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Self-Directed Retirement Plan

   Also found in: Acronyms 0.02 sec.
Self-Directed Retirement Plan
A retirement plan in which the account holder has a great deal of control over the investments made on the account. That is, either the account holder or a designated representative has the ability to make investments with the contributions made to the account. Generally speaking, a self-directed retirement plan exists through a brokerage, which makes investments on behalf of the account holder. The brokerage may charge an annual fee for managing a self-directed retirement plan in addition to the commissions it charges on the individual trades.

Self-directed retirement plan. If you participate in an employer's retirement savings plan, such as a 401(k) or a 403(b), you usually must select the investments into which your contribution goes from a menu of choices your plan offers.

When that's the case, your plan is self-directed, and the income you receive when you retire is determined in part by the investment choices you make.

Individual retirement accounts are also self-directed, as you choose the way that the assets in the account are invested. Individual retirement annuities may or may not be self-directed, depending on the contract you chose.

In contrast, if you're part of a defined benefit pension plan, your employer is responsible for making the investment decisions. If you own a fixed annuity, the insurance company makes the investment decisions.



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However, a prospective franchisee can avoid these costs through a self-directed retirement plan that allows them to roll money into their own corporation's retirement fund, thus investing the money in the franchise.
If your company, has a self-directed retirement plan, such as a 401 (k) or SIMPLE, you're offering your employees significant control over their future.
We're seeing clients turn to CPAs for help designing and implementing their financial and investment plans," he added, noting that the rapidly growing number of self-directed retirement plans, coupled with the transfer of wealth to baby boomers from their parents, have transformed financial planning from a privilege into a necessity.
 
 
 
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