What is the Difference Between an IRA and a Self-Directed IRA?

Self-directed IRAs allow you to invest in assets not forbidden by the IRS, such as real estate and precious metals, though such investments typically carry higher fees and require careful recordkeeping.

Alternative assets are intangible and difficult to value, posing the possibility of fraud if they’re not given due attention.


Self-directed IRAs allow account owners to direct investments themselves rather than through a custodian, providing greater investment options such as alternative assets. Investors should take care not to violate any IRS rules when investing in this way; for instance, investing in restaurants would likely result in Unrelated Business Income Tax (UBIT).

As part of their IRA obligations, owners should keep careful track of all contributions and withdrawals. Withdrawals prior to age 59 1/2 may incur taxes and a 10% penalty fee. Also be mindful that the IRS frowns upon investing IRA money in collectibles like artwork, rugs, antiques metals or stamps while disqualified persons.


Self-directed IRAs allow investors to invest in alternative assets such as real estate, promissory notes and precious metals without subjecting themselves to IRS penalties for prohibited transactions. This type of account typically works well for people who can put forth extra effort when managing their retirement investments – for instance locating reliable dealers for alternative assets as well as overseeing paperwork related transactions and processes involved with managing them successfully.

Self-directed IRAs offer more investment options than simply stocks, bonds and mutual funds found through top online brokerages. A self-directed IRA may hold nontraditional assets such as real estate that fulfills certain regulations; startup equity through crowdfunding platforms like Wefunder or SeedInvest; tax liens and deeds on foreclosed properties. When dealing with these nontraditional investments it’s crucial that a custodian be willing to work with these assets and find them suitable dealers – investing requires additional research time as these investments may less liquid than more traditional investments so making sure a dedicated time is set aside specifically for this task is key!


Self-directed IRAs (SDIRAs) allow their owner to take more active control over investment decisions, making this account an attractive choice for investors with the time and expertise to manage it themselves. While a SDIRA offers numerous advantages for hands-on management investors, there can be risks involved; make sure to understand all rules before investing anything and inquire thoroughly regarding fees that may accompany an expansive platform.

Dependent upon the type of retirement account you select, funds from other accounts can be moved into an SDIRA via direct or indirect transfers. With direct transfers, 20% will be withheld to cover taxes; deposit this sum within 60 days or face further tax penalties. When considering indirect transfers it’s always wise to consult a financial professional first in order to avoid tax penalties while simultaneously saving both administrative fees and time!


Custodians play an essential role in self-directed IRAs as they administer assets and ensure regulatory requirements are fulfilled. Furthermore, custodians also help move funds over from other retirement plans and file required IRS reports.

Consider what type of investment choices they provide as well as fees when choosing a custodian. Look for companies without transaction or account value-based fees as well as those offering low storage and insurance costs.

Self-directed IRAs offer an expansive selection of investments, such as private equity, precious metals, private lending agreements and tax liens. When selecting your custodian for these types of investments which can often be difficult to value accurately, be certain they can verify all information they receive as well as establish LLCs and provide checkbook control services with no hidden charges or fraudulent activities taking place.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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