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An Individually Directed Account (IDA) may be established as part of a diversified investment strategy within an employer-sponsored retirement benefit plan. The retirement plan allows employees to defer portions of their salaries to a tax-deferred account as a way to save for retirement. These contributions are done easily through monthly payroll deductions.
Defined benefit plans typically make all the investment decisions for the plan’s assets (trustee directed), while defined contribution plans frequently provide a small group of predetermined investment options for the participants to choose the allocation (participant directed). Sometimes, these plans allow the participants to exercise independent control over the investment decisions (Individually Directed Account).
IDAs allow plan participants to utilize alternative investment options not offered in many plans.