As an account holder of a Roth IRA retirement plan, you should be the one who is in control of it. To do so, you will need to use a checkbook IRA. If you do not, then the company will be the one in charge of your money, leaving you unaware of what is happening to it – whether it is just sitting down or it is earning the big bucks. Having a checkbook IRA will determine where your investments are earning. A checkbook IRA is a separate entity from your roth IRA. It is your own, and you will be the one in charge of its management. This account will allow you to take control on the types of investments that your funds are paying for. When you covert your traditional IRA to a self-directed Roth IRA, then the company will hand over to you their duties as the manager of your account. You are then the one who is going to choose on what investments you would like to have, and the investment strategies will be yours to employ. Since you are now handling your own money, you have to be very careful and cautious of the investments that you are entering. Being reckless may lead to losing some of your retirement plan funds, if not all of them.
To have a successful investment, you have to invest in something that you know, one that you are expert on. This is vital, for when you invest in certain areas that you know nothing about, then you may just be fooled by the people who are also involved. Let’s say you know something about homes, and you have some experience of selling them. It is wise then to invest in a real estate property. After all, you are not ignorant on that certain field and you have enough knowledge about it. In fact, you will be most successful in an area where you are an expert on it.
Documentation is a very significant part of managing your checkbook IRA. All your transactions should be recorded in an organized way so that when you will do your auditing, you will know if you are gaining or not. You should prepare income and loss statements, together with balance sheets for your Checkbook IRA. Also, the records should show that you have benefited from the Checkbook IRA, but not as an individual or a disqualified person from the IRS.
Keep track of your funds when managing your checkbook IRA. There are softwares that are available for you to use such as Quickbook, Peachtree, Quicken or MS Money. Record all your activities with these softwares, and develop also a system that you will use to track all the papers that are produced from you’re your Checkbook IRA’s investments and other transactions. These are either statements, invoices, receipts and other paperwork that are necessary to keep your investment going. You have to keep this organized for you will be presenting this to the IRS for the filing of tax returns.
Managing a checkbook IRA can be taxing, but that would be better than letting other people take hold of your account. Instead of wondering where your money is used, you are the one who is taking care of it.