Self-directed IRAs - let's talk about them!

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#1

Hi friends! KFan back, finally. Now that I’m switching jobs, I’ve got a 401(k) to roll over somewhere.

Now I KNOW Jeremy’s rules (live below your means, buy and hold index funds early and often). :smiley: But I’m interested in the overlap between self-directed IRAs and my other financial hobby of dabbling in real estate. Assuming I did want to break PFC rules, what should I know about self-directed IRAs?

  1. Can I split my $70k 401(k) roll-over, say, $50k back into index funds and $20k into a self-directed IRA? Or does the total amount have to stay together?
  2. What should I look for in a self-directed IRA account? Are there management fees involved, and if so, how do I find the lowest one? Are they all bullshit?
  3. What questions should I have that I don’t yet know about?
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#2

The answer to #1 is ask your plan administrator, what practice do they allow. I would assume yes, you can split the rollover amounts to different places, but you need to verify this with your plan administrator. Also, rollover means money goes from one account to another. “Index funds” is not an account; it is a type of investment. Accounts are: Brokerage, IRA, Roth IRA, Self-directed IRA (to name a few relevant ones). Your self-directed IRA should give you option to invest in Index funds too.

Self-directed IRA provide more investment options than a regular IRa. But those added options involve a lot more risks. Just be careful on what you may gamble on outside of the common investments (i.e., Index/mutual funds, stocks, bonds).

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#3

KFan is back! Congrats on the new job!

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#4

I’ll cover this in tonight’s office hours (5/19/2021) with the recording available afterwards on the course site!

If you’re not signed up for office hours, you can sign up here.

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