What is a Self-Directed IRA?

A Self-Directed IRA (SDIRA) is a Traditional or Roth IRA held by a specialized custodian that allows you to invest in alternative assets like real estate, private equity, crypto, precious metals, and promissory notes. The tax rules (contribution limits, withdrawal rules) are identical to a standard IRA.

What is a prohibited transaction in a Self-Directed IRA?

A prohibited transaction is any dealing between the IRA and a 'disqualified person' (you, your spouse, your parents, your children, or entities they control). Examples include renting IRA-owned property to yourself, using IRA funds to pay personal expenses, or buying property from a family member. Violating this rule destroys the entire IRA.

What are the fees for a Self-Directed IRA custodian?

Fee structures vary widely. Flat-fee custodians like Rocket Dollar charge $15-30/month regardless of balance. Asset-based custodians like Equity Trust may charge 0.15-0.50% of assets annually. For large balances, flat-fee models are significantly cheaper.

investing Audience: investor 3 min read

Top IRA Custodians for Alternative Assets (Gold, Crypto, Real Estate)

Want to buy Bitcoin or a Rental Property inside your IRA? You can't do it at Vanguard. You need a Self-Directed IRA custodian.

Last updated on March 12, 2026

Fidelity and Schwab allow you to buy Stocks, Bonds, and ETFs. But if you want to use your retirement funds to buy a duplex or Ethereum, you need a Self-Directed IRA (SDIRA). This requires a specialized custodian who holds the assets. The same IRA contribution limits and RMD rules apply.

Key Takeaways

Rocket Dollar: Best for 'Checkbook Control'. They give you an LLC, and you buy whatever you want (Startups, Real Estate). Flat monthly fee.
Alto IRA: Best for 'Platform' deals. Easy integration with AngelList, Masterworks, and Coinbase.
Equity Trust: The old giant. High fees, but they handle complex real estate transactions well.
Risk: Prohibited Transactions. You cannot rent your IRA-owned condo to your daughter. That destroys the IRA.

Fees Matter

Asset-Based Fees: (e.g. 0.5% of assets). Bad for high balances.
Flat Fees: (e.g. $20/mo). Good for high balances.

The “LLC” Model

Checkbook control (via Rocket Dollar or similar) gives you an LLC bank account.

Pros: Instant speed. You write the check.
Cons: You can easily break IRS rules (Self-Dealing) inadvertently. Proceed with caution.

Traditional vs. Roth SDIRA

The same Traditional vs. Roth math applies to Self-Directed IRAs. If you believe your alternative investments will appreciate significantly, a Roth SDIRA is powerful --- all that growth is tax-free forever. Buying a rental property at $100k that grows to $500k inside a Roth means $400k of tax-free gains.

If you are funding a Roth SDIRA through a Backdoor Roth strategy, be aware that the Pro-Rata Rule applies across all your Traditional IRA balances, including Self-Directed ones. You can also move existing retirement funds via a 401(k) to IRA rollover.

Crypto in a Self-Directed IRA

Holding crypto inside an SDIRA eliminates the annual tax reporting headache. No wash sales to track, no Form 8949, no cost basis nightmares. But you lose the ability to deduct losses, and you pay ordinary income tax (not capital gains rates) on Traditional IRA withdrawals. For a full breakdown of crypto-specific tax issues, see our crypto tax guide.

Real Estate and the 1031 Alternative

If you are considering real estate inside your IRA, compare it against a 1031 exchange outside the IRA. Our real estate investor tax playbook covers additional strategies. A 1031 lets you defer capital gains indefinitely by swapping properties. Inside an IRA, the gains are already tax-deferred (Traditional) or tax-free (Roth), but you lose the ability to deduct mortgage interest, depreciation, and property taxes on your personal return.

How sharper.tax Helps

sharper.tax analyzes your uploaded return and identifies whether you have IRA or 401(k) balances that could be deployed more strategically. If you are contributing to a standard IRA while interested in alternative assets, we flag the opportunity to explore Self-Directed options and estimate the long-term tax impact. You may also benefit from an IRA-to-Roth conversion before moving assets into a Self-Directed account. Sophisticated tax planning used to require a high-end CPA --- we make it available for free.

Sources

The information above is educational and not tax advice.