Everything You Need to Know About Self-Directed IRAs (SDIRA)

A self-directed IRA is simply a kind of retirement account that allows you to invest in a broader selection of asset classes.

A trustee or custodian still administers the IRA, but it is managed directly by the account holder, hence why it is called “self-directed.”

You can either open up a self-directed traditional IRA, in which you make tax-deductible contributions or a self-directed Roth IRA, in which you make tax-free contributions.

Like an IRA that you'd get from a bank or brokerage, you need to follow the eligibility requirements and contribution limits to participate.

For example, in 2022, the maximum contribution limit is $6,000 (or $7,000 if you're 50 years old or older), and you can only withdraw funds once you reach 59 and a half years old.

Typically you can go to a brokerage firm to open up any, but many mainstream brokerages don't offer the option of opening a self-directed IRA.

The most common place you'll find self-directed IRAs offered is through providers that specialize in them. Some banks and trust companies provide these services.

Different providers will have other offerings when it comes to investments available, so be sure to shop around if you're interested in a specific asset class. As a side note: the IRS still doesn't allow certain types of investments inside self-directed IRAs (like insurance or collectibles).

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