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Home > Blog > How Do I Set Up a Self Directed IRA?

How Do I Set Up a Self Directed IRA?

At some point after seeing consistently disappointing returns in a standard Wall Street IRA, an investor might decide that he/she wants to go to the alternative route. There are real estate deals to be made, and private business that can explode into the stratosphere. Anything is better than slowly bleeding to death with an under-performing mutual fund.

But, even with that decision made, an investor might still be hesitant moving forward. Most of that hesitancy comes from a lack of knowledge. The main question – How do I set up a Self Directed IRA? – is still unanswered.

The answer to this question has two parts:

  • One from the perspective of the individual opening the Self Directed IRA, and
  • One from the perspective of the Self Directed IRA provider.

The Self Directed IRA Investor

From your perspective as an investor, the process is incredibly simple. There are essentially three basic steps:

  1. Do your research.
  2. Fill out a few forms for your custodian.
  3. Open a checking account.

Step 1: Do Your Research

Research and knowledge-building should always be your first step in any financial endeavor. This is especially true when your retirement funds are at stake. When you start researching providers for Self Directed IRAs, keep the following two factors in mind:

  • Account Type: Self Directed IRAs come in two basic versions: the Custodian model and the Checkbook model. Each one has its own unique advantages depending upon your investing strategy. (As the Checkbook model is the more economic and versatile model, we’ll focus on that one here.)
  • Provider: When researching companies, look for experience, professionalism, and preferably some kind of reliability rating like the BBB. Also take special notice of the services provided. A quality provider should be able to give you turnkey service for your Self Directed IRA. That means that you should be doing little more than filling out a few forms and opening a checking account at the bank of your choice. You have to feel comfortable that any problems that arise will be taken care of quickly and efficiently by your chosen provider.

Step 2: A Few Simple Forms

The self-directed retirement specialist you choose to work with will provide you with a few forms for you to fill out and return to the appropriate recipients. This will allow your custodian to set up the necessary accounts.

Step 3: Open a Checking Account

Once you get a capitalization check from your custodian, you take it to the bank of your choosing and open a checking account. You can start investing immediately by simply writing a check.

The Self Directed IRA Provider

Of course, there’s much more going on behind the scenes. With an experienced Self Directed IRA provider like Broad Financial setting up your accounts, you don’t have to worry about the detailed paperwork and legalities, but many investors are curious. Here’s what the process looks like for us:

Step 1: Self Directed IRA Setup

With your paperwork in hand, we set up a new Ultimate Self Directed IRA, as the registered custodian. We can start with either an initial contribution from the investor, or by rolling over funds from your existing retirement account(s).

Step 2: LLC Setup

We then facilitate a Limited Liability Corporation (LLC) for the Self Directed IRA. This LLC will act as the investment platform for the IRA. This is where professionalism and experience are crucial: We can make sure the LLC is organized in accordance with laws and regulations that govern Self Directed IRA investment platforms.

Step 3: Capitalization

The Self Directed IRA is then invested in the new LLC. Capitalization is similar to the process of purchasing stock: the Self Directed IRA essentially buys all the shares of the new LLC, and becomes its sole owner. The check from that sale is then sent to you, the investor, to use in opening a checking account at the bank of your choice.

The Self Directed IRA Process

So you see, the process of setting up a Self Directed IRA is actually very simple, especially for the investor working with a highly-rated, experienced self-directed retirement platform provider.

Our specialists make the process as smooth and worry-free as possible. Broad Financial enjoys an A rating from the Better Business Bureau for its industry leading customer support. When you make that first phone call, your dedicated specialist will hold your hand every step of the way. The process will be easy, effortless, and put you in the mindset you need to start maximizing your retirement investing.

Interested To Learn More?

Schedule a call, and one of our Broad Specialists will answer any questions you may have.


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