What is a Self-Directed IRA?
- A Self-Directed Individual Retirement Account (SDIRA) is an individual retirement account (IRA) that gives you more control over your retirement savings. Although a trustee or a custodian administers SDIRA, it is directly managed by the account holder, hence the name “self-directed.” Self-directed IRAs allow you to make various investments that are usually unavailable from regular IRAs. A Self Directed IRA can be either Traditional or Roth.
- A traditional IRA contribution is before tax, meaning the contribution amount is tax deductible therefor lowering your taxable income. On the other hand, a Roth contribution is after-tax – meaning you do not get a tax deduction. Later in life, when it comes time to take a distribution from the IRA, the Traditional distribution will be taxed, but the Roth distribution will be tax-free! If you are a savvy investor looking to diversify in a tax-advantaged account, Self-Directed IRAs are well suited to your investment needs.