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What is a Self-Directed IRA?

A Self-Directed IRA (SDIRA) is an Individual Retirement Account that gives you increased control and greater diversification over your investments and retirement savings.

Unlike other IRAs held at banks, brokerage firms and other institutions, you’re not limited to stocks, bonds, or mutual funds. A truly Self-Directed IRA allows you to take advantage of investing in alternative assets - such as limited partnerships, LLCs, gold, real estate and more.

With Entrust as the administrator of your account, you have the power to take your own path in your retirement planning. As a pioneer of the self-directed IRA industry, we have devoted nearly 40 years to helping investors achieve their financial goals for retirement.

Entrust by the numbers...

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Get the Free Self-Directed IRA Basics Guide!

In this guide you’ll discover:

  • What SDIRA Can & Can’t Invest In
  • An Overview of Self-Directed IRA Rules
  • 3-Step Guide to Self-Directing Your IRA Funds
  • And Much More!

What are the Benefits of a Self Directed IRA?

This type of IRA allows you to…
Increase the potential for growth

Increase the potential for growth

Opening a self-directed retirement account gives you the freedom to invest in almost any type of asset - meaning you have more flexibility in the amount of risk you take on and more potential for a higher rate of return.

Take control of your own financial future

Take control of your own financial future

Put your knowledge and expertise of a particular industry or niche to good use. Make investment decisions based on what you know and understand to grow your retirement savings.

Protect your wealth against economic fluctuations

Protect your wealth against economic fluctuations

The ability to diversify your portfolio by investing in alternative assets such as real estate and precious metals can act as a hedge against market fluctuations and volatility.

Grow your savings in a tax-advantaged account

Grow your savings in a tax-advantaged account

Investing over time in a SDIRA that allows for tax-deferred or tax-free growth can significantly affect future wealth positively.

Difference Between a SDIRA and Other Retirement Accounts

The key difference is the increased flexibility in investment options!

Simply put: working with a self-directed IRA company allows you to invest in practically anything. A typical retirement account, on the other hand, limits you to the assets offered by that particular custodian.

That’s right, you can leverage almost any type of asset as an investment vehicle - including real estate, precious metals, private equity, notes, and many other alternative investments.

This is perhaps the most common reason investors choose a SDIRA. The investor will need to find a company, like Entrust, that has the expertise and infrastructure to handle alternative investments.

 

Let’s look at an example:

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You purchase a home for $100,000 and then sell it for twice that amount. If this property was a part of your SDIRA, the profit would go directly into your IRA and ultimately be tax-deferred, allowing it to potentially grow tax-free.

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Now pretend that you rent this same piece of real estate out annually for $40,000. If this property was a part of your SDIRA, once again, this income would go directly back into the IRA and ultimately be tax-deferred.

Bottom line: with the help of a self-directed IRA you can build up your retirement savings, while simultaneously enjoying the tax benefits.

The increased freedom provided by SDIRAs comes with extra rules.

Work with an experienced IRA company like The Entrust Group.

Schedule a Free Consultation →

Popular Alternative Investment Options:

Popular Alternative Investment Options:

Real Estate

Real Estate

From single-family homes to mortgage notes, you can build a retirement portfolio with a range of assets you understand and trust.

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Precious Metals

Precious Metals

Adding precious metals to your retirement account could help you avoid the risk of unstable markets and inflation.

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Private Placements

Private Placements, LLCs

Amplify the potential for financial growth by making investments in such entities as startups, hedge funds, or land trusts.

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Energy, Oil & Gas

Energy, Oil & Gas

Go green while diversifying your portfolio when you invest in renewable energy sources.

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Secured and Unsecured Notes

Secured and Unsecured Notes

Take advantage of the potential high return on investment private lending can provide.

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Learn More
Other Alternatives

Other Alternative Investments

Maximize your IRA’s earning potential with an array of investment options most custodians don’t allow.

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Learn More

Investing in Real Estate with a Self-Directed IRA

Real Estate IRAs are among the most popular alternative investment strategies here at Entrust.
Single-family homes, office buildings, and mortgage notes are common investments that yield a profit for many under this type of IRA. Here are a few reasons to invest in real estate:

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Enjoy tax benefits

Investors love the tax advantages that come with a Real Estate IRA. Depending on the type of account you choose, you can expect either tax-free or tax-deferred earnings.

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Leverage your experience

Invest in tangible assets you know well and understand, like a rental property or condominium complex. Your options are nearly limitless when it comes to the real estate assets you can invest in.

Download the Guide: 5 Steps to Investing in Real Estate with a SDIRA

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Understanding The Rules Around SDIRAs

The guidelines around self-directed IRAs are not much different from other retirement accounts, but it’s important to familiarize yourself with Self-Directed IRA rules and regulations. These include IRA contribution limits, prohibited transactions, distribution rules and more. 

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IRA Contribution Limits

Each type of IRA has a maximum dollar amount that can be contributed each year. These limits are provided and enforced by the IRS.

