Changing Jobs? Now Might Be The Time For A Self-Directed IRA

Estimated reading time: 3 minutes(Last Updated On: August 12, 2019)

A recent study by the Bureau of Labor Statistics found that the average younger baby boomer (individuals born between 1957 and 1964) held more than 11 jobs when they were between the ages of 18 to 46. With the job market in much greater flux today, and more people working well into their 60’s (and beyond), it’s probably safe to assume that the number of jobs the average worker holds throughout their career is more likely to increase rather than decrease in the coming years.

Changing jobs can often be an exciting occurrence, but it’s also likely to involve some challenges as well. One of the administrative hassles of changing jobs is managing the employer-sponsored benefit plans that you may have been participating in when you were at those prior jobs. Most often these take the form of 401(k) plans, but they can include other types as well. Managing all of these different accounts can take a significant amount of your time, and it can be difficult to do so in the most efficient and financially productive manner.

That means that for most, they can greatly improve their retirement future by consolidating these various accounts into a single self-directed IRA.

Why choose to conduct your rollovers into a self-directed IRA, over a traditional IRA or even your new employer’s 401(k)? The biggest reason is investment choice.

The self-directed IRA is not a separate legal entity from the IRAs that you see advertised by banks and discount brokers. The difference is that a self-directed IRA custodian such as Quest Trust Company will allow you to invest in all the asset types that are authorized by law, while traditional custodians (such as banks and discount brokers) limit you to investment options that they can facilitate more easily – such as stocks and mutual funds. Even worse are 401(k) plan administrators who often limit a plan participant’s investment choices to a handful of sponsored mutual funds or other collective investment vehicles.

Having a self-directed IRA, and having other asset types, which include private equity and debt instruments, real estate, and even precious metals, provides you with much greater investment opportunities.
In addition, once you have a self-directed IRA setup, you’ll be able to roll over your various other retirement accounts into it as you change jobs over time.

If you choose a self-directed IRA that is set up as a Roth account, then you have a number of additional long-term financial advantages that you wouldn’t otherwise have with a lawyer- sponsored plan. Roth IRAs are not subject to the IRS rules on required minimum distributions, so you can let your investments continue to grow on a tax-free basis even past age 70½. Furthermore, Roth accounts provide significantly more flexibility when it comes to estate planning.

With all the other changes that you’re likely to be facing with a new job, take the extra step and set up a self-directed IRA. You may be surprised at how it can help with your retirement planning.

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