Self-Direct Retirement Accounts

Most retirement account holders invest in stocks, bonds, and mutual funds through traditional custodians. Self-directed retirement accounts expand your options to include real estate, private businesses, precious metals, and other alternative investments.

What Is Self-Direction?

Self-directed IRAs and 401(k)s allow the account holder to choose investments beyond those offered by typical brokerages. A specialized custodian holds the account and executes transactions, but you make all investment decisions.

Permitted Investments

Self-directed accounts can hold real estate (rental properties, land, commercial buildings), private company stock, promissory notes and private loans, precious metals meeting IRS fineness standards, tax liens and deeds, and LLCs and partnerships.

Prohibited Transactions

The IRS prohibits self-dealing—transactions benefiting you personally. You cannot sell property to your IRA, buy property from your IRA, use IRA property personally, or have your IRA pay you fees. Prohibited transactions can disqualify the entire account, triggering taxes and penalties.

Real Estate in Your IRA

Buying real estate through your IRA means all expenses come from the IRA and all income returns to it. You cannot use personal funds for repairs or receive personal benefits from the property. The IRA owns the property, not you—this creates practical challenges but also tax-free or tax-deferred growth.

Due Diligence Is Critical

Self-direction requires understanding complex rules. Prohibited transaction penalties are severe. Work with experienced custodians and advisors who specialize in self-directed accounts before investing.

Is It Right for You?

Self-direction suits investors with alternative investment expertise who want to use that knowledge within their retirement accounts. It's not for passive investors seeking simplicity.