Can Anyone Open a Self-Directed IRA?

March 31, 2023

Key Points 

  • Just about anyone who earns taxable income can open a Self-Directed IRA.

  • Self-Directed IRAs safe retirement accounts in which you can hold alternative investments.

  • Setting up a Self-Directed IRA is easy.

When most people first discover the concept of a Self-Directed IRA, they read into it a little more and become increasingly intrigued by the idea of owning alternative assets in a tax-advantaged retirement account. Still, they have many questions that can be difficult to find clear answers to online, the first one being, “Can anyone open a Self-Directed IRA?”

No suspense here. The simple answer is a resounding, “Yes!” 

Just like with a standard IRA, anyone can open a Self-Directed IRA. To contribute to a Self-Directed IRA, the investor must earn taxable income.

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What Are the Benefits of a Self-Directed IRA?

A Self-Directed IRA allows you to diversify your retirement portfolio with the flexibility to invest in real estate, private businesses, precious metals, promissory notes and more. Meanwhile, a standard IRA is limited to stocks, bonds and mutual funds. Investing in alternative assets with a Self-Directed IRA brings the tax advantages of holding investments in a tax-deferred or tax-free retirement account.

How Does a Self-Directed IRA Work?

All retirement accounts have the same IRS rules and framework, meaning a Self-Directed IRA at its core functions similarly to a standard IRA. If your Self-Directed IRA is a Traditional IRA, your funds will grow tax-deferred. If it’s a Roth IRA, they’ll grow tax-free. 

The main difference between a Self-Directed IRA and a standard IRA is in the asset types available. A Self-Directed IRA sets itself apart by enabling investors to build their wealth for retirement by investing in alternative assets like real estate, private placements, precious metals, and beyond. Additionally, with a Self-Directed IRA, you’ll go through either your Self-Directed IRA custodian, such as Madison Trust, or an entity and bank account that you set up for your Self-Directed IRA to gain what’s called checkbook control. 

Clipboard that reads "Self-Directed IRA"

If you go through the extra steps to gain checkbook control, you can write checks and wire funds directly from your Self-Directed IRA checking account. Just make sure not to commingle your Self-Directed IRA with personal funds.

Are Self-Directed IRAs Safe?

Self-Directed IRAs from Self-Directed IRA custodians like Madison Trust are handled just as safely as—any other retirement account. The risks associated with Self-Directed IRAs stem from the possible risks of any investment, which is why it's important to perform your own due diligence when considering an investment.

Can I Set up a Self-Directed IRA Myself?

If you decide that a Self-Directed IRA is right for you, getting started is easy at Madison Trust. Simply fill out our online application to open an account. You can fund your account by transferring funds from an IRA, rolling over from a 401k, or making a new contribution. Once your account is opened and funded, you can begin investing in the assets of your choice by instructing Madison Trust to send funds directly to your investment.

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Where Can I Open a Self-Directed IRA?

If you’re comparing the best Self-Directed IRA custodians and deciding which one to choose, look no further than Madison Trust. With over 20,000 clients, 2,000 five-star reviews and $4B of assets under custody, we are an investor-first Self-Directed IRA custodian that clients truly trust. Our flat fee structure and amazing client support make the Self-Directed IRA experience empowering and rewarding. See why we call it the Madison Advantage and open your Self-Directed IRA today! 

Disclaimer: All of the information contained on our website is a general discussion for informational purposes only. Madison Trust Company does not provide legal, tax or investment advice. Nothing of the foregoing, or of any other written, electronic, or oral statement or communication by Madison Trust Company or its representatives, is intended to be, or may be relayed as, legal, tax, investment advice, statements, opinions, or predictions. Prior to making any investment decisions, please consult with the appropriate legal, tax, and investment professionals for advice.

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