Insights
Beyond stocks and bonds: the self-directed menu
A field guide to what a self-directed IRA can hold — and the specific risks that ride along with each.
The promise of a self-directed IRA is range. The peril is that each asset class on the menu carries its own rules and its own ways to go wrong. A responsible tour of the options is also a tour of the caveats.
Real estate
The most popular alternative, and the most rule-bound. The IRA can own rental property, land, or notes secured by property — but every dollar of rent and every dollar of expense must flow through the account, and you cannot use the property personally or perform services on it. Financing the purchase generally requires a non-recourse loan and can create a tax inside the account.
Private equity, venture, and private credit
Ownership in companies and funds that never touch a public exchange. The upside is early access; the downside is illiquidity, long lock-ups, capital calls, and Schedule K-1 reporting. Income from an operating business held this way can be taxable to the IRA.
Promissory notes and metals
Notes turn your IRA into a lender, with the credit and collection risk that implies. Precious metals are permitted only in specific forms meeting purity and approved-custody requirements — you cannot store the gold in a safe at home and call it an IRA asset.
Digital assets
The newest entrant, and the most volatile. Beyond price risk, digital assets raise custody, security, and still-evolving regulatory questions. Availability depends entirely on the platform.
The through-line
Two obligations attach to every alternative: you must supply a supportable annual valuation, and you must keep enough cash in the account to pay its fees, expenses, and any taxes. Run the account dry and even a good investment can force a distribution.
The bottom line
The menu is long, but it is not a buffet you graze without consequence. Match each asset to your tolerance for illiquidity and paperwork, and price in the rules before you price in the returns.
This article is general information, not individualized investment, legal, or tax advice. Sources referenced include the Internal Revenue Service, Department of Labor, Securities and Exchange Commission, and FINRA. Consult a qualified professional about your circumstances.
Educational only. This page is general information, not individualized investment, legal, or tax advice. Rules depend on your account type, transaction, tax year, and circumstances — consult a qualified professional.