Explore your options.

A Self-Directed IRA (SDIRA) is a retirement account that allows certain alternative assets. This differs from standard IRAs, which typically hold publicly traded securities. Depending on the custodian, an SDIRA can hold real estate, private equity, promissory notes, and IRS-approved precious metals. These accounts follow the same IRS contribution rules as other IRAs:

• Annual limit: $7,000 for 2025 and $7,500 for 2026
• Catch-up contributions: $1,000 in 2025 and $1,100 in 2026 for individuals aged 50 or older

Rollovers and transfers have their own IRS rules and do not count toward these limits.

Unlike brokerage-directed IRAs, an SDIRA places alternative investment-direction responsibilities on the account holder, consistent with IRS requirements. Since these accounts can hold non-publicly traded assets, SDIRAs must follow IRS rules on prohibited transactions, valuation, and custodial oversight.

A qualified IRA custodian or administrator manages the SDIRA assets and handles IRS reporting, including Forms 5498 and 1099-R. 

Takeaway:
A Self-Directed IRA holds certain alternative assets within an IRA’s existing tax framework. It follows the same IRS contribution limits and custodial rules as other IRAs. Understanding the rules for custody, reporting, and allowed asset types is key when evaluating whether an SDIRA aligns with your overall retirement approach.

A Self-Directed IRA (SDIRA) follows the same IRS contribution limits, tax rules, and distribution requirements as Traditional or Roth IRAs. For 2025, the annual contribution limit is $7,000 and $7,500 in 2026. Those age 50 or older can make catch-up contributions of $1,000 in 2025 and $1,100 in 2026. Rollovers and transfers have separate IRS rules and do not count toward these limits. There is no legal difference between a self-directed IRA and an IRA. They are all federally regulated. A self-directed IRA can be Traditional or Roth. 

A key difference involves the types of assets the account may hold and the level of investment direction required from the account holder. Standard IRAs usually invest in publicly traded securities like stocks, bonds, and mutual funds. However, an SDIRA may hold certain alternative assets, depending on the custodian’s permitted asset types and IRS regulations. Examples include real estate, private equity, promissory notes, and IRS-approved precious metals, when permitted by the custodian and compliant with IRS rules.

Because SDIRAs may involve non-publicly traded assets, they require careful adherence to IRS rules, documentation standards, and due diligence. A qualified IRA custodian or administrator holds the assets, maintains records, and provides IRS reporting, including Forms 5498 and 1099-R. 

Takeaway:

A Self-Directed IRA differs from Standard  IRAs by allowing certain alternative assets while keeping the same IRS contribution limits and tax rules. Understanding custodial requirements, prohibited transaction rules, and asset-specific responsibilities is key when evaluating whether an SDIRA aligns with your retirement strategy and regulatory requirements.

A Self-Directed IRA (SDIRA) can hold alternative assets that are not typically available in IRAs at a public custodian. Common examples include real estate, private equity, promissory notes, and certain approved precious metals under Internal Revenue Code §408(m). Some custodians may also allow certain niche asset types, such as tax liens, provided they comply with IRS rules and do not involve prohibited transactions.

SDIRAs share the same contribution limits as all IRAs:

• Annual limit: $7,000 for 2025 and $7,500 for 2026
• Catch-up contributions: $1,000 in 2025 and $1,100 in 2026 for those aged 50 or older

Rollovers and transfers have different IRS rules and do not count toward the annual limits.

Since SDIRAs can hold non-publicly traded assets, they need careful documentation, valuation, and IRS compliance. A qualified IRA custodian or administrator holds the assets, maintains records, and issues tax forms. 

Takeaway:

A Self-Directed IRA can hold alternative assets if allowed by the custodian and compliant with IRS rules. Understanding eligibility, custodial requirements, and administrative responsibilities can help individuals evaluate whether certain asset types fit within their retirement strategy.

A Self-Directed IRA (SDIRA) offers more asset options than a standard IRA. However, IRS rules limit what can be included. According to Internal Revenue Code §408 and §4975, certain assets are not allowed. Specific activities, called “prohibited transactions,” can disqualify the IRA and have it distributed at face value to the IRA owner.

Assets Not Permitted in an SDIRA

The IRS prohibits the following in SDIRAs:

• Collectibles, like artwork, rugs, antiques, stamps, most coins, alcoholic beverages, and some gems.
• Life insurance contracts are not eligible investments for IRAs.
• S-corporation shares. 

Prohibited Transactions

Even permitted assets can lead to violations. A prohibited transaction happens when the SDIRA engages in actions that benefit directly or indirectly a “disqualified person,” such as:

• The account holder
• The account holder’s spouse
• Lineal descendants or ascendants (children, parents, grandparents)
• Entities owned or controlled by any disqualified person

Examples of prohibited transactions can include personal use of SDIRA-owned property, selling personal assets to the SDIRA, or extending credit between the SDIRA and a disqualified person. These are governed by IRS rules under §4975. Such actions may cause the IRS to treat the entire IRA as distributed as of the first day of the year in which the violation occurred, which can create significant tax consequences.

IRA Club includes prohibited transaction analysis as a member benefit to all IRA Club members. 

Takeaway:

SDIRAs cannot hold collectibles, life insurance, or assets that do not meet IRS eligibility. A clear understanding of prohibited transactions and disqualified persons helps maintain the tax-advantaged status of the account. Review asset eligibility with your custodian or a qualified tax professional to ensure the investment meets IRS requirements.

A Self-Directed IRA (SDIRA) allows you to invest in options outside of the stock market. An SDIRA can include real estate, private equity, promissory notes, and IRS-approved precious metals, and more. This variety allows individuals to diversify beyond publicly traded securities, which may behave differently across market conditions.

SDIRAs follow the same IRS contribution limits as all IRAs:

• Annual contribution limit: $7,000 for 2025 and $7,500 for 2026
• Catch-up contributions: $1,000 in 2025 and $1,100 in 2026 for individuals age 50 or older

Rollovers and transfers have different IRS rules and don’t count toward annual contribution limits.

Because SDIRAs can hold non-publicly traded assets, they require careful attention to IRS rules on prohibited transactions, valuation, documentation, and custodial oversight. A qualified IRA custodian or administrator holds the SDIRA assets, keeps records, and issues required IRS forms like Forms 5498 and 1099-R. 

Takeaway:

A Self-Directed IRA offers access to alternative assets not found in most traditional retirement accounts. Its potential advantages include broader diversification and the ability to choose asset types that align with personal experience, while still following the same IRS contribution limits, tax rules, and custodial requirements that apply to all IRAs.