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What Is a Self-Directed IRA?
How self-directed IRAs expand the asset menu and why broader choice also creates additional due-diligence responsibility.
A self-directed IRA is held by a custodian that permits a broader set of investments than many conventional IRA custodians. Alternative assets can include precious metals, real estate and other nontraditional holdings.
More choice does not mean more validation
Investor.gov emphasizes that self-directed custodians generally do not investigate the quality or legitimacy of the investment simply because they administer it.
Risks to understand
- Complex tax rules
- Potentially higher fees
- Liquidity limitations
- Fraud risk
- Valuation challenges for some alternative assets
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