Incorporating Self-Directed IRAs and Self-Directed 401(K)s into Your Retirement Strategy

Throw around phrases like IRAs and 401(K)s and people will start to feel their eyes glaze over. Add on a hyphenated word — Self-Directed IRAs and Self-Directed 401(K)s—and you will get the same reaction. Yet that simple compound word can mean a major difference for those who are planning on retiring in abundance and security. It only makes sense for those who are currently weighing their retirement options to know what they are getting into.

What are Self-Directed IRAs and Self-Directed 401(K)s and how do they differ from regular IRAs and 401(k) plans? Let’s have a look at the key differences, the key limitations, and whether or not these plans might be right for your particular retirement strategy.

Self-Directed IRAs and Self-Directed 401(K)s: A Brief Overview

The concept of Self-Direction is relatively simple: rather than outsourcing the work of investing and management to a financial advisor, you make your own choices. A Self-Directed IRA, for example, is nothing more than an IRA that you control. It will have the same overall contribution limits and characteristics that any other IRA otherwise would. The same is true of the Self-Directed 401(K).

But that control does make for a great deal of difference in how the retirement plan will be administrated. For many investors, their first involvement with a 401(k) is through an employee-sponsored plan. They then have limited options according to this plan and make do with the options available to them. In the concept of self-direction, it is possible to utilize a large variety of investment options even through a 401(k) plan—provided that the correct administrative framework has been established. This is true for both Self-Directed IRAs and Self-Directed 401(K)s.

Gaining More Control Over Your Retirement Investments

Why bother with Self-Direction? It allows you more control to make the investments you deem appropriate. For example, while your options may be limited in employee-sponsored plans, Self-Directed IRAs and Self-Directed 401(K)s allow you to invest in a wide degree of asset classes, including:

  • Real estate
  • Precious metals
  • Private lending/notes
  • Private companies
  • Tax liens and deeds
  • Joint ventures and partnerships

Although there are still some limitations—you will be expected not to invest in fine art as part of a Self-Directed IRA, for example—these options afford even the average investor with plenty of leeway for diversifying the assets in their portfolio beyond the usual medley of stocks and bonds.

How to Utilize Self-Directed IRAs and Self-Directed 401(K)s

If you are looking at an employee-sponsored plan and wonder how you can start to take control over your finances—or if you do not have a retirement plan in place at all—the idea of Self-Directed IRAs and Self-Directed 401(K)s can be quite intimidating. You are not sure which account type or investment type is right for you, and you do not know the next steps. We at American IRA, however, have created a few different pages that should guide you through what to expect:

  • Our overview of Self-Directed Accounts will steer you through the various account types – Self Directed Solo 401(k), Self-Directed SEP IRA, etc.—to get a better sense of which one might match your particular situation. It is important to do plenty of research and read up on the individual account types to get a sense of which is best for you.
  • Pay particular attention to the Self-Directed Solo 401(K) site to see if you are eligible for this type of account. A Self-Directed Solo 401(K) comes with high contribution limits, which is highly advantageous for anyone with excess money to stow away for retirement.
  • You might start by reading up on the Self-Directed IRA, or Self-Directed Traditional IRA. Even if you do not plan on opening up this particular type of account, you will find that this is a great way to get started reading up on your various retirement accounts and how they can fit into your retirement strategy.

Want more information on how a Self-Directed IRA might be administrated? Call us at American IRA at 866-7500-IRA or visit  If you would like to schedule a training session for your staff please call 828-257-4949.