What is a Self Directed IRA?

A self directed IRA is an IRA that empowers the account holder to select investments that span beyond the securities market, including alternative assets like real estate, precious metals, private lending, and private equity. Many types of retirement accounts (Traditional IRA, Roth IRA, HSA, Individual 401(k), SEP IRA, or SIMPLE IRA) can be a self directed.

 The term “self directed IRA” is a descriptive term, not an IRS term or a legal distinction. Virtually any IRA account can become a self directed IRA ; all it takes is finding an IRA administrator who is capable and willing to manage the bookkeeping for your IRA’s alternative asset investments.

When you open a self directed IRA with an alternative asset administrator like New Direction IRA, you can invest your retirement plan in real estate, private equity, precious metals, land, energy, and many other assets. When you take advantage of the substantial tax advantages provided by a self directed IRA, you can potentially build wealth and secure your future more effectively than investing outside of your IRA.

For many, a financially secure future boils down to the freedom to make choices; to rely on your individualized market expertise when investing, to receive guidance by experts in the field, and to enjoy the challenges of taking control of your investments. With a self directed IRA, you can invest your retirement funds virtually wherever and however you want, providing the assets fall within IRS guidelines.

Who benefits from a self directed IRA?

Who should consider a self directed IRA? Self directed IRA benefits are often best realized by retirement investors who fit into one or more specific category. If you are considering a self-directed IRA for yourself or for a client, consider the following questions:

1. Are you or your client a creative investor willing to find investment opportunities in areas other than just securities?

2. Does your personal investing experience include non-traditional assets, and have you had success with those investments?

3. Do you occasionally discover an investment opportunity that leaves you thinking, "If I only had the money, I could take advantage of this?"

4. Are you comfortable using leverage and/or interested in taking advantage of the potential of using leverage in your retirement plan?

If you answered yes to one or more of these questions, then a self-directed IRA may be a perfect fit for you or your client. However, affirmative answers to both of the next two questions are critical before you move forward:

1. Are you and/or your advisor(s) willing to help you analyze investments and make informed investment decisions on non-traditional investments? AND,

2. Are you and/or your advisor(s) willing to learn about the power and advantages of self-directed IRAs and the rules that go along with them?

The core of a self directed IRA is "self." That "self" is you, the investor. With a self directed IRA, the account owner or their advisor makes all investment decisions.