Investor Education on Self Directed IRAs

Jan 23, 2019

Self-Directed IRA - Common Questions

Getting started as an investor can be challenging. With a solid “investor education” however, you could be rolling in the greenbacks in no time.

One topic that has risen in popularity is that of Self Directed IRAs. This investment tool is a viable opportunity to grow your retirement while offering greater control and flexibility.

What is a Self Directed IRA?

A Self Directed IRA is similar to traditional brokerage firm IRAs (like a Roth IRA). They are investment vehicles that make it possible to grow your money tax-free (or tax-deferred) and see the benefits of compound interest over time and maximize growth. What makes a Self Directed IRA so appealing to investors is that the available investment options are far wider and give the IRA owner more control.

What Are the Benefits of a Self Directed IRA?

In addition to the obvious tax advantages of investing in individual retirement accounts and being afforded the same federal protection from bankruptcy, the benefits of a Self Directed IRA are that you can truly diversify your portfolio and invest in markets including real estate, private lending, precious metals, life settlements and even a business.

How Much Money Can You Put in a Self Directed IRA?

This year (2019) the maximum personal contribution for a Self Directed IRA is $6,000, but if you’re over the age of 50 that amount rises to $7,000. You can also transfer funds from another IRA or old 401(k).  There is no transfer limit. 

Can You Buy a House with a Self Directed IRA?

Self Directed IRAs can be used to purchase all forms of real estate including rental properties such as single or multi-family homes, Airbnbs and even mobile homes. Investors use these special IRAs because they can buy, sell and even flip properties and move funds between projects and still maintain the tax-deferral status.

Are Self Directed IRAs Allowed Under IRS Rules?

Self directed Individual Retirement Accounts are allowed, but investors do risk the tax-deferred status of these accounts if they don’t follow the rules – not to mention some major tax problems.  Since the 1970s, Self Directed IRAs are completely legal just like a traditional IRA.

How Does a Self Directed IRA Investment Work?

The first step in getting started with this type of financial investment is to work with a qualified company, like the IRA Club, to establish and fund an account. Once you identify a solid investment, perform due diligence, and provide the required paperwork, the IRA Club will send out the funds. Your Self Directed IRA is now the owner of that identified investment (for example, real estate, precious metals, a private placement, etc). Investors are then responsible for managing their account and the IRA Club is responsible for the administrative work. Review the process that the IRA Club takes for setting up a Self Directed IRA.

What Can You Invest in with a Self Directed IRA?

A Self Directed IRA cannot invest in life insurance or collectibles. Clients of the IRA Club have a variety of investment options, such as real estate, structured settlements, life settlements, private placements, cell phone towers and even wind turbines. There are hundreds of investment opportunities. Think outside of the box.

Can a Self Directed IRA “Partner” With Another IRA or Person on a Larger Investment?

One of the most valuable benefits and biggest advantages of a Self Directed IRA is that they can be used to partner with another person (or another IRA) in order to make a larger investment. Say, for example, that your friend has found a great investment opportunity with the potential to provide a generous return. The project, however, requires $150,000 but your friend only has $90,000. Your IRA can invest the other $60,000 for 40% ownership of the deal ($60,000 / $150,000 = 40%) and a proportionate share of the earnings in the future!

Can You Withdraw Money from a Self Directed IRA?

Of course! The money is yours, but remember that you will pay taxes and a 10% early distribution penalty tax if you take the funds out before age 59 1/2. It is not advised to take out money early from your Self Directed Individual Retirement Account.  For those who need to withdraw from their account, simply fill out a distribution form.

Why Don’t More People Use Self Directed IRAs?

The most logical reason why more people don’t consider a Self Directed IRA is because they simply don’t know that the option is available. While users of these investment options tend to want more control over their portfolio and more options into what they can invest in, anyone can do it.

Considering Adding a Self Directed IRA to Your Investing Portfolio?

The IRA Club is one of the most established and trusted names in Self Directed IRAs. Reach out to a member of our team to learn about the investment options available and how you can get started.


The IRA Club does not make investment recommendations. The IRA Club offers no investments, products or planning services. Always consult your attorney, your tax professional, your financial planner and any other qualified person before making any investment.