Self Directed IRA

What is a Self Directed IRA (SDIRA)?

A self directed IRA (Individual Retirement Account) is defined by the type of investments owned within the plan. It is not a special retirement account. Any IRA can self-direct for greater diversification and control in an investment portfolio.

With a self directed investing account, you choose the investments. If you think outside the box, a self directed IRA is your ideal vehicle to control your retirement.

Unlike conventional institutions, SDIRA custodians or trust companies do not limit investment decisions. Custodians allow investments in alternative assets such as real estate and private placements.

With self-direction, the account owner directs all investments and does all due diligence. As a self directed IRA custodian, Midland does not sell products nor offer financial advice. Our goal is to inspire investors to understand their investment choices. We want investors to take control of their retirement accounts.

When you self-direct, all income and gains in an IRA are tax-deferred until you take a distribution. With a Roth IRA, all income and gains to the account are tax-free.

Which IRA Accounts Qualify for Self Direction?

Self-directed accounts can include Traditional IRAs, Roth IRAs, SEP, and SIMPLE IRAs. Educational plans (ESAs), health savings plans (HSAs), and 401(k)s can also be self-directed. Learn more about each type of self-directed plan.

Self Directed IRA Investing Benefits

There are four main reasons why people invest using SDIRAs:

Alternate Source of Funding

You may not realize that IRA funds can invest in alternative assets. These investments include real estate, private loans, private companies, and more.

Invest in Assets That Have Opportunity for Higher Returns

Using a self directed retirement account allows investors to choose assets that may lead to higher returns than traditional investment options.

True Diversification

Brokerage account firms and banks offer limited investment choices. Those looking to diversify their investment portfolios use alternative assets within a self directed IRA. SDIRAs allow investors to hedge against market inflation with more stable, long-term investments like real estate.

Tax-Free or Tax-Deferred Growth (Time Value of Money)

When you invest using an SDIRA, you defer capital gains taxes when you sell the asset. Reinvest these tax savings in investments that produce higher returns. Create higher account values in shorter time frames. Create more wealth in your retirement account; self direct your IRA today.

What Can I Invest in With an SDIRA?

Alternative Investment Options Include:

Real Estate

Investors can buy or sell vacant land, residential, and commercial properties with an IRA. Rehab properties and foreclosure properties can be held in an IRA as well. Learn more about real estate IRAs.

Secured Notes and Mortgages

Both secured and unsecured notes are allowed in an IRA. Learn more about note investments in an IRA.

Single-Member LLC (Checkbook IRA)

A Single-Member LLC is a popular strategy with real estate investors who need checkbook control of their IRA funds. With this structure, the IRA owns the LLC and the account holder acts as the manager. Learn more about checkbook IRAs.

Partnership/Closely-Held LLC

This structure allows investors to easily pool investment funds with others. Learn more about partnerships and closely-held LLCs.

Private Placement/Private Equity

Private equity can invest in a wide array of options. It is essential to discuss the pros and cons with your financial advisor or tax advisor. Learn more about private placements.

Private Stock

The primary benefit of buying private stock in an SDIRA is that the dividends are tax-free. And, when you sell stocks, gains are tax-free. Learn more about private stock in an IRA.

Hedge Funds

Self directed IRA investors can use account cash to purchase shares. Investing can provide the account holder with a tax-sheltered retirement income and returns. Learn more about hedge funds in an IRA.


Futures trading can be used for hedging against the market or industry. You can trade futures on stock exchanges by buying contracts in the S&P 500, DOW Jones, and Bitcoin. Learn more about futures in an IRA.


With forex, currencies trade against each other as exchange rate “pairs.” Many currency pairs are available. Learn more about forex in an IRA.

Equities – Stocks, Bonds, & Mutual Funds

We understand that true diversification in an investment portfolio can include a mix of self-directed assets and publicly traded securities. Midland has established a relationship with TDAmeritrade to make these investments easy in your IRA. Learn more about equities in an IRA.

Gold & Silver

A self directed IRA can buy gold, silver, palladium, and platinum as long as the purchased assets meet the IRS’ requirements. Learn more about investing in precious metals in an IRA.

midland trust case studies

Get Creative With Your IRA Investments

Our investors at Midland have found creative ways to invest using their IRA accounts. Take a look at some of their stories and achievements with alternative investments.

What Are the Self Directed IRA Rules When Investing in Alternatives With My IRA?

Self Directed IRA Prohibited Investments

The IRS does not state which assets you can buy in an IRA. The IRS does identify assets that cannot be bought in an IRA. The only two assets that cannot be purchased in a self directed IRA are life insurance and collectibles.

Examples of collectibles include art, rugs, antiques, gems, stamps, coins, alcoholic beverages, and viaticals.

Self Directed IRA Prohibited Transactions

There are certain IRA transactions that can disqualify your plan. These prohibited transactions can defeat the tax benefits your IRA offers and subject the IRA to fines and penalties.

Your retirement account should benefit you when you retire and not before. Therefore, transactions understood to provide immediate financial gain to account holders are not allowed. Section 4975 of the IRS code details many of these.

IRA holders may not:

  • Borrow money from their IRA.
  • Sell, exchange, or lease a property to their IRA.
  • Receive payment for managing property in their IRA.
  • Use their IRA as security for a loan.
  • Transfer plan income or assets to disqualified persons.
  • Lend money to disqualified persons.
  • Alcoholic Extend credit on their IRA to disqualified persons.
  • Furnish goods, services, or facilities to disqualified persons.
  • Allow fiduciaries to use the plan’s income or assets for their own interest.

Self Directed IRA Disqualified Persons

For the most part, prohibited deals involve the IRA and a disqualified person. So, it is vital to know who disqualified persons are.

Prohibited parties include:

  • IRA holder.
  • The IRA holder’s spouse.
  • The IRA holder’s lineal ascendants, lineal descendants, and spouses of lineal descendants.
  • Investment advisors and managers.
  • Any entity in which a disqualified person has 50% or greater interest. These entities can include corporations, partnerships, trusts, or estates.
  • Any entity in which the disqualified person maintains control. These entities can include corporations, partnerships, trusts, or estates. Control can be in the form of presidency or management.
  • Anyone servicing the IRA such as the trustee or self directed IRA company.

Disqualified Parties Updated 2020

Self Directed IRA Contribution Limits

Each IRA has a maximum contribution that can be made each year. These limits are created and enforced by the IRS. You should review the contribution limits as part of your retirement planning.

Self Directed IRA Distribution Rules

If you have a pre-tax retirement plan and are over 72, you are required to take an annual distribution. The required withdrawal amount is determined by the prior year-end balance, age, and sometimes your beneficiary’s age.

Self Directed IRA Fees at Midland

Exceptional Service. Reasonable Fees.

Each IRA has a maximum contribution that can be made each year. These limits are created and enforced by the IRS. You should review the contribution limits as part of your retirement planning.

How to Open a Self Directed IRA With Midland


    Open a Midland account by completing our online application (typically takes around 15 minutes).


    Fund the account via transfer, rollover, or contribution.


    Complete the appropriate form for the asset in which they wish to invest.