Self-Directed IRA & 401K Accounts -- This is Self-Directed??

Many of us remember our first "dive" into the municipal swimming pool or lake. Once we overcame the trepidation of diving head first into the expansive body of water, did we dive in completely or just halfway?

The same is true with self-directing your retirement assets. While your plan must be established and continually adhere with all IRS and Department of Labor regulations, the code in no way prevents a fiduciary (e.g., you, yes it can be you) from controlling all aspects of the plan. This is true provided the fiduciary is not "self-dealing", which is expressly prohibited. A fiduciary can only act in the best interests of the retirement plan, and may not personally benefit.

So, if that is the case, why do most individuals believe that other individuals or entities must "do" everything for you after the self-directed plan is established? Well, the answer is lack of education on the part of the self-directed participant.

Once a self-directed plan is legally structured, an individual can have full control of their retirement assets and be the fiduciary of this plan. Practically speaking, what this means is:

1) Ease of Investing with no Time Restrictions -- What if the self-directed participant wanted to make a timely investment only to find out that the custodian/administrator was going to need 10 days to process the request? One might argue that if that self-directed participant had control of their own money, the time restriction, in that example, is cut approximately 10 days!

2) Execution of Transactions -- Whether it is paying maintenance fees, repair fees, taxes, mortgates, etc., ficudiaries CAN execute the same transactions, and at no cost to the plan (remember this is the participant's OWN retirement assets). SIMPLE ENGLISH -- does a self-directed participant want to pay fees every time they want a transaction executed for something they can do themselves? This, by the way, can cost a participant hundreds of dollars a year in transaction fees.

3) Savings With Account Maintenance Fees -- Other than what a participant's bank may charge as a monthly checking account service fee (e.g., $0 - $15), is there any reason to pay a custodian/administrator fees for account maintenance?

4) Having NO Account Balance Fees -- Many custodians/administrators charge the participant MORE in account balance fees as the participant grows their retirement assets. Does this make any sense to anyone? Kind of like your broker.....the more tha balance grows in your account, the more they make!

5) "It's Your Money" -- Tying into Items 1-4 (above), bottomline is that most individuals (wait, maybe 100% of the people), if they can, would rather have their hard-earned retirement assets in an account that they actually can control and be personally responsible for. Why pay someone else to deposit your retirement assets when you can control them yourself?

Self-directed participants are concerned with the following:

1) Establishing a self-directed plan that meets all IRS/Department of Labor regulations;

2) Security of their assets:

3) Growth of their assets: and,

4) The ability to control their assets (if they didn't want control, why self-direct in the first place?).

As a result, once the self-directed participant receives assistance with Item #1 they, as fiduciaries of their own retirement plan, can take control of Items 2 - 4.

Get educated....remember, with self-directing your own retirement assets, what you don't know can cost you...a lot.


John Park is President of PGI SelfDirected (www.pgiselfdirected.com) and co-founding Partner of Fulcrum Investment Network (www.fulcruminvestmentnetwork.com).

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