A True Self-Directed IRA


A self-directed IRA is a type of traditional or Roth IRA, which means it allows you to save for retirement on a tax-advantaged basis and has the same IRA contribution limits. The difference between self-directed and other IRAs is solely the types of assets you own in the account. Now, what can’t you invest in? What are your limits? In a self-directed IRA, you have a limited control of what you can do. It is more than a 401(k), but you still have constraints enacted on you by your custodian. So, if this is the case, what is a “True” self-directed IRA?


What Makes the IRA Truly Self-Directed?


The number one difference between an average self-directed IRA and a “true” self-directed is checkbook control. The two main reasons investors take on the risks of self-directed IRAs are to seek higher returns and greater diversification. A Self-Directed IRA brings you the freedom to diversify your financial portfolio into lucrative assets like property, mortgage notes, foreign currency, annuities, raw land, limited liability companies, and many other investments. If you have the required knowledge and expertise to succeed with a particular investment type, you can leverage the asset to help secure your financial future.


What Are My Limits?


With a true self-directed IRA with checkbook control, like at New Standard IRA, the only restrictions are those outlined in section 408 ( IRAs) and the prohibited transactions listed in section 4975 (Prohibited transactions for various retirement accounts) in the Internal Revenue Code ( made available at USCode.House.Gov). These include:

  1. Life Insurance Contracts
  2. Collectables defined as:
    1. Any work of art
    2. Any rug or antique
    3. Any metal or gem
    4. Any coin or stamp
    5. Any alcoholic beverage

Prohibited Transactions

  1. Any direct or indirect :
      1. Sale or exchange, or leasing of any property between a plan and a disqualified person;


      1. Lending of money or other extension of credit between a plan and a disqualified person;
      2. Furnishing of goods, services, or facilities between a plan and a disqualified person;


      1. Transfer to, or use by or of the benefit of, a disqualified person of the income or assets of a plan;


      1. Act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interests or for his own account;


      1. Receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan


The truth is this: your retirement account, no matter what you do, should be yours and yours alone. A true self-directed IRA gives you the ability to invest your money wherever you need, given it does not violate sections 409 and 4975 of the IRC. If you are a steadfast deal finder, great. This is your place. If you are thinking “Oh no, I have no idea what I am doing but I want control of my life’s savings,” then give us a call. We can help with that as well. A true self-directed IRA gives you access to any kind of investment, and enables you to be in control of where your investments are going and what they are going to do. Feel free to contact us via email or phone with any further inquiries