Can I Set Up My Own Self Directed IRA?

Can I set up my own selfdirected IRA

While traditional brokerage accounts limit your choices, self-directed IRAs provide greater investment flexibility by enabling you to purchase alternative assets such as real estate, promissory notes and startups. Just ensure your investments meet all applicable guidelines and don’t violate any prohibited transactions.

Diversifying your retirement portfolio helps lower risk and lessen losses when one asset class experiences a decline.


Self-directed IRA LLCs provide more flexibility for investors seeking to diversify into alternative assets such as real estate and precious metals, but there are important points to take into consideration before taking the leap.

Self-directed IRA custodians cannot provide investment advice; rather they follow your directive within IRS regulations. Furthermore, you’ll need to independently verify any prices or asset values provided in your account statements.

The Internal Revenue Service prohibits investments into certain personal properties such as life insurance policies and collectibles like art, rugs, antiques and coins in your IRA account. Failure to abide by these regulations could incur heavy taxes and penalties; additional research or consulting with experts may be required as you ensure purity standards for precious metals are met – an IRA financial advisor can be an invaluable source of help when understanding how these regulations work in practice.


Self-directed IRAs differ from traditional IRAs in that they allow investors to hold investments that go beyond stocks, bonds and funds available through traditional brokerage accounts. However, to comply with IRS rules they must be managed by a custodian who specializes in these accounts and takes responsibility for compliance purposes.

Nontraditional assets may offer diversification and potentially higher returns than traditional financial investments, though you must be wary of fees associated with storage and insurance costs, as well as any possible fraud from untrustworthy dealers.

Investment in alternative assets also poses the risk of creating unrelated business taxable income (UBTI) and/or debt-financed income (UDFI). Your IRA custodian may need to file an IRS form on your behalf in order to report this information, which could increase the tax you owe when withdrawing investments from an IRA. It would be prudent to speak with either a CPA or attorney regarding these matters in greater depth.


Your self-directed IRA custodian must fulfill numerous responsibilities, unlike what would be required of a traditional brokerage firm. They must ensure all investments purchased meet IRS rules and assist in avoiding prohibited transactions; additionally they will issue client statements and submit required reports.

If you plan to invest in alternative assets such as real estate or precious metals through a self-directed IRA, make sure that the custodian has experience and time spent in this field. Ask about their track record.

Verifying information in your account statements, particularly prices and asset values can also be useful, since alternative investments can be difficult to value accurately. A third party appraisal or dealer price quote could help; alternatively you could also check whether there are security measures in place at your custodian to prevent hackers from hacking into their database; with cyber attacks becoming ever more frequent this question should also be asked.


Self-directed IRAs enable you to invest in alternative assets, including real estate, promissory notes, cryptocurrency and precious metals – providing greater diversification than the investments available from most providers of traditional IRAs.

Withdrawals from a self-directed IRA follow the same regulations as withdrawals from any other IRA, including Required Minimum Distributions (RMDs), though you may owe taxes on nontraditional assets that were purchased with your money in an RMD. Please consult with a tax advisor regarding specific details of how to treat a self-directed IRA withdrawal.

Your IRA cannot be used to purchase property from or stay on it yourself from an individual who does not qualify, personally guarantee a mortgage in its name, lend funds directly to an unqualified individual, guarantee mortgages in its name or guarantee the loan of funds from your IRA to them etc. Also you will likely need to report their fair market value and lack of financial information annually with the IRS which is why seeking advice from qualified financial or legal advisor is highly advised prior to opening a self-directed IRA.

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