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Q.What is a Self-Directed IRA?


Internal Revenue Code Section 408 permits individuals to use the funds in a traditional IRA (including 401ks, SEP-IRA, Traditional IRA, and Roth IRA) to set up a self-directed IRA to purchase land, commercial property, residential property, condominiums, tax lien certificates, private partnerships, limited liability companies, and many other types of investments. (see IRS Publication 590).

Technically, the self-directed IRA is no different than any other IRA (or 401k, SEP, Etc.). As you probably know, most IRAs maintained at banks and brokerage firms only hold such investments as stocks, ETFs, mutual funds, bonds, CDs, and annuities.

The self directed IRA custodian, however, may enable the IRA to hold non-traditional forms of investments such as real estate, tax lien certificates, private partnerships, and other forms of investment.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this web site is not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed on a taxpayer under the U.S. Internal Revenue Service.

Copyright 1999-2019 Melissa C. Marsh. All Rights Reserved. All Information on this website is subject to a Disclaimer and Use Agreement. This information is provided as general information only and should not be construed as legal advice. We advise you to seek the advice of competent legal counsel to address your own specific questions, facts and circumstances.