Frequently asked questions

The tax-sheltering benefits of a self-directed retirement plan are identical to any conventional IRA or 401(k).  What is different is what you can do inside the plan. A self-directed plan expands your investment universe beyond stocks and mutual funds to include real estate, private equity, cryptocurrency, private loans, and more.

Investment flexibility enables genuine diversification. A portfolio spread across ten different stocks is still entirely correlated to market movements. Adding real estate or private assets decouples part of your savings from the news cycle. And because you choose the investments, you can direct capital toward asset classes where you have real knowledge and conviction, such as your own community, your industry, your network.

Read more: What are the benefits of a self-directed IRA or Solo 401(k)?

Checkbook Control means you have direct signing authority over your plan's investments.  No custodian approval is required every time you need to make a move. With IRA plans, this is achieved by forming a legal entity (an LLC or Trust) that is wholly owned by your IRA.  A Solo 401(k) has a built-in trust ready to go. That entity holds a bank account you control. When you're ready to invest, you sign the contract and write the check.

The practical difference is significant. With a conventional self-directed IRA, every transaction flows through the custodian, with paperwork, processing time, and per-transaction fees included. With Checkbook Control, you act the moment the opportunity is ready.

Read more: What is Checkbook Control?

Two factors drive most plan selection decisions: whether you're self-employed, and what you intend to invest in.

The Solo 401(k) is only available to self-employed individuals with no full-time non-owner employees. For those who qualify, it offers higher contribution limits, no custodian requirement, and an exemption from the debt-financing tax (UDFI) that applies to leveraged real estate in an IRA.

If you don't qualify for a Solo 401(k), a Checkbook IRA is the path. The choice between an IRA LLC and IRA Trust then comes down to your asset mix. Real estate and other liability-exposed investments favor the LLC.  Paper assets like crypto, private placements, and syndications often work well with the simpler Trust structure.

The fastest way to get a clear answer for your situation is our Plan Finder. Answer a few questions about your situation and investment strategy to learn what the best self-directed retirement plan structure for you might be.

Read more: Plan Fit Finder

If you have an IRA — yes. IRAs are required by law to have a custodian: a regulated institution that holds the account and reports to the IRS. With a Checkbook IRA, that custodian's role is deliberately limited.  They handle contributions, distributions, beneficiary designations, and annual reporting, but play no role in your day-to-day investment activity. Self-Directed Plans works exclusively with IRA Resources as custodian for all IRA plans.

If you have a Solo 401(k) — no. As the plan trustee and sponsoring business owner, you serve in that administrative role yourself. No third-party custodian is required.

Read more: Do I need a custodian?

Alternative investing inside an IRA has been legal since Congress established the IRA in 1974. The IRS has never limited retirement plan investments to stocks, bonds, and mutual funds. That limitation comes from the institutions that offer retirement plan investments, not the law. Banks, brokerages, and financial planners built their business models around conventional products, and have little incentive to inform you that other options exist.

The strategy isn't new. Checkbook Control IRAs and Solo 401(k)s have been in use for decades, initially accessible only to wealthy investors through specialist tax attorneys. The playing field has since leveled considerably, which is exactly why you're finding it now.

Read more: Why haven't I heard of a self-directed IRA before?

A Self-Directed IRA or Solo 401(k) is a retirement plan where you choose what the plan invests in rather than a manager. You get the same tax-sheltering benefits as any conventional IRA or 401(k), but the investment universe expands far beyond stocks and mutual funds to include real estate, private equity, cryptocurrency, private loans, and more.

Important: "self-directed" is a term used loosely in the industry. Many brokerage firms call their accounts self-directed, but limit you to conventional financial products. A truly self-directed plan with checkbook control is a fundamentally different structure.

Read more: What is a self-directed retirement plan?

Two requirements must both be met:

• Active self-employment — your business must generate earned income (sales, services, commissions). Passive income like rentals or investment distributions does not qualify.
• No non-owner employees — your business, and any other business you or your spouse control, cannot have full-time employees working more than 1,000 hours per year, or long-term part-time employees working more than 500 hours per year in two or more consecutive years.

Business structure doesn't matter. Sole proprietorships, LLCs, and corporations all qualify. A spouse employed by the business may also participate.

