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Your Self-Directed IRA: Funding Your Self-Directed Retirement Account

We receive a lot of questions about how to fund a self-directed IRA and how you get enough money in an IRA to be able to self-direct it and actually be able to invest in something worthwhile.

And so, there are a few ways you can do that. I think maybe the most obvious way would be to start investing in an IRA when you’re young. Right now, if you’re under 50 years old, I think you can invest $5,000 a year or $5,500 a year. I’m not sure. Google that. You could find that out. It changes every year. And if you’re over 50, you can invest $6,500. So, if you’re a young person in your 20s or early 30s, you’ve got quite a bit of time to be able to build up a sizable amount of money that you can do something with.

The other thing that happens quite often is people work at a business that provides a 401k or offers a 401k. So, they contribute to that 401k. Maybe the employer matches the funds in some way and so, they end up, when they leave that place of employment, they might have a sizeable account. With that kind of an account, you can do what’s called a Direct Rollover and that’s what we see a majority of people doing and that’s usually an account that has a sizable amount of money.

I’ve always said over the years that you probably, I guess I would say be careful if you’re looking to do a self-directed IRA. If you have less than maybe twenty or thirty thousand dollars in your IRA, the reason for that is with twenty or thirty thousand dollars, although that’s a sizable amount of money, you couldn’t go out and easily buy some kind of non-traditional asset. That’s one thing.

The other thing is just to look at it. The self-directed IRA custodians in the marketplace don’t sell anything, so Sunwest Trust does not sell anything. All we do is we charge a fee for the service that we provide as custodian. So, when you’re looking at making an investment within your IRA, always take into consideration the cost of having a self-directed IRA. So, go to the website, go to websites, look at various custodians, figure out what their fees are and determine based on that fee what kind of return you need to make on your investment, 1) just to break even, because if you have a small a small amount of money and the fee might be, in our case $275 a year, if you only have to say $20,000, a 10% return would give you $2,000 and then you take you $275 off of that, and you’re down to $2,725 which gives you below a 10% return. If you only have $1,000 in your account and you’re able to earn a 10% return, that would be $1,000 less the $275, which would leave you $725. That would just be a 7.25% return. I’m using those numbers because they’re easy for me to do in my head. But keep in mind the fact that the self-directed IRA custodian is going to charge you something for the service that they provide and make sure that the investment that you’re looking at doing will hopefully provide you a return great enough to pay the fee to the custodian and also give you a decent return.

So, that’s just something for you to think about. I appreciate you taking the time to watch this video and I hope this information is valuable to you. If you’d like more information about self-directed IRAs visit to our YouTube channel, Sunwest IRA. We will very soon have a podcast which is also Sunwest IRA where you get your podcasts. You can also go to our website which is and through the website, you can find the videos that we have that have different topics, educational topics for you to explore to determine how to invest your self-directed IRA or if you should even have a self-directed IRA.

So, there’s a great amount of education there for you to go look at and I would encourage you to take the time to go do that. Thanks again. See you again next week.

Terry White

About Terry White

I started my business career after getting my degree in Accounting from the University of New Mexico in 1983. My first job was as a controller for a local title company, and in 1987 I started First Financial Escrow, Inc. Over the years I played a part in several startup companies including First Financial Equities, Inc., First Financial Trust, Inc., First Financial Marketing, Inc. and Asset Ventures, Inc. In 1997 First Financial Escrow, Inc. was able to purchase the escrow accounts from Sunwest Bank and changed its name to Sunwest Escrow. As the market changes, Sunwest has grown and changed along with it. Besides my wife, Sheila, we have three boys, two daughters-in-law, one grandson, another grandson on the way and a future daughter-in-law. Sunwest is my passion, and I enjoy coming to work every day to see what will happen next. I enjoy fly fishing, spending time in Colorado, biking and watching my boys play soccer.