To turn an Individual Retirement Account (IRA) into a self-directed IRA, you will need to open a new self-directed IRA account with a financial institution that offers this type of account.

Here are the steps you can follow to set up a self-directed IRA:

1. Choose a financial institution that offers self-directed IRAs. This could be a bank, credit union, brokerage firm, or specialized self-directed IRA custodian.
2. Decide on the type of self-directed IRA you want to open. There are several types of self-directed IRAs, including traditional IRAs, Roth IRAs, and SEP IRAs. Each type has different rules and requirements, so it’s important to choose the one that best fits your financial situation and goals.
3. Gather the necessary documentation. You will need to provide proof of identification, such as a driver’s license or passport, and proof of income, such as a tax return or pay stub. You may also need to provide proof of employment if you are opening a SEP IRA.
4. Open the account. Once you have gathered the necessary documentation, you can complete the account opening process by filling out an application and submitting it to the financial institution. You may be required to make an initial contribution to your self-directed IRA at this time.
5. Fund your self-directed IRA. After your self-directed IRA is set up, you can begin funding it by making contributions or rolling over assets from other retirement accounts. You can make contributions to your self-directed IRA up to certain annual limits, depending on your age and income.

Here are 3 of the companies we recommend using as a 3rd party custodians.

All of these groups provide self-directed IRA and 401(k) plans, allowing individuals to invest in alternative assets such as real estate, cryptocurrency, and private placements. They offer a range of services, including traditional and Roth IRA accounts, solo 401(k) plans, and health savings accounts (HSAs). They work with clients to help them understand the rules and regulations surrounding self-directed retirement accounts and provide support and resources to assist with the administration of these accounts.

The Entrust Group

Equity Trust Group

Specialized Trust Company

Now, there are pros and cons of switching to a self-directed IRA

Pros:

1. Self-directed accounts allow individuals to have greater control over their investments rather than relying on a financial advisor or broker to make decisions on their behalf.
2. These accounts can potentially offer higher returns by allowing investments in alternative assets such as real estate, cryptocurrency, and private placements.
3. Self-directed accounts may offer more flexibility in terms of investment options and strategies.
4. These accounts may offer tax benefits, depending on the specific type of account and the individual’s tax situation.
5. Self-directed accounts can be a good option for individuals with a high level of financial knowledge and understanding.

Cons:

1. Self-directed accounts require a higher level of financial knowledge and understanding, which may be intimidating for some individuals.
2. These accounts may carry a higher level of risk compared to traditional investments, as alternative assets can be more volatile.
3. Self-directed accounts may come with additional fees and administrative responsibilities, which may be burdensome for some individuals.
4. These accounts may not offer the same level of protection or oversight as traditional retirement accounts.
5. Self-directed accounts may not be suitable for all individuals, depending on their financial goals and risk tolerance. It is important for individuals to carefully consider whether these accounts are a good fit for their individual circumstances.
   

It’s important to note that self-directed IRAs have more flexibility than traditional IRAs, as they allow you to invest in a wider range of assets beyond stocks, bonds, and mutual funds. However, they also come with additional responsibilities and risks, as you will be responsible for making your own investment decisions and ensuring that your investments comply with the rules and regulations governing self-directed IRAs. It is recommended that you consult with a financial professional or tax advisor before making any investment decisions with your self-directed IRA.