Self-directed IRA: What every savvy investor should Know

A Self-Directed IRA (SDIRA) gives you control over retirement investing beyond traditional assets. Unlike standard IRAs limited to stocks and mutual funds, SDIRAs allow investments in real estate, private equity, tax liens, precious metals, and more. An SDIRA is ideal for investors who: Want greater control over retirement funds, understand alternative assets, and are willing to stay compliant with IRS rules.

What Makes It Different?

An SDIRA isn’t a separate type of IRA—it’s a structure that expands your investment options under a Traditional, Roth, SEP, or SIMPLE IRA. The key distinctions:

• You invest in non-traditional assets

• A specialized custodian or administrator is required

• You’re responsible for IRS compliance

How It Works

Open an SDIRA with a qualified custodian and fund the account (via rollover, transfer, or contribution). Choose your investment (real estate, private equity, crypto, tax liens, etc.) while Custodian holds the asset in your IRA’s name. The profits return to the IRA—not to you personally and withdraw in retirement are taxed (Traditional) or tax-free (Roth) accordingly. No Self-Dealing: You or close family can’t benefit personally from the asset. All expenses and income must flow through the IRA. Enjoy excellent Tax Advantages:

• Traditional SDIRA

• Roth SDIRA

 Bonus: Excellent for real estate tax shielding; 

Can use leverage, but may trigger 

UBIT (Unrelated Business Income Tax).

Getting Started

• Choose a Custodian (Entrust, Equity Trust, Advanta, etc.)

• Pick Your Type (Traditional or Roth, based on tax goals)

• Fund the Account (via rollover, transfer, or contribution)

• Find and Vet Investments

• Do your due diligence

• Title must be in the IRA’s name

• Stay Compliant

• Track performance, expenses, and valuations

• Consider an accountant or tax advisor familiar with SDIRAs

Quick Example

You roll over $100K into an SDIRA and buy a rental titled to “XYZ Trust Co. FBO [Your Name] IRA.” Rent flows into the IRA, Expenses are paid from the IRA, You don’t live in or manage the property, Gains from sale stay tax-deferred, then rinse and repeat.