Self-Directed Basics
28 articles
About Self-Direction
8 articlesWhat is a self-directed retirement plan?
A self-directed retirement plan is one where you choose the investments rather than having a fund manager or robot manage your portfolio. The plan still operates under the same IRS rules as any IRA or 401(k): same tax benefits, same contribution ...
What are the benefits of a self-directed IRA or Solo 401(k)?
Self-directed plans give you the same tax advantages as conventional retirement accounts, but with two critical differences: you control what your money is invested in, and you can choose from a much wider range of assets. This means real ...
Why haven't I heard of a self-directed IRA before?
The financial institutions that administer most IRAs have no incentive to tell you about self-directed IRA plans. Banks, brokerage firms, and mutual fund companies earn fees on the products they sell, which include stocks, bonds, funds, and ...
What is checkbook control?
Quick Answer Checkbook control means you sign the contracts and write the checks for your retirement plan investments, without relying on a custodian. You achieve this by creating a special-purpose LLC or trust owned by your IRA, giving you direct ...
What is the difference between a Custodian and a Facilitator?
A custodian is the regulated financial institution that holds your IRA and reports to the IRS. A facilitator is a service provider that builds the legal structure giving you checkbook control over plan funds. The custodian holds your retirement ...
What assets can I invest in with a self-directed IRA?
A self-directed IRA can invest in a wide array of assets. The IRS does not publish a list of approved investments. Instead, the tax code identifies a short list of prohibited assets. Anything not on that list is allowed, provided you follow the rules ...
Is Checkbook Control legal?
Yes. The IRA LLC and IRA Trust structures used for checkbook control are legal and have been in continuous use since the early 1990s. The IRS is fully aware of these arrangements. Compliance depends on how the structure is used, not the structure ...
Do I need a custodian?
Yes. All IRA plans are required by law to have a custodian. This is a non-negotiable feature of the IRA structure under IRC Section 408. What matters is understanding what the custodian actually does, and what they do not do. What the custodian ...
IRA Eligibility
13 articlesDo I qualify for a self-directed IRA?
Yes, if you have retirement funds that can move into one. Eligibility turns on whether compatible funds exist, not on your income, net worth, or profession. Funding sources that qualify you today Three sources establish eligibility on their own. An ...
What kind of IRA account can be set up as a self-directed IRA?
Any type of IRA can be structured as a self-directed IRA with checkbook Control. The account type you set up will correspond to the type of funds you are bringing in, whether that's a rollover from a prior employer plan, a transfer from an existing ...
Can I self-direct my Roth IRA?
Yes. A Roth IRA works with checkbook control exactly as a Traditional IRA does. The structure is identical, with an LLC or trust formed under the Roth IRA that you hold signing authority for. The only difference is the tax treatment, which carries ...
Can I self-direct a SEP or SIMPLE IRA?
Yes, both SEP and SIMPLE IRAs are fully compatible with checkbook control. Each can be structured as an IRA LLC or IRA Trust using the same two-layer setup as any other self-directed IRA. There are a few mechanics worth understanding for each account ...
Can I combine my IRA with my spouse's IRA?
Our recommendation is no, and Self-Directed Plans does not offer this structure. Two separate plans, one for each account holder, is the right approach in virtually every case. Here's why. It is technically possible, but carries serious risk A ...
Can I combine a Traditional and Roth IRA?
No. A Traditional IRA and a Roth IRA cannot be combined into a single account or a single plan entity. This is not a policy choice, as it reflects a fundamental difference in how each account type is taxed. Why they cannot be mixed Traditional IRA ...
Can I have a self-directed IRA if I participate in a retirement plan at work?
Yes, and this very common. Participating in a 401(k), 403(b), pension, or any other workplace retirement plan has no effect on your ability to open or maintain a self-directed IRA. A common path to self-direction Many people use their workplace plan ...
Can I open an account for a minor?
Yes. A minor can hold a self-directed IRA structured as either an IRA LLC or IRA Trust. Because a minor cannot legally enter into contracts, the account requires a parent or legal guardian to serve in an administrative capacity alongside the minor ...
Can a non-US citizen open a self-directed plan?
Yes, if you are a resident foreign national living in the United States. IRA Resources opens IRA accounts for US residents regardless of citizenship. Accounts for non-resident foreign nationals are not available. What a resident foreign national ...
Can I invest in more than one state with an IRA LLC?
Yes, but the LLC must have a proper registration footprint in every state where it conducts business activity. There are two ways to accomplish this, and the right choice depends on your investment strategy. Understanding nexus Before addressing the ...
What happens if I move after I set up my IRA LLC?
A personal move requires some attention to your IRA LLC, but it rarely requires major structural changes. What you need to do depends primarily on whether your LLC has nexus, an active business presence, in the state where it was formed. When there ...
Can I set up an IRA LLC as a partnership?
A multi-member IRA LLC, where two or more IRAs each hold a membership interest, is technically possible but carries significant administrative complexity and compliance risk. This is not a structure Self-Directed Plans supports or recommends. The ...
Can I mix real estate and other assets in an IRA LLC?
Yes, a single IRA LLC can hold multiple asset types. However, mixing liability-producing assets like direct real estate with non-risk holdings like cryptocurrency, private loans, or cash in the same entity exposes everything in that LLC to any ...
Solo 401(k) Eligibility
7 articlesWho counts as an employee for Solo 401(k) disqualification?
A Solo 401(k) is available exclusively to owner-only businesses, meaning the business has no employees who must be offered retirement plan benefits. But not every person who does work for your business counts as a qualifying employee. Understanding ...
Can my spouse participate in my Solo 401(k)?
Yes, a spouse who is compensated by your business is eligible to participate in your Solo 401(k) as a plan member. A participating spouse does not disqualify the plan. In fact, including a spouse can meaningfully expand the plan's contribution ...
Do my other businesses affect my Solo 401(k) eligibility?
Potentially yes. If you own or control more than one business, the IRS may treat those businesses as a single employer for retirement plan purposes. When that happens, employees across all businesses in the group are counted together, and if any ...
Can I have a Solo 401(k) if I also have a day job?
Yes. Having a W-2 job with another employer does not disqualify you from establishing a Solo 401(k) for your own self-employment activity. In fact, this is one of the most compelling scenarios for a Solo 401(k), and something we commonly work with. ...
What is a Roth Solo 401(k)?
A Roth Solo 401(k) is not a separate plan type; it is a standard Solo 401(k) with the Designated Roth Account feature enabled. The same plan holds both pre-tax and Roth savings in separate sub-accounts. The key distinction is how contributions are ...
Can I move a stock market Solo 401(k) to self-directed?
An existing Solo 401(k) held at a brokerage firm can be converted to a self-directed plan. The plan itself does not change, but the plan document and administrative structure do. To make a conventional Solo 401(k) self-directed, the brokerage's ...
Do I need an LLC inside my Solo 401(k) for investing?
No, your Solo 401(k) trust already has full authority to hold and manage any IRS-permitted asset directly, so forming an LLC isn't required to invest. Some investors set one up anyway, though, specifically to wall off the liability from a single ...