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Retirement Account and Self-Directed IRA Cases

  1. What Is a Retirement Account?
  2. What Types of Retirement Accounts Can I Choose From?
  3. What Is a Traditional IRA?
  4. What Is a 401(K)?
  5. Can My IRA Account Operate on Margin?
  6. What Is a Self-Directed IRA?

What Is a Retirement Account?

Retirement accounts help investors plan and save for retirement. Some of these accounts allow investors to save on a tax-deferred basis.

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What Types of Retirement Accounts Can I Choose From?

There are many options when it comes to retirement accounts. There are several types including 401(k) Retirement Accounts, Traditional Individual Retirement Accounts (IRAs), Roth IRAs, SEP IRAs, and Simple IRAs. These various accounts have the same goal of helping you save for retirement, however, there are different factors involved that you should be cognizant of, including tax implications, age requirements, employer contributions, withdrawal penalties, and amounts you can invest per year.

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What Is a Traditional IRA?

The Traditional IRA is popular because it is a tax-deferred retirement account. Meaning, the IRS allows you to invest pre-tax monies into the account which are then used to purchase securities. The assets are not taxed until you take distributions down the road, thus allowing the account to grow over time before realizing capital gains/losses.

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What Is a 401(K)?

401(k)s are known as defined contribution retirement savings plans offered by employers. 401(k)s have become more common over time, as pensions have become less common. Because the 401(k) retirement plan is offered through your employer, you should carefully review the agreements/paperwork to identify whether your employer “matches” your contributions and at what percentage.

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Can My IRA Account Operate on Margin?

No, under the relevant law, you cannot use your retirement assets as collateral.

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What Is a Self-Directed IRA?

Self-Directed IRAs are directed by the account holder, not a broker. Meaning, an advisor is generally unable to make investment recommendations for this type of account. Thus, the account holder has free range and can purchase alternative investments, which would otherwise be prohibited from another type of IRA account. A couple of benefits from this type of IRA account are that you, the investor, have control over your retirement funds, and you can diversify the account across various types of assets (including private equity for example). However, adding alternative investments to your retirement account increases risks including liquidity concerns.

If a broker or advisor tells you to take a distribution or roll over to a Self-Directed IRA, BEWARE… It may be that they want to sell you something inappropriate outside the firm and outside of a supervisor’s review. Many Ponzi schemes start in Self-Directed IRAs because the investments are not vetted or sponsored.

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Testimonials From Former Clients
I highly recommend Jenice and her team at Malecki Law. I had a challenging, and lengthly case. Jenice was professional, very knowledgeable, and a pleasure to work with. She managed to make the process far less stressful during a very difficult time. They care about their clients, and it definitely shows. Mario
Jenice is truly a miracle worker and one of the top securities lawyers. She handled a very difficult case for us, displaying her legal knowledge, intelligence, and savviness throughout the process. I cannot recommend her enough. The quality of work from her team rivals that of corporate law firms. She was always available, extremely professional, and made sure to know all the details of the case. We were very fortunate to have been referred to Jenice and highly recommend her for any securities related legal issues. Nathan A.
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