December 21

Self-Directed IRA: The Complete SDIRA Guide


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Saving for retirement is crucial, however according to the Federal Reserve, 13% of Americans over 60 do not have any retirement savings and 40% do not think their savings is on track with what they will need for retirement.

With a market crash, similar or worse to what we saw in 2008 possible in the near future, it's important to diversify your assets. Where you choose to invest your money to grow your savings for retirement matters. One alternative to some of the more traditional retirement plans is a Self-Directed Individual Retirement Account, or SDIRA.

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What is a Self-Directed Individual Retirement Account (SDIRA)?

An SDIRA is a retirement savings, or investment account that differs from a standard IRA by allowing a wider array of assets to be invested. This type of account also places the control of the account in the account holder’s hands alone.

Instead of limiting your investments and only being able to put money into stocks, bonds, mutual funds and other paper assets, an SDIRA allows the account holder to invest in assets like cryptocurrency, precious metals, real estate and many other alternative assets. 

This allows for a more diverse array of assets to make up the account, and (if you know what you're doing) increasing potential for higher rewards. SDIRA investments have specific requirements are held by custodians that ensure regulations are met.

These custodians are not "advisors," they must remain passive, and all of the decision-making must come from the account holder. SDIRA custodians cannot give financial advice at all, giving the account holder complete control, and responsibility over their account. 

SDIRAs: Traditional or Roth

With a traditional SDIRA, you can deduct contributions to the account when you invest them and pay taxes on your withdrawals later. There are no income limits. You must start taking out minimum distributions at age 72, but if you take anything out before age 59 ½, you will face early withdrawal penalties. 

A Roth IRA allows you to pay taxes up front and are allowed to withdraw tax-free, however you have to make less than a certain amount of money per year. There are no required minimum distributions.

What Assets Can You Hold in an SDIRA?

One of the biggest advantages of an SDIRA is the variety of assets that you can hold within the account. Instead of solely paper assets, you can invest in real estate, cryptocurrency, gold, silver, other precious metals, underdeveloped land, tax lien certificates, livestock and other alternative investments. 

You cannot hold antiques or collectables, life insurance, high risk derivative, or real estate for personal use. 

Holding Precious Metals Investments in an SDIRA

Gold is one of the more popular assets to invest in a SDIRA. It typically gains value when paper assets are not. Adjusted for inflation, gold was worth about $240 in 1970 and is worth around $1500 in 2020. 

With variability over the years, there has been a large incline, potentially meaning high gains. Investing in gold could also protect you from inflation over time.

Gold bullions, bars or coins can be invested as long as they are official currency and meet a purity standard of at least 0.995. The United States Code outlines the specifications for gold coins that can be invested into an SDIRA;

  • A fifty dollar gold coin that is 32.7 millimeters in diameter, weighs 33.931 grams, and contains one troy ounce of fine gold,
  • A twenty-five dollar gold coin that is 27.0 millimeters in diameter, weighs 16.966 grams, and contains one-half troy ounce of fine gold,
  • A ten dollar gold coin that is 22.0 millimeters in diameter, weighs 8.483 grams, and contains one-fourth troy ounce of fine gold,
  • A five dollar gold coin that is 16.5 millimeters in diameter, weighs 3.393 grams, and contains one-tenth troy ounce of fine gold.

Much like gold, investing silver in your SDIRA can provide protection from major market changes. Other metals you can invest into your SDIRA include platinum or palladium.

In order to begin investing gold and other precious metals into your SDIRA, you will want to work with a financial group, like Goldco or Augusta Precious Metals to ensure that all of your investments comply with IRA standards.

You will work with a bullion dealer or metal broker, then a shipping service to get your metals to a vaulting company, where they will be stored. 

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Cryptocurrencies in a SDIRA

Cryptocurrencies or digital currencies like bitcoin are encrypted, or coded to increase security and decrease potential for counterfeit. Bitcoin started in 2009 and stayed low in value for the first few years, then steadily climbed the markets until 2017, where it reached an all time peak of nearly $20,000 per bitcoin. The price dramatically dropped soon after the peak and has leveled out around $10,000. There are huge potential returns with cryptocurrencies like bitcoin, but also some risk. 

With the world moving increasingly into a digital space, market analysts predict that cryptocurrency will continue to grow and become more popular, and therefore will continue to increase in value over time. As with anything that’s emerging or new, cryptocurrency is still considered speculative, but with that risk comes potentially very high reward. 

Why Invest in an SDIRA?

A SDIRA is more diverse than a traditional IRA, by allowing you to invest your money into more than just stocks, bonds and mutual funds. In the end, when you’re ready to begin withdrawing from your IRA, the investment choices you made, albeit stocks, bonds, or more unique assets, will determine the life you live throughout retirement.

Your retirement equals your choice of assets, and a SDIRA allows you to diversify those assets. By investing in precious metals, cryptocurrency and more, you get to spread your investments across sectors that are not reliant completely on the stock market. You get to decide the risks you want to take and the dimensions of your assets. 

Risks Associated with an SDIRA

There are specific rules and regulations regarding your SDIRA, and if there is a compliance issue, you could face high fines and taxes. There is often a significant amount of research involved, especially in the beginning. Someone that has a previous understanding of investing, might enjoy the work it takes to keep up with a SDIRA more than someone who is entirely new.

The most major regulation to comply with is not engaging with a “disqualified person,” when it comes to making decisions in your account. The IRS defines a “disqualified person” as “any person who was in a position to exercise substantial influence over the affairs of the applicable tax-exempt organization at any time during the lookback period.”

This can include family members and trustees. The purpose of this is to ensure that the decisions being made on behalf of your account are yours alone, and to prohibit an account holder from buying assets from a disqualified person. 

What is a Self-Directed IRA: Your Complete Guide to SDIRAs

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How Do I Start My SDIRA?

If you’re considering a SDIRA, the odds are that you have some sort of traditional IRA account existing within a financial institution. If this is the case, you can rollover the funds from that account into a SDIRA. You will not be penalized for early withdrawal, as long as you reinvest the money into your SDIRA account within 60 days. 

If you need to rollover or transfer funds from a pre-existing IRA account, here are a few steps to doing so. 

First, you have to find a custodian, or financial institution to hold your investments. Typically your custodian will be specialized in the area you want to invest to ensure that you’re meeting all of the standards and your account remains IRA compliant. For example, if you want to invest in gold or precious metals, Goldco or Regal Assets could assist. 

Second, you rollover funds into your new SDIRA account. The old administrator of your IRA account will write a check to you. Or, if you’re rolling over your funds the old administrator will write a check to your trustee.

Third, your custodian will help you find the asset you are looking for and when you are ready to buy, the dealer of the asset can lock in the rate for you to purchase your asset. 

Last, if you’re investing in precious metals, you will need to find a high security shipping company and a vault company to secure your assets. 

Switching to a SDIRA can provide you with a more diverse retirement investment portfolio, potentially leading to a more secure retirement plan than a traditional IRA alone.

This plan is not for those who are brand new to investing or those that are busy and do not have the time to complete the research and management involved to maintain a SDIRA. If you do have time, skills and knowledge, a SDIRA can lead to higher returns and more security than your traditional IRA could. 

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About the author 

Ilir Salihi

Ilir Salihi is the founder and senior editor at He oversees all content for GoldIRASecrets and its partner sites. His articles and insights have been featured on Barchart, Benzinga, and, among other prominent media channels.

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