A Self-Directed IRA: Is it Worth the Work?

Here you are, planning that comfortable retirement by taking stock of all that needs to be done and assessed. It’s necessary but not always easy. A lot of decisions need to be made and mistakes can be costly. One choice before you—and you need to get it right—is whether a self-directed IRA (SDIRA) is beneficial for you and, if so, whether it’s worth the effort. Regardless of the risks (and there are a few), many people eagerly choose to create their retirement package from a SDIRA. Let’s look at some of those reasons.


#1 The trust factor

For many, it all comes down to a matter of trust (or lack thereof as the case may be). Understandably, folks are hesitant to shell out their hard-earned money to the big buck firms that, during the Great Recession, have cost them dearly. As expected, investors would rather now be in the driver’s seat putting their trust and reliance upon themselves instead of others.


#2 Driving your own car

For others, it’s really a matter of liberty, isn’t it? At a core level, it’s a fundamental need to possess the autonomy to devise your own investment strategy and see it through. You have to have the freedom to choose your own investments. That way, the results are based on the plans you executed and the decisions you made, rather than on the choices somebody else made supposedly on your behalf. Self-direction drives you, and since custodians aren’t needed for checkbook control IRAs, this is the vehicle of choice for investors such as yourself who need to press the throttle and the brakes with their own two feet.


#3 Ease of simplicity

The process is straightforward, downright easy. You won’t have to master any secret handshakes or learn the nuances of any complicated back office programs or employ any goofy technical jargon to make your investments and intentions clear.


#4 Myriad options

One of the most exciting benefits of wielding your own SDIRA is the fact you have so few limitations. If you don’t prefer, you don’t have to sit at the table of blasé fare which is all that the banks can offer. Should your financial tastes run more exotic, you can plan an altogether delightful repast for yourself with sumptuous goodies that include businesses, real estate holdings, cryptocurrencies and more.


#5 Tax advantages

Your IRA investment tax is deferred. The proceeds of the investment that return to the account are also tax deferred. The greater the income, the greater the tax advantage and the greater the overall benefit. If you’re a savvy investor, you can stand to make huge gains, dwarfing the typical returns seen on nominal 401(k) investments or Roth IRAs.


#6 Privacy protections

Privacy can be defined as the state where nobody can see our activity. This certainly rings true in our digital online lives where we might not want just anybody knowing what we do and when we do it. Interestingly for some reason, there are those who place little value on their privacy. Be that as it may, for those who opt for the checkbook control LLC IRA option, the ensuing privacy protection is a big deal. It’s how you keep your investments, er… private. Bank and other custodian IRAs cannot provide this level of anonymity because you’ll always be listed as the owner, and anyone can easily see what you do whenever they want to.


#7 Alacrity

Honestly, checkbook control IRAs enjoy the greatest benefits, and this is another one (the speed that allows you to approach any investment with a brisk and cheerful readiness). There’s no delay choosing something like rental property or altcoins because there’s no requirement to seek a custodian’s approval or consent to make the investment happen. You can strike while the iron is still very much hot and in competitive markets, this can be a significant factor in your overall success.


#8 Liability protections

Because checkbook control IRAs are established as Limited Liability Companys (LLCs), you can enjoy some asset protection. As long as you remain compliant, your business debts will not become your personal debts.



With all of the benefits we listed, it may be difficult to think of an instance where it “just isn’t worth it.” But the reality is that self-directed IRAs are not everyone’s cup of tea. There are plenty of investors who will not find these investments at all worth the work (or the risk). Likewise, there are those who need a bit more guidance in the process because they don’t trust themselves yet—nothing wrong with that. Just as you may well be an expert in your field, there are those who excel as investment gurus, their role being to assist those having less experience.

There are greater tax implications, compliance and recordkeeping requirements using SDIRAs than with other retirement options. These transactions also receive greater scrutiny from the IRS because there is greater fraud potential.

When investments are successful and legally compliant, many find that SDIRAs provide a high ROI, notwithstanding all the effort involved. The gains can be very high, but so are the risks. Know yourself and understand what you’re getting into before you choose this retirement vehicle. Also know that it could just be the best financial retirement decision you ever made.

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