Self-Directed IRA - SDIRA

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DEFINITION of 'Self-Directed IRA - SDIRA'

A retirement account in which the individual investor is in charge of making all investment decisions. The self-directed IRA provides the investor with greater opportunity for asset diversification outside of the traditional stocks bonds and mutual funds, as real estate, private tax liens and notes can be purchased. All securities and investments are held in an account administered by a custodian or trustee.

BREAKING DOWN 'Self-Directed IRA - SDIRA'

Some investment types, such as life insurance, are still not permitted in an IRA. In addition, investments cannot be employed for personal use or gain. For example, an investor cannot hold real estate that is personally used in a self-directed IRA. It is the responsibility of the investor to comply with all IRS regulations.

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RELATED FAQS
  1. How do I invest my IRA in real estate?

    To include real estate in an IRA investment account, certain criteria have to be met. There are regulations regarding what ... Read Full Answer >>
  2. What are the disadvantages of commodities on a Roth IRA?

    Commodity investments refer to securities based around goods such as grain, beef, oil, gold and silver. There are many ways ... Read Full Answer >>
  3. What are the main advantages of a self-directed IRA?

    The main advantages of a self-directed IRA are the investment options and the flexibility an investor has in how to manage ... Read Full Answer >>
  4. What are the differences between a self-directed IRA and a traditional IRA?

    Individual retirement accounts are restricted savings accounts intended to provide a source of income for retirement. Contributions ... Read Full Answer >>
  5. Can I use my self-directed IRA to take out a loan?

    A self-directed IRA is a versatile financial resource for retirement. Under some circumstances, you can use it to take out ... Read Full Answer >>
  6. Can mutual funds outperform savings accounts?

    A mutual fund can – and should – outperform a savings account. In most cases, it should not even be a close race. Savings ... Read Full Answer >>

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