Read more: Solo 401(k) Eligibility

No — there is no minimum funding requirement for any of our plans. Two practical considerations are worth keeping in mind:

• Investment scale — alternative assets like real estate require enough capital to actually transact. The plan structure has no floor; the investment itself does.
• Bank minimums — some banks impose a minimum balance on business checking accounts. This varies by institution and is not a plan requirement.

Read more: Is there a minimum funding amount?

Start by selecting the right plan for your situation. Our Plan Finder can help if you're not sure. The application is then completed online in 10 minutes or less. Once submitted, we handle entity formation, IRA custodial account setup (for IRA plans), and plan documentation. Most plans are funded and ready to invest within 2–4 weeks, depending on your funding source and plan type.

Read more: View all plans and apply

Two conditions determine eligibility:

Funds must be accessible. Most IRAs and former employer plans (401k, 403b, pension, etc.) are eligible. The main exception is your current employer's plan, which typically cannot be rolled over while you're still employed there.

Funds must be compatible with the destination. Tax-deferred and Roth funds cannot be combined in a single Checkbook IRA — each requires its own plan. And a Solo 401(k) cannot accept a Roth IRA or any inherited IRA as a rollover source. The Plan Fit Finder will surface any compatibility issues based on your specific situation.

Read more: Rollover & Transfer Eligibility

Yes. Self-directed plans operate like any conventional IRA or Solo 401(k). You can make annual contributions, roll over funds from other retirement accounts, or transfer assets from compatible plans at any time. The same IRS rules and limits that apply to conventional plans apply here.

Read more: Can I add more money to my plan in the future?

The IRS does not publish a list of approved investments.  Rather, it publishes a short list of what is prohibited. Everything else is available, provided you follow other IRS rules around self-dealing and disqualified persons. Popular alternatives include real estate, private equity, cryptocurrency, private loans, tax liens, and investment funds.

The prohibited short list: collectibles (artwork, antiques, jewelry, most coins) and life insurance. IRAs also cannot hold S corporation stock, due to S corporation shareholder restrictions rather than IRA rules specifically.

Read more: What assets can I invest in with a self-directed IRA?

Yes.  Real estate is one of the most common self-directed plan investments. The plan can hold virtually any type of property: residential rentals, commercial buildings, raw land, agricultural property, tax liens and deeds, and even foreign real estate. The plan takes title to the property, all expenses flow through the plan, and all income returns to it.

The key rule to keep in mind: the property must be a pure investment. You, your spouse, and certain family members cannot use it personally, not even a vacation home at market rent.

Read more: Types of real estate you can own

Yes. Your self-directed plan can bring the power of leverage into your retirement portfolio, potentially boosting your real estate investment’s ROI. IRS rules require that the mortgage be a non-recourse loan, meaning the lender's recourse is limited to the property only and you may not pledge a personal guarantee.

Leverage amplifies your plan's purchasing power and potential returns. A plan with $150,000 in capital can control a $300,000 property rather than a $150,000 one, and the full appreciation and cash flow return to the plan's tax-sheltered environment.

One tax consideration applies: leveraged real estate in an IRA may generate Unrelated Debt-Financed Income (UDFI), a tax on the portion of gains attributable to borrowed funds. A Solo 401(k) is exempt from UDFI on real property.  This is a meaningful advantage for self-employed investors using leverage. For IRA investors, the tax is real but modest, and the benefits of leverage typically outweigh it at most financing levels.

Read more: Can my plan use a mortgage to purchase real estate?

Yes. The IRS determined in Notice 2014-21 that digital currencies are treated as property, making them a fully permissible retirement plan investment. Bitcoin, Ethereum, altcoins, and other digital assets can all be held inside a self-directed IRA or Solo 401(k) — with all gains sheltered from tax under the umbrella of the plan.

Checkbook Control is the key advantage here. With a plan entity — an IRA LLC, IRA Trust, or Solo 401(k) trust — you open exchange accounts and manage wallets directly in the plan's name. No broker intermediary, no per-transaction commissions, no waiting days for a custodian to execute a trade. You invest in real time, on the exchange of your choice, across the full range of available tokens.

Read more: Can I invest in Bitcoin and cryptocurrency?

Yes. A self-directed plan can hold stocks, bonds, ETFs, and mutual funds alongside alternative assets. You can open a brokerage account in the name of your plan entity and invest conventionally. Be advised that not all brokerages will accommodate a Checkbook IRA LLC or Trust, so some research is required.

