What is a Self-Directed IRA?

A self-directed IRA is an Individual Retirement Account that gives the account holder more control over their investment decisions. With a self-directed IRA, the account holder can choose to invest in a wider range of investments than traditional IRAs, which are limited to stocks, bonds, and mutual funds.

Self-directed IRAs can be opened with most major banks and financial institutions, and there are a few specialized companies that manage self-directed IRA accounts. The account holder must open the account and make all investment decisions; the financial institution or company simply holds and manages the account and executes the transactions.

There are a few things to keep in mind when opening a self-directed IRA. First, the account holder is responsible for ensuring that their investment choices are allowed under the IRA rules. Second, the account holder must be careful to avoid self-dealing, which is prohibited by the IRS. Finally, the account holder must remember that they are still subject to the same contribution limits and early withdrawal penalties as traditional IRAs.

Overall, self-directed IRAs can be a great way to have more control over your retirement savings. They offer a wider range of investment options and can be a good way to diversify your portfolio. However, it is important to understand the rules and regulations before opening an account.