How is a Self Directed IRA ("SDIRA") different from other retirement plan options?

IRAs, 401(K)s, and SDIRAs are all used to earmark funds you intend to use during your retirement. At their core, each is a vehicle that is used to promote savings and investments that become available to you upon retirement.

The majority of these accounts allow for unhindered growth as the invested funds and their earnings are generally tax-deferred. Each allows for investments in publicly traded securities and derivations of them, including stocks, bonds and mutual funds. However, that is where a SDIRA distinguishes itself. SDIRAs allow you to invest is much more than that. These alternative assets, like real-estate, precious metals, and renewable energy, allow for you to have a much more diverse portfolio. IRAs and 401(K)s are typically held at banks, insurance companies, or general investment firms and managed primarily by investment professionals.

Investment firms that offer custodial management of your SDIRA, on the other hand, tend to specialize specifically in these types of accounts. Also unlike IRA and 401(K) accounts, you control every aspect of your SDIRA. The investment professionals who retain custodial-only access are simply there to ensure you do not unintentionally break rules set out by the IRS.