Can I Roll My 401k Into a Self Directed IRA?

Rollovers are the primary method for moving retirement funds between institutions, typically between IRAs (individual Retirement Accounts), such as an old 401(k) or 403(b).

IRAs often provide more investment choices than employer-based 401(k) plans, although there may be certain considerations you need to keep in mind when considering either one.


Direct rollover is the quickest and most efficient way of moving money from one retirement account to another; it avoids withholding taxes altogether and deposits must be made within 60 days or they may incur an early withdrawal penalty.

Self-directed IRAs offer more investment options than their traditional counterparts, yet it is vitally important that before committing funds it is clear as to any rules such as prohibited transactions that must be observed; any violations could incur serious repercussions and could incur penalties that can reach severe proportions.

A good IRA custodian can guide you through the process of rolling over your 401k into a self-directed IRA, helping you select investments that align with both short- and long-term goals while complying with IRS rules. They should also offer an array of investments like real estate, private equity, cryptocurrency and precious metals. NerdWallet ranks self-directed IRA custodians based on fees/minimums/customer support/mobile app capabilities/investment choice as part of our ratings system for self-directed IRA custodian ratings/ratings/ratings/ratings/ratings/ratings/ratings ratings/ratings/ratings/ratings/ratings/ratings/ratings of self-directed IRA custodialers/ratings/rating//rating-rated @NerdWallet rates self-directed IRA custodians on various criteria such as fees/minimums/customer support capabilities/rating rating/rating ratings/r vs investment options/ and NerdWallet rates self-directed IRA custodialers vs NerdWallet rates self-directed IRA custodialers against various criteria such as fees minimums/rates+ investment choice among others versus NerdWallet ratings criteria/investments which they offer wide array of investments choices etc & minimums/rates+ (r) from NerdWallet ratings/ Minimum fees minimums/customer service/ mobile app capabilities/r ratings from NerdWallet ratings + ratings + NerdWallet ratings etc…


Self-directed IRAs allow investors to diversify their portfolio by investing in nontraditional assets like real estate, private equity, precious metals and cryptocurrency. To avoid penalties and taxes from the IRS, self-directed IRA holders must abide by certain rules regarding prohibited transactions that must be strictly followed for this type of account – for instance you cannot buy and sell investments within your account or with people with competing interests (known as disqualified persons).

Self-directed IRAs offer many of the same benefits as regular traditional or Roth IRAs, such as tax deferred growth or tax-free withdrawals upon retirement, but provide investors with more personalized investments tailored specifically to their interests and expertise such as rental properties, secured promissory notes and tax lien certificates. Furthermore, investors have access to low cost robo advisors which will manage and diversify investments for an annual fee.


If you’re considering rolling over your 401k into a self-directed IRA (SDIRA), the first step should be finding an IRS-approved custodian that accepts rollovers. At NerdWallet, our ratings consider over 15 factors related to account fees and minimums, investment choices, mobile app capabilities and customer support when rating providers.

An easy and tax-efficient way of moving funds from an old plan into an SDIRA is through direct rollover. Under this type of transaction, funds are sent directly from one trustee to the other without taxes being withheld or withheld from your funds.

Direct rollover is the fastest and easiest way to transfer funds from an old employer’s retirement plan into an SDIRA. Furthermore, this transfer gives you more freedom with your investments by permitting nontraditional asset classes typically unavailable through employee-sponsored plans – such as real estate, private businesses and precious metals – unlike indirect rollover, which requires filing paperwork on your own and only allows 60 days before incurring penalties.


Once you convert your 401k to an SDIRA, you have more freedom when investing. Popular alternative assets may include rental properties, secured promissory notes and tax liens; however it’s essential that you can understand and manage these assets yourself or work with an experienced financial advisor who can ensure there are no prohibited transactions (i.e. investments that produce unrelated business taxable income).

Also be mindful of the IRS contribution limits set for retirement accounts, which typically coincide with an annual calendar. In 2024, for individuals under age 50 the maximum self-directed IRA contribution limit is $7,000 according to 2024 calendar. Furthermore, IRA custodians may charge fees when opening and maintaining your account; typically this includes administrative as well as custodial costs so it is wise to ask about these before selecting an IRA provider.

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