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Disqualified Persons & Prohibited Transactions

Although a SDIRA offers countless investment options, certain transactions are prohibited. Knowing who you cannot make a transaction with, also known as disqualified persons, could save you a hefty tax penalty.

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IRA Distribution Rules

IRA distributions, or the withdrawal of cash or an asset, can be made at any time. However, a few criteria will determine whether there are tax and penalties associated with any distribution.

FMV-Reporting

Fair Market Value (FMV) Reporting

A valuation of your assets must be performed annually, or when there is a distribution.

How to Set Up an Account in 4 Easy Steps

1

Understand the Basics

The process of investing with a self-directed IRA is not much different than investing with other IRAs, but it’s important to familiarize yourself with the basics such as the process, investment options, and rules.

Check out our Learning Center, the largest knowledge base online for self-directed IRAs, answering virtually every question you may have.

Browse the Learning Center
2

Choose Your Investment Strategy

Why stop at stocks, mutual funds, and CDs? With Entrust, you can invest in virtually any alternative investment.

Protect yourself from unsteady stock markets by expanding your portfolio into real estate, precious metals, or private business.

Explore Investment Options
3

Select an Account Type

Grow your savings tax-free with a Self-Directed Roth IRA or defer taxes with a Self-Directed Traditional IRA. Your choice. From individual plans to small business accounts, there are many types of retirement plans available to you based on your goals.

Download Account Guide
4

Open & Fund Your Account

Set up your retirement account quickly and easily, then finance it in a way that’s convenient for you. Transfer your IRA from another custodian, rollover your 401(k), or start today by making cash contributions.

Open an Account

Frequently Asked Questions

How much money can I put in a Self-Directed IRA?
Contributions limits may vary year over year depending on the type of account you have. The IRS releases new contributions limits for all plans including Traditional IRAs, Roth IRAs, SEP and SIMPLE plans, ESAs and HSAs every year. Check out the current contributions limits here. 
What type of fees are there?

Fees at Entrust fall under one of four categories: establishment, recordkeeping, transaction, and termination. For your convenience, we offer two recordkeeping fee options, one based on the number of assets and one based on asset value. For a full list of fees associated with a self-directed IRA, please visit our fees page.

I thought only stocks, bonds, or mutual funds were allowed in retirement accounts? Why haven’t I heard of this before?

Most investors are surprised to find out that investing in alternative investments with your retirement funds has actually been around since 1975. Most brokerage firms and banks offer investments, like stocks and bonds. For this reason, it’s not exactly in their best interest to talk about self-directed retirement accounts.

Can you invest in real estate with a Self-Directed IRA?

Yes, Real Estate IRAs are one of our clients' most popular investment strategies. Clients have a vast amount of options with this investment strategy, including rental properties, undeveloped land, mortgage notes and much more. In addition, investors benefit from tax-free or tax-deferred earnings, depending on the type of IRA selected.

How do I start a Self-Directed IRA?

Our process is quick and straightforward. Follow these steps:

  1. Open a new account: you can open an account online here, download the account application here or speak with an Entrust representative at 800-392-9653, option 2.
  2. Fund your account. Entrust offers multiple options for funding your IRA. 
  3. Choose an investment. If you have an investment in mind and have any questions, contact Entrust to get started.
What rules must you follow with a SDIRA?

A few self-directed IRA rules from the IRS to keep in mind with these types of retirement accounts include being aware of contribution limits, avoiding prohibited transactions, accurately reporting the fair market value of your assets, understanding distribution rules, and paying attention to any unrelated business income tax you may be responsible for.

What investments aren’t allowed?
Transactions not permitted under a SDIRA include life insurance contracts, collectibles, and S corporations. In addition, any investment involving a disqualified person (spouse, parents, children and more) are considered prohibited transactions.
Can I move my 401(k) into a Self-Directed IRA?
Yes, consolidating accounts like a 401(k) into a self-directed IRA is a fairly simple process called a rollover. Methods for funding your account available at The Entrust Group include IRA Transfers, IRA Contributions, and IRA Rollovers.
Are there any disadvantages to a Self-Directed IRA?

With any investment comes risk, and self-directed IRAs are no exception, but investments also provide an opportunity for earnings. This is especially true for SDIRAs, where the assets you can invest in are virtually limitless. For inexperienced investors, this can sometimes be perceived as a disadvantage, as more options and freedom means greater responsibility. We encourage all investors to check out five questions to ask before you invest from the U.S. Securities and Exchange Commission.

What should I look for in a custodian?
A few key things you want to look for in a potential company include investment options, disclosure, expertise, fees, data protection, insurance, and servicing times.
When can I start withdrawing my money?
To begin accessing your funds without a penalty, you must have reached 59 ½ years old. Depending on the type of IRA, taking early distributions will result in a 10% early distribution penalty tax. At age 70 ½, you must start taking required minimum distributions, depending on the type of account you hold.
Can I invest in my own business with a self-directed IRA?

No, this is considered a prohibited transaction as it is a conflict of interest by involving a disqualified person (you).