't accept that, what that means is you have to then liquidate your assets, sell them, go all to cash and move the cash over. Wow, that's a big. Yeah, that's a big choice if you're having to do that. So most of the time when you have investments within your self directed Iraq, you want to keep them there because they're working for you. So that's the big consideration for that. Also another consideration is this, and we'll end with this, is the termination fee. What's the termination fee of the self directed ira? For instance, they might raise their fees and you go, okay, I'm not going to pay these fees and I want to find a new provider. Well, they might charge you 250 or $300 to close their account. So you have to take that into consideration. Now if they charge you termination fee, one of the questions, and you're determined to change self directed IRA providers, then one question you can ask your new potential self directed IRA custodian is will you pay for the termination fee for my last provider? Now if you ask them that right up front, they may say yes.

Love that.

Awesome.

That saves you two or three hundred dollars. And that two or three hundred dollars can buy a lot of swag.

Yes, it can.

That's what I'm talking about. Maybe even a shirt, footwears, you know, I mean that's, that's big bucks there. So there you go. So those are important steps on in the basic scenarios when you open your own SD or self directed IRA account.

Well, I love it. Again, huge gold nuggets. I can't even say how much I love this series. Enough. In fact, in my head I'm just going, hey, we should create like a checklist of all these questions he's asking. Wow. So I'm just gonna let you take over now because now that's what I want to do.

All I can think of is Randy would always say, is that the best you can do? And then he wouldn't say another word. So, like, I have a feeling that's going to be said once or twice with these people. That's going to be $300. Is that the best you can do? Anyway, we hope that you're enjoying all these episodes again. Make sure you head over to our website, freedomcapitalinvestments.com to join the investor club. We're also also got the swag on there as well that Ben keeps talking about. So make sure you check out the swag. But also we're on all the social medias, the Facebooks and LinkedIns and all those. But we like to end every episode.

With Invest Smart, Live Happy.

Bye everybody. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on this show are not guaranteed. All investment strategies have the potential for profit or loss.

Sam.