DRIP Investing, Step by Step

DRIPs in Self-Administered IRA Accounts

If you'd like to utilize DRIPs in an IRA accpount, one option is to establish a "self-administered IRA account."

Because an IRA requires a trustee (such as a bank, mutual fund company or brokerage firm) you must find a custodian for your account that will permit reinvestment of dividends on securities that you hold directly. If your broker won't do it (and they won't--there is no commission in it for them!), you might consider one of the following pension adminstration companies.

These differ from the typical retirement accounts offered by your bank or brokerage firm in that these self-directed plans allow you to hold non-traditional assets such as limited partnerships, limited liability companies, direct participation programs, real property, and deeds of trust for mortgages.

These firms typically charge an initial set-up fee and an annual administrative charge, usually 1/2 or 1% of your account, or on a flat-rate fee basis.

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