When it comes to retirement savings, we all do wish for the same amount of investment freedom that we usually get with our other investments. Traditionally, most of the financial institutions offer limited investment options, starting with stocks and bonds to mutual funds and CDs only. The last recession taught us one thing for sure i.e. not to invest your entire savings in the stock market. So, how do you achieve better control over your retirement savings? Checkbook IRA is the answer to these questions.

What is Checkbook IRA?

In simple terms, checkbook IRA is a self-directed IRA that offers unlimited investment freedom to the account owner. The owner doesn’t need custodian consent for making investment decisions, hence eliminating transaction delays and associated costs in the process.

Understanding the benefits of Checkbook IRA

  • Checkbook control: Checkbook IRA is structured in a manner that puts you in charge of your retirement funds. You do not require custodial consent before making an investment. When investing your retirement funds, you can do so by either writing a check or direct wire transfers.
  • Unlimited investment opportunities: Saving money in a self-directed IRA with checkbook control allows you to invest in any qualified investment class, starting with real estate, tax liens, tax deeds, mortgage notes, private lending, precious metals, and even private equity. You can achieve true diversification by investing funds in different asset classes.
  • Tax-deferred growth: Being a qualified IRS plan, your Checkbook IRA will reap the benefits of tax-deferred growth. For an instance, if you hold rental properties in your account, the rental income will go directly into the retirement account and grow on a tax-deferred basis until retirement. Your investments will benefit from compounding over the next several years. You will pay taxes only at the time of distributions.
  • Cost effective: The absence of a custodian can save money otherwise spent on transaction/processing charges while ensuring minimal transaction delays.

Written by: Dmitriy Fomichenko