Self-Directed IRA Basics

Invest Beyond 
Wall Street

Invest in alternative assets such as real estate, private placements, promissory notes, and beyond.

Diversify Your Portfolio

Diversify your portfolio, invest based on what is important to you, and believe in, and hedge against the stock market.

Low Fees

Our fees are among the lowest in the industry and they are set at a fixed rate regardless of the value in your account. 

Simple Three-Step Setup

Setting up an SDIRA is easy. Just open an account, fund your account, and place your investment.

One concept that almost all investors and financial advisors can agree on is the importance of diversifying your investment portfolio. Investing in a variety of assets, including Wall Street products (stocks, bonds, and mutual funds) and alternative assets may reduce overall investment risk. 

But you still may be wondering, "Which IRA is best for me?" Below are some of the basic differences between a standard IRA and an SDIRA.

Among the lowest in the industry, Madison Trust offers competitive flat fees set at a fixed rate regardless of the value of your account. For more information, visit our fee schedule.

Madison Trust strives to make your SDIRA account setup fast and simple. Once you fill out our easy online application, it typically takes about one to two weeks for your account to be funded.* Once your account is opened and funded, simply place an investment by instructing Madison Trust to send your funds directly to the investment of your choice.

Please note, that our processing timeframe does not include the transferring institution’s processing time. Turnaround time and delivery method back to Madison Trust are subject to the external institution’s processing times and procedures.

Yes, you can roll over all or a portion of your 401(k) into a Self-Directed IRA. To do so, you will start by contacting your existing 401(k)’s plan administrator. For more information, view our quick guide to funding an SDIRA with your 401(k).

All income from an investment returns directly back to the Self-Directed IRA without being taxed and without being added to your personal taxable income for that year. You can reinvest these earnings into another opportunity and keep growing your retirement savings in a tax-advantaged environment.

Like standard IRAs, potential tax benefits vary depending on your account type. If you have a Self-Directed Traditional IRA, you can lower your income tax owed when you contribute to your account. If you have a Self-Directed Roth IRA, you pay taxes upfront, but you can take out your earnings tax-free in retirement.

Yes! All IRAs must be held by a regulated custodian. A Self-Directed IRA custodian is responsible for administering the retirement account and holding custody of the IRA’s assets. Read our guidelines on how to choose the right SDIRA Custodian to learn more.

Yes! Anyone can open a Self-Directed IRA. But to contribute, the investor must earn taxable income.

The contribution limits for a Self-Directed IRA are the same as a standard IRA. If you are younger than 50 years old, you could contribute up to $7,000 in 2025. If you are age 50+, you could contribute up to $8,000 in 2025. Contributions for the year prior must be made by the tax filing deadline. For more information, visit our contributions FAQs.

In addition to annual contributions, you may also transfer or roll over all or of a portion of your funds from an existing qualified retirement account, such as an IRA or 401(k).

You are not required to establish an LLC to invest in an alternative asset. Depending on your specific investments’ needs, establishing a Self-Directed IRA LLC may be beneficial. An IRA LLC enables you to invest your retirement money directly into the investment of your choice without having to contact your custodian for your everyday transactions. IRA LLCs are optimized for transaction-heavy investments, such as real estate rentals and fix-and-flips.

As a self-directed account holder, you do not need to file an annual tax return. However, each year you must provide your SDIRA custodian with the fair market value (FMV) of your account. Read our IRS tax tips for retirement accounts for more information.

Your self-directed retirement account would likely owe taxes if it generated business or trade income that is not related to the tax-exempt purpose of the IRA (Unrelated Business Income Tax) or when debt is leveraged to purchase an asset with your IRA (Unrelated Debt Financed Income).

A prohibited transaction is a transaction that involves the account holder or other disqualified persons benefiting from the IRA’s investments. A good rule of thumb is that an IRA may transact with third parties but may not transact with close family members or closely held entities.

To make a distribution from a Self-Directed IRA, complete a Distribution Request Form that details the distribution type, amount, and frequency of the distribution. If you are distributing an asset, please also submit a third-party certified value (i.e., an appraisal, letter from an investment sponsor, CPA-certified valuation, etc.). Depending on the asset, additional documents may also need to be submitted.

After the documents are submitted and approved, Madison Trust will send an Assignment of Interest to you. This documents the transfer of ownership from your IRA to your personal possession.