Invest Freely with a Self-Directed IRA

SDIRA stands for Self-Directed Individual Retirement Account. It’s a retirement account that lets you invest in alternative assets like real estate, crypto, and private equity—beyond traditional stocks and bonds. SDIRAs offer tax advantages and greater control but must be held by a custodian and follow IRS rules to avoid prohibited transactions.

A Self-Directed IRA is a tax-advantaged retirement account that allows you to invest in a broad range of alternative assets—including real estate, private equity, precious metals, cryptocurrency, and tax liens—beyond the stocks and mutual funds typically available in traditional IRAs.

With an SDIRA, you have full control over your investment choices, while a specialized custodian holds the assets and ensures IRS compliance. Unlike banks or brokers, SDIRA custodians do not provide investment advice—you’re responsible for managing your own strategy. These accounts also come with strict IRS rules. You must avoid prohibited transactions, such as investing in assets that personally benefit you or dealing with disqualified persons (like family members). All income and gains must flow through the IRA to maintain its tax-advantaged status.

For 2025, you can contribute up to $7,000 plus an additional $1,000 catch-up contribution if you are age 50 or older. IRA contributions can be made in pretax, after-tax and Roth.

Yes, you can have as many as you want. However, the annual IRA contribution limit applies to every plan you have in the aggregate.

When it comes to making investments with a Self-Directed IRA, the IRS generally does not tell you what you can invest in, only what you cannot invest in. The types of investments that are not permitted to be made using retirement funds is outlined in Internal Revenue Code Section 408 and 4975. These rules are generally known as the “Prohibited Transaction” rules. Other than life insurance, collectibles, and transactions that involve or directly or indirectly benefit the IRA holder or a “disqualified person,” one can use their IRA to make the investments.

The most popular investments include:

• Real Estate
• Private placements
• Cryptocurrency
• Precious Metals
• Investment funds
• Real estate funds
• Private business investments

A disqualified person is anyone prohibited from engaging in certain transactions with your Self-Directed IRA under IRS rules. This includes you (the IRA owner), your spouse, your parents, grandparents, children, grandchildren, and their spouses, and any entity where you or a disqualified person own 50% or more. Your Self-Directed IRA cannot buy, sell, loan money to, or otherwise transact with disqualified persons, as doing so would trigger prohibited transaction rules, potentially leading to taxes and penalties. Understanding these restrictions is crucial to keeping your retirement account compliant.

You can withdraw funds from your Self-Directed Traditional IRA at any time, but if you’re under 59½, you’ll face a 10% early withdrawal penalty plus income taxes. After 59½, you’ll only pay taxes on withdrawals.

For a Self-Directed Roth IRA, you can withdraw your contributions at any time tax- and penalty-free. However, to withdraw earnings without penalties or taxes, your account must be open for at least five years, and you must be 59½ or older. If you’re looking to access your retirement funds early without penalties, strategies like a Solo 401(k) loan may be worth exploring.

A required minimum distribution (RMD) is the amount you must withdraw from your traditional IRA once you turn 73. The amount is generally about 3% of the total account balance.

With a Self-Directed IRA, you can move funds through transfers or rollovers, depending on the type of account change:

• Transfers – Move funds between similar accounts (Self-Directed IRA to Self-Directed IRA).
• Rollovers – Move funds from one account type to another (401(k) to Self-Directed IRA).

There are two ways to move funds:

• Direct Transfers/Rollovers – Funds go directly from one IRA custodian to another, avoiding taxes or penalties.
• Indirect Transfers/Rollovers – Funds are sent to you first. You’ll have 60 days to deposit them into your Self-Directed IRA to avoid taxes and penalties.

Administrators usually handle the day-to-day management of the Self-Directed IRA, which can include tasks like setting up investments and assisting with record-keeping.

Custodians are responsible for holding and safeguarding your assets while ensuring compliance with IRS regulations. This includes providing account statements, processing contributions, and facilitating distributions when needed.

Facilitators typically help with specific investment opportunities like real estate, cryptocurrency, or private equity, often providing more hands-on guidance.