What does the term 'self directed' mean concerning retirement accounts?
What will be an ideal response?
Answer: The term self directed means that the individual account holder will make the investment decisions for their retirement monies. For employer sponsored plans, the employer will select a Financial Institution like a Mutual Fund company to be the plan Administrator. Typically there will be a selection of various mutual fund categories available to meet the requirements of a diverse group of employees. It is the employee who chooses which fund or funds they feel are best suited to their individual needs, hence they are 'self directing' their retirement account.
With an individual retirement account, the individual makes all of the choices themselves. They choose a Financial Institution to act as the Plan Administrator and the individual chooses whatever investments they want for their account.
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