What is a Self-Directed IRA?
Unlike traditional IRAs that typically restrict investments to public stocks, bonds and mutual funds, Self-Directed IRAs offer unparalleled flexibility by allowing individuals to diversify their portfolios with a wide range of alternative assets.
With a Self-Directed IRA, you can invest in real estate, private equity, private debt, LLCs, precious metals, and more. Traditional IRA custodians may offer or recommend specific investments, while a Self-Directed IRA custodian does not provide investment advice. Instead, you have the freedom to choose and present the investment opportunities you want to pursue.
What Are the Benefits of a Self-Directed IRA?
Self-Directed IRAs allow investors to make investment decisions based on their unique financial goals and expertise instead of being limited to publicly traded assets. This expanded investment universe provides the potential for better returns and reduced exposure to public market volatility.
Self-Directed IRAs also have the same tax advantages as conventional IRAs. Income and capital gains generated within the IRA are tax-deferred (Traditional) or tax-free (Roth).
Can I Use My Current IRA for a Self-Directed IRA?
Yes, you can transfer or rollover some or all of your retirement funds to a Self-Directed IRA. The IRS allows all retirement accounts to hold alternative or private investments. However, most custodians and administrators choose not to hold these assets due to the additional requirements, oversight, and expertise required. Most non-Self-Directed IRA custodians only allow you to choose from their offering of public securities, upon which they typically make a sales commission or charge a fee.
A Self-Directed IRA custodian specializes in administrating a wider variety of assets and ensures your transaction complies with IRS regulations.
What Alternative Investments Should I Consider?
With a Self-Directed IRA, the world is your oyster. You can invest in businesses and sectors that you understand and trust. Learn more about the preferred types of alternative investments.
What Kind of Assets Cannot Be Held in a Self-Directed IRA?
The IRS designates the following assets as prohibited in a Self-Directed IRA:
S Corporation stock — generally not allowed. Exceptions: existing S corp. stock if certain conditions are met, including pre-ownership before the S Corp.’s election or acquisition through an allowable rollover.
Collectibles — artwork, stamps, antiques, vehicles, gems and most coins.
Life insurance contracts — direct ownership of life insurance is not permitted. Exception: variable annuities.
How Can I Get Help With a Self-Directed IRA?
A Self-Directed IRA may be a sound option if you are seeking more freedom and diversification in your retirement planning. Before selecting a Self-Directed IRA custodian, do your research and decide exactly what you intend to invest in. Once you have decided on your specific alternative investment, you can open an account with a custodian and then rollover or transfer funds to your new account. Just like bank accounts, you can own as many retirement accounts as you desire, including SDIRA accounts.
Investment documents must use the IRA title as the investor/buyer, not the IRA owner as an individual. The custodian will carefully review the investment documents and confirm the investment is allowable. If approved, they can purchase the investment on behalf of your IRA.
Stadia works with Self-Directed IRA custodians who specialize in administrating these types of assets within IRS compliance laws. Let us help you ensure your financial security today!
Stadia Capital Group is a unique firm focused on the needs of our clients. Our mission is to provide capital preservation, reliable monthly income, and conservative growth opportunities, while providing protection from market volatility. Call 800.893.6184 or contact us to learn more today.