Frequently asked questions
A Self-Directed IRA (or SD IRA) is an account that gives you the ability to use your retirement funds to invest in “alternative investments,” i.e. investments off Wall Street (not just stocks, bonds, and mutual funds). The most common alternative investment is real estate.
There is a significant difference between regular LLCs and an IRA LLC. Regular LLCs don’t have the ability to hold retirement funds. IRA LLCs, however, have been specifically crafted by ERISA attorneys (“Employee Retirement Income Security Act”) to properly conform with IRS retirement law.
Yes and no. Yes, in that you (or someone you delegate) – can make any investment decision you like as long as you are purchasing stocks, bonds, or mutual funds. No – in that the traditional IRA doesn’t give you the ability put money in “alternative” investments. Thus the traditional IRA doesn’t allow you to achieve full diversification nor the growth and safety potential inherent in true diversification. Once you become active in the alternative-investment arena, you’ll most likely find yourself thinking and acting about retirement with a lot more energy than before.
No IRA, of any type, is allowed to purchase “collectibles” (art, stamps, baseball cards, etc.), or life-insurance contracts. All other investments, alternative and traditional, are allowed. (However, investors should still be wary of Prohibited Transactions.)