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Self-Directed Roth IRA

Self-Directed Roth IRAs


Created in 1997 by Senator Roth of Delaware, the Roth IRA is attractive to many investors because of its potential tax advantages. Contributions are made with after-tax dollars and are NOT tax-deductible. All funds within the Roth IRA compound tax-free and all withdrawals from the account are also tax-free (as long as the account owner is 59½ and the account has been open for five years).

Benefits of the Roth IRA

One of the benefits of a Roth IRA is that there is no required minimum distribution (RMD). Individuals may contribute as long as they have earned income and meet the modified adjusted gross income criteria. All withdrawals continue to be tax-free (if the account has been open for at least five years).

Anyone who has earned income and falls within the MAGI (Modified Adjusted Gross Income) limits established by the Internal Revenue Service can establish a Roth IRA.

Grow your retirement account over time tax-deferred and distributions are tax-free, once certain eligibility requirements are met. There are no yearly tax deductions with a Roth IRA.

Self-Directed Roth IRAs and tax treatment

Roth IRA Contribution Limits

The IRS sets limits for how much you can contribute to a Roth IRA each year. See the current year’s contribution limits.

What Makes a Roth IRA Self-Directed?

When a Roth IRA is referred to as a self-directed account, it simply means you can use the account invest in areas outside of the traditional stocks and bonds. That’s the primary difference between a self-directed and traditional retirement account — where you put those investment dollars.

With a self-directed IRA or 401(k), you can invest in a variety of areas, including:

  • Real estate
  • Private debt like corporate debt offerings, notes secured by deeds of trust or mortgages
  • Private equity-like stock of C-corporations, limited partnerships, LLCs and REITs
  • Precious metals, including gold, silver, platinum, and palladium
  • Cryptocurrency like Bitcoin

Invest Tax-Free. Retire Tax-Free. Build a Legacy Tax-Free. Learn More in Your Roth Account Guide

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