That said, many investors choose to keep their stock portfolio in a separate conventional IRA and use their self-directed plan exclusively for alternatives. This is a particularly sensible approach when the self-directed plan holds liability-producing assets like real estate. Keeping the two portfolios structurally separate provides cleaner liability boundaries and simpler administration for both.

Read more: Can I still invest in publicly traded equities and funds?

The core principle is straightforward: you are investing for your future self, not your present self. Everything the plan does must be exclusively for the benefit of the plan and its beneficiaries, not for your personal use or gain today.

Three guardrails define the boundaries:

• Prohibited investments — a short list applies, primarily life insurance and collectibles.
• No dealing with Disqualified Persons — the plan may not transact with you, your spouse, your lineal family, or certain other closely related parties.
• No direct or indirect personal benefit — you cannot personally use plan assets, provide services to the plan, or structure deals that benefit you now rather than the plan.

The rules are the same whether you have a conventional plan or a self-directed one. The difference is that more control creates the need to know and operate within the rules.

Read more: IRS Rules

The same rules that apply to any conventional IRA or 401(k) apply here. Distributions are generally available without penalty beginning at age 59½. Early withdrawals before that age are subject to income tax plus a 10% penalty, with a limited set of IRS-defined exceptions. Required Minimum Distributions begin at age 73 for traditional pre-tax accounts.

The self-directed structure changes nothing about when or how you can access your funds, only what those funds are invested in.

Read more: Taking Distributions

Self-Directed Plans is a facilitator of checkbook-control retirement plans, including IRA Trusts, IRA LLCs, and Solo 401(k)s. We handle plan formation, entity structuring, and ongoing support so investors can put their retirement capital to work in real estate, private lending, cryptocurrency, and other alternatives. We are not a custodian and we do not provide investment advice.  We provide the structure and the education you need to invest with confidence.

Our leadership team has been at the forefront of self-directed IRA facilitation for nearly 20 years, consistently bringing the next-level solution to market; from pioneering the complete Checkbook IRA LLC model to developing the IRA Trust as a simpler, lower-cost alternative. Our principals hold the Certified IRA Services Professional (CISP) designation from the American Banking Association.

Our web-first model strips away the overhead that makes traditional providers expensive. The result is professional-grade plans at roughly half the industry average cost, backed by expert guidance and a knowledge base that puts the right answers in front of you — instantly, around the clock.

Read more: Who is Self-Directed Plans LLC?

Traditional self-directed IRA providers built their businesses on agent-dependent sales and support, and paper-heavy processes. That overhead gets passed to clients in the form of elevated setup fees and ongoing charges.

We built a digital-first model from the ground up, with structured education, a best-in-class knowledge base, and technology-enhanced support that eliminate overhead without compromising on expertise or compliance. Help is available around the clock, not just during business hours.

The result: setup fees and total cost of ownership at roughly half the industry average, with no per-transaction or asset-value-based fees. As your plan grows and your investment activity increases, your costs don't.

Read more: How are your fees so much less than other providers?

From a structural perspective, yes.  You always control your funds, which remain in regulated, insured institutions throughout.

Your IRA is held by our partner custodian, an FDIC-insured institution regulated by the South Dakota Division of Banking. Your plan's checking account is held at a bank that is also FDIC insured. Both accounts carry standard FDIC coverage up to $250,000 per depositor. 

Read more: Are my funds safe with Self-Directed Plans?

The IRS does not approve or disapprove specific investment structures, so one cannot claim that a checkbook IRA is “IRS Approved”. That said, you can utilize a checkbook IRA with confidence.

The IRA-owned LLC and Trust structures have been in use since the early 1990s and have been involved in several tax court cases. The IRS is very much aware these types of plans exist. In cases where investors have been audited, the structure itself has not been found to create a prohibited transaction.

What the IRS scrutinizes is how the structure is used, not the plan itself. Follow the rules, and the structure is sound.

Read more: Is Checkbook Control legal?

Cash held in your plan's bank accounts is FDIC insured up to $250,000 per account.

Actual investments are a different matter. Once funds leave the bank account and enter an investment, they are subject to the performance and risk of that investment, the same as any other investor. No government agency insures against investment loss. Real estate can be covered by landlord insurance for property damage and liability; other asset classes carry their own risk management considerations. Diligence before investing is essential.

Read more: Is my self-directed account FDIC insured?