Like ice cream, retirement plans and pension plans come in many different flavors. The most common are IRAs and 401(k)s.
Self Directed: Stock Market Only
Of the more than $5 trillion in these plans, 95% is invested into the stock, bond and mutual fund markets through large institutional brokerages like Fidelity, Vanguard, etc. Also, banks like Wells Fargo, Chase, etc. offer the same services.
Some of the accounts are characterized as “self directed”. Typically, this would be where someone has left a job and converted a 401(k) plan to an IRA.
“Self-direction” in this context means you can determine and take action to move funds around within stocks, bonds and mutual funds only. The custodian carries out the transaction and you pay fees.
Self Directed: Non-Traditional Custodian
Then, there’s a subset of “self directed” IRAs whereby you can invest into non-traditional assets like real estate, private company stock, gold and silver, etc. This can only be accomplished (with an IRA) by setting up an account with a custodian that allows such activity.
In the case of these “non-traditional” custodians, the term “self directed” applies in the same sense it does with the stock market custodians: You choose the investment and the custodian carries out the transaction.
But, in most cases (unlike stocks, etc. where everything is done online), you have to fill out hardcopy paperwork with original signatures and submit it to the custodian. They handle the transactions for you and charge fees to do so.
Self Directed: Checkbook Control
Then, comes the best choice of all – checkbook control. Safeguard Advisors sets up a legal structure (LLC) or trust (Solo 401k) that allows you to transfer control from non-traditional custodians to yourself. (It’s your money so why shouldn’t you control it?)
We assist with the set up of a checking account at your local bank to hold funds, and you execute transactions simply by writing a check. You entirely control the process and all but eliminate custodial fees (annual fees still apply).
You can see an illustration of this by going to this link: Custodian vs Checkbook Control.
This Isn’t A New Concept
What Safeguard offers as a service has been done for high net worth clients ever since the Employee Retirement Income Security Act of 1974 (ERISA) was passed by Congress.
As a matter of fact, our tax attorney, has been setting up plans with checkbook control for more almost 20 years. So, this strategy isn’t new. It’s just not been well known.
But, in the last 10 years since the advent of high speed internet, the playing field has been leveled and this strategy, formally reserved for the wealthy, is now yours for the taking. Contact us today to get started.