Have any questions?

Self Directed IRA

By sandeep

January 8, 2024

Self Directed IRA

Self Directed IRA

A Self Directed IRA is an IRA that allows you to buy or invest in things other than Mutual Funds, Stocks and Bonds. Self Directed also means that the custodian is merely a holding bank account for your retirement funds and you have to “Direct” them to buy or invest in the Asset you want to hold in your retirement account. The “Direction” for the custodian, i.e., you tells the custodian what to do, what to expect. If you have specific knowledge about some area that makes money then you can profit from that in your IRA. There is very little that you cannot invest in with IRA funds.

A self-directed IRA is technically no different than any other IRA. A self directed IRA is unique because of the available investment options. Most IRA custodians only allow approved stocks, bonds, mutual funds and CDs. A truly self directed IRA custodian, allows those types of investments in addition to real estate, notes, private placements, tax lien certificates and much more.

What are the benefits of a self-directed IRA over a Traditional IRA and a Roth IRA?

There are only two types of IRA’s, Traditional and Roth IRA. Either can be Self Directed.


In addition to the tremendous IRA benefits (tax-free profits, tax deductions, asset protection and estate planning), you will be able to invest tax-free in investments that you know and understand, which through the power of compounding interest, will create true wealth for you and your family. The reason you want to Self Direct your IRA is so that you can use your specific knowledge to help your retirement account grow instead of relying on others opinions and management skills.


A Traditional IRA is best for people who need an immediate tax break or expect their income-tax rate to be lower at retirement.


A Self-Directed IRA: A Self-Directed IRA on the other hand, allows you much more freedom in selection of investment vehicles.

Self Directed IRA

Why haven’t I heard of a self-directed IRA before?

While the concept of investing in real estate and other assets in retirement plans has been around for more than 30 years, the concept hasn’t received large attention because most custodians who offer IRAs (banks and brokerage firms) focus on mutual funds and CDs because they have vested financial interests in you selecting those investments from them. Because the majority custodians focus on stocks and CDs there is a misperception that is your only investment option for retirement plans, which is not the case.

Allowable investments include the following:

  • Residential real estate—including apartments, single family homes, and duplexes
  • Commercial real estate
  • Undeveloped or raw land
  • Real estate notes (mortgages and deeds of trusts)
  • Promissory notes
  • Private limited partnerships,limited liability companies, and C corporations
  • Tax lien certificates
  • Foreign currencies
  • Oil and gas investments
  • Publicly traded stocks, bonds, mutual funds
  • Private stock offerings, private placements
  • Judgments/structured settlements
  • Gold bullion
  • Car paper
  • Factoring investments
  • Accounts receivable
  • Equipment leasing
Stock sales tax
Stock investment tax
Tax planning
Self-employed IRA

What CAN’T I invest in with an SD IRA?

  • Artworks
  • Rugs
  • Antiques
  • Metals
  • Gems
  • Stamps
  • Coins
  • Alcoholic beverages
  • Certain other tangible personal property

Self Directed IRA

How much can I invest in one?

If you already have a Roth or Traditional IRA established at another custodian you can roll it over to a Self Directed custodian. Right now the IRA says you can contribute $5,000 per year. This figure can change as dictated by the IRA and congress.

Can I be assured that self directed IRAs are allowed under IRA rules?

As long as you follow relevant rules the answer is yes. There are specific rules regarding IRAs, and in particular, self directed IRAs that you should be familiar with to ensure compliance. There are certain types of transactions that you cannot perform through an IRA. Most importantly, the IRS prohibits “self dealing,” which are investments in which you or your family members of lineal descent have prior ownership.

Are self directed IRAs for everyone?

Self directed IRAs are not for everyone, they are for those who want to create wealth using their knowledge of investments outside of stocks, bonds, and CDs.

Are self directed IRA investments guaranteed?

Self-directed investing is not for everyone. However, most successful investors feel that the investment risk in assets they know and understanding is much less than that associated with investing solely in conventional IRAs.