Self-directed IRAs have become increasingly popular since their inception in 1975.
While typical IRA custodians or brokerage firms continue to invest your money in traditional stocks and bonds, self-directed IRAs offer account owners total control in making their own investment choices. Individuals who self-direct real estate IRAs and other savings plans also gain the freedom to make investments in things they know and understand, at a pace within their own comfort zones.
Self-directed accounts are allowed to hold a myriad of alternative investments like real estate, as well as the more traditional holdings in stocks and bonds, which promotes crucial diversification in retirement portfolios. Alternative investments have the potential to build tax-free or tax-deferred wealth in your self-directed IRA, sometimes at a faster pace than traditional investment methods.
Alternative investments permissible in self-directed plans.
- Real Estate
- Notes & Mortgages
- Single Member LLC
- Private Placements & Private Stock
- Precious Metals
- Foreign Currency Exchange & Futures Trading
- Other Investments
Some examples of other investments allowed within self-directed IRAs include cattle, timber, oil and gas opportunities, accounts receivable, rental homes or condos, commercial real estate and even raw land. There are many assets available through self-direction. The key is to invest in what you know.
The only investments you may not hold within your IRA are life insurance contracts and collectibles. Internal Revenue Code 4975 states: collectibles include works of art, rugs, antiques, metals (other than certain approved gold, silver, and palladium bullion), gems, stamps, coins, alcoholic beverages, and other tangible personal property as may be defined by the Secretary of Treasury.