Saving Your IRA from the Dreaded Cliff

Last month, I published an article about opening a SDIRA to beat the fiscal cliff. It's here, if you'd like to read it.

http://voices.yahoo.com/the-sdira-too-late-beat-fiscal-cliff-11875273.html?cat=3

Now it's mid-December, and I am hearing from people wondering if it's too late to open a SDIRA in 2012 and move everything into it before the world ends on January 1, 2013.  I believe that your chances of completing all the activities to form a SDIRA with checkbook control and then transferring your financial-product IRA's assets into the new one are slim. A SDIRA must be properly formed, and then a custodian-to-custodian transfer must take place so the funds are not taxed. This takes time, and the custodial transfer can take weeks.

Given this, what is one to do? Here are a few suggestions:

1) Go ahead and start the process of setting up a SDIRA. You'll need it eventually, even after the cliff does whatever it's going to do.

2) Understand that there is nothing wrong with cashing out of your long-term positions now (and taking the tax hit on non-IRA assets in 2012 while you know what the tax rates are).

3) Understand that there is nothing wrong with having a pile of cash sitting around earning nothing for a few weeks while the market gyrates around as you wait for your SDIRA to be set up.

4) Accept the fact that you don't know what the market's going to do. Nobody does. Accept the fact that Congress doesn't know what it's going to do about the cliff.

5) If you decide to stay in the market and ride out the cliff, be sure you have an exit strategy in case things go wrong. Remember, most brokers are great at riding a rising tide, but few know how to react in a falling market.

Take this free advice for what it's worth - free advice. I'm not a professional broker or financial planner. I'm just someone who got caught in the last market free fall, and finally understood that nobody cared more about my money than me.