Are Self-Directed IRAs a Good Idea?

Are Self-Directed IRAs a Good Idea?


Written by John Rothans

Jan 13, 2023

Are you paying down debt? Smart. Want to spend more quality time with your family? That’s also a great idea. And saving for retirement? Another one! How about building retirement savings through a self-directed IRA? Learn why that may be an ideal option to add to your list of retirement strategies.

Self-Directed IRAs Offer Flexibility

A self-directed IRA is a member of the IRA family. IRAs provide tax benefits for people who are putting away money for their golden years.

Among the most common types of IRAs are traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs. These IRAs—typically managed by brokerage firms, banks, and insurance companies—limit account holders to approved stocks, bonds, mutual funds, ETFs, and CDs.

A self-directed IRA, in the form of a traditional or Roth IRA, enables account holders to go beyond those asset categories and choose alternative assets such as precious metals, real estate, promissory notes, and tax lien certificates.

With a self-directed precious metals IRA, a custodian buys gold and silver on the account holder’s behalf, then stores those precious metals in an IRS-approved depository. Through a trusted distributor like U.S. Money Reserve, the account holder selects the precious metals that the custodian purchases.

A self-directed precious metals IRA can help you achieve portfolio diversification and help protect your portfolio from economic and inflationary factors.

It’s worth noting that a self-directed IRA is not the same as a self-managed IRA. A self-managed IRA gives an account holder some flexibility in choosing which asset types to buy within certain boundaries. A self-directed IRA, on the other hand, allows the account holder to wield full control over how and where their money is spent, as long as IRS rules are followed.

Keep in mind that the IRS only permits gold, silver, platinum, and palladium products to be added to self-directed IRAs. Approved precious metals must also meet minimum fineness requirements and be produced by a national government mint or accredited refiner/assayer/manufacturer. Certified coins and other precious metals products that qualify as collectibles are not permitted for inclusion in self-directed IRAs.

Self-Directed IRAs Offer Freedom

Self-directed IRAs not only give you access to alternative assets, but they also give you the freedom to take advantage of your interests and knowledge. For instance, you can capitalize on your know-how about gold and silver, your love of U.S. history (many gold and silver coins have fascinating backgrounds), or your longtime passion for coins.

“Knowledge gained through work experience, industry involvement, or even hobbies can often be translated into viable [asset acquisitions],” John Bowens, a retail sales manager for Equity Trust Company in Westlake, Ohio, told U.S. News & World Report.

Self-Directed IRAs Offer Control

As long as you stay within the IRS’s guidelines, you have control over what your custodian purchases for inclusion in your IRA. As an individual, you can hold a number of different assets that aren’t eligible in most IRAs. Not only does a self-directed IRA put you in control over which assets are included in your long-term retirement plans, but it also gives you more control over when those assets are bought and sold.

Self-Directed IRAs Offer Tax Advantages

Just as other IRAs do, a self-directed IRA provides tax benefits when you’re saving for retirement. These benefits can include tax-deferred gains (within a traditional IRA framework) or tax-free gains (within a Roth IRA framework).

For 2022, the annual contribution limit for IRAs is $6,500. The limit goes up to $7,500 if you’re at least 50 years old.

Is it Smart to Manage Your Own IRA?

There are a number of advantages to managing a self-directed IRA as part of your personal finances and plans for your retirement. You will often pay lower fees, depending on the plan and assets you choose to include. You also maintain control over your retirement plan by having more asset options to hold and the power to buy and sell on your own terms. It is generally considered a good idea to speak with a financial advisor to see if a self-directed IRA is a good option for your unique financial situation.

All in all, a self-directed IRA “can be a phenomenal asset,” as Joseph Polakovic, owner and CEO of Castle West Financial in San Diego, told U.S. News & World Report. Can you put it to use for your benefit?

How Do You Open a Self-Directed IRA?

If you believe that a self-directed IRA may be a good fit for your retirement goals, you can start by researching a reputable broker to open an account. To learn more about what a self-directed IRA can do for your retirement portfolio or to get started today, call one of our dedicated U.S. Money Reserve IRA Account Executives.

You can also read more about the benefits of a self-directed IRA by visiting our list of the top 5 benefits of a self-directed precious metals IRA.

Learn more about the freedom and flexibility you can gain with a self-directed IRA. Call U.S. Money Reserve for a one-on-one discussion about your retirement goals or download our free precious metals IRA Information Kit.


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