Self-Directed IRA Basics
Put More Investment Choices Within Your Retirement Strategy
A Self-Directed IRA gives you the ability to use retirement funds to invest in a broader range of assets beyond traditional stocks, bonds, and mutual funds.
You choose the investments. Preferred Trust provides the custody and account administration needed to hold eligible alternative assets within your retirement account.
Real estate
Private Placements
Private Credit
Other Alternatives
Eligible assets, held in your IRA
The Basics
What Makes an IRA “Self-Directed”?
A Self-Directed IRA, or SDIRA, is an individual retirement account that can hold eligible alternative investments in addition to more traditional investment options.
What makes it “self-directed” is the investor’s role.
You identify the investment opportunity, conduct your own due diligence, and instruct your custodian to complete the transaction on behalf of your IRA.
The custodian handles the administration and custody of the retirement account, but does not select, recommend, or evaluate investments for you.
How Direction Flows
You
Choose and evaluate the investment
Preferred Trust
Custodies the account and processes properly documented investment instructions
Your SDIRA
Holds the investment
Why Self-Direct
Why Consider a Self-Directed IRA?
For investors who want to look beyond conventional retirement investments, a Self-Directed IRA can provide access to a much broader investment universe.
More Investment Choice
Explore eligible alternative assets that may not be available through conventional brokerage IRAs.
Invest in What You Understand
Use your own experience, interests, and knowledge when identifying potential investment opportunities.
Broaden Your Retirement Portfolio
Add different types of assets and investment strategies to your retirement holdings.
Preserve IRA Tax Advantages
Depending on the type of IRA and applicable rules, investment earnings may grow tax-deferred or tax-free.
Investment availability, tax treatment, eligibility, and risks vary. Investors are responsible for conducting their own due diligence and should consult qualified financial, tax, or legal professionals when appropriate.
Eligible Assets
Go Beyond Traditional Investments
Self-Directed IRAs can hold many types of alternative investments, subject to IRS rules and the custodian’s requirements.
Real Estate
Private real estate, certain direct property investments, and other eligible real-estate opportunities.
Private Placements
Investments in certain privately held companies, funds, and securities.
Private Credit
Eligible notes, private lending opportunities, and other debt investments.
Precious Metals
Certain IRS-permitted gold, silver, platinum, and palladium products.
Digital Assets
Certain eligible digital asset investments when supported by the custodian.
Other Alternative Investments
Additional private and alternative assets may also qualify depending on the investment structure and applicable requirements.
Side by Side
What’s Different About a Self-Directed IRA?
Conventional IRA
Investments offered by the platform
Typical Investment Options
- Stocks
- Bonds
- Mutual funds
- ETFs
Investment Selection
Typically selected from investments available through the financial institution or brokerage platform.
Custodian
Usually holds publicly traded financial assets.
Self-Directed IRA
Investments you identify and direct
Potential Investment Options
- Traditional investments
- Real estate
- Private placements
- Private credit
- Certain precious metals
- Other eligible alternative assets
Investment Selection
The investor identifies and evaluates investment opportunities.
Custodian
A qualified custodian holds and administers the retirement account and processes investment instructions.
The primary difference is investment choice and investor responsibility — not a different type of tax treatment.
How It Works
From Retirement Funds to Alternative Investment.
01
Open Your Account
Choose the Self-Directed IRA account type appropriate for your situation.
02
Fund Your Account
Fund the account through an eligible transfer, rollover, or contribution.
03
Choose Your Investment
Identify the alternative investment and conduct your own due diligence.
04
Direct Your Investment
Submit the required investment documentation and instructions to Preferred Trust for processing.
Roles & Responsibilities
Self-Directed Means You’re in Control
The Investor
Your Role as the Investor
You
- Choose your investments
- Conduct due diligence
- Evaluate investment risks and opportunities
- Provide investment instructions
- Make investment decisions
The Custodian
Preferred Trust’s Role
Preferred Trust
- Custodies your Self-Directed IRA
- Processes properly documented investment instructions
- Maintains account records
- Facilitates eligible account transactions
- Collects required valuation information
- Completes applicable IRA reporting
You make the investment decisions. We administer the account..
Preferred Trust performs the duties of a custodian and does not sell investments or provide investment, tax, or legal advice.
Account Types
Find the Account That Fits Your Situation
Self-directed investing can be available through several types of retirement accounts. The right account depends on factors including employment status, income, existing retirement accounts, and tax considerations.
Traditional IRA
A retirement account that may provide tax-deferred growth and potential tax-deductible contributions depending on eligibility
Roth IRA
Funded with after-tax dollars, with qualified distributions potentially available tax-free.
SEP IRA
Designed primarily for self-employed individuals and eligible small-business owners.
SIMPLE IRA
A retirement plan designed for eligible small businesses and their employees.
Important Rules
More Choice Comes With More Responsibility
Self-Directed IRAs are subject to IRS rules governing eligible investments, prohibited transactions, disqualified persons, distributions, contributions, and other retirement-account requirements.
Understanding these rules is an important part of self-directed investing.
Prohibited Transactions
Understand transactions and relationships that can create problems for an IRA.
Learn About Prohibited Transactions
Investment Due Diligence
Understand your responsibility when evaluating an investment opportunity.
Explore Investment Resources
Self-Directed IRA FAQs
Get answers to common questions about accounts, funding, investments, and administration.
View FAQs
For Investment Sponsors
A Custodian Built for Alternative Investing
Preferred Trust is a Nevada-regulated trust company specializing in Self-Directed IRAs and alternative asset custody.
We help investors administer retirement accounts holding alternative investments while providing responsive service, straightforward processes, and access to their account information.
Licensed & Regulated
A Nevada-regulated trust company.
Alternative Asset Experience
Built around the operational requirements of Self-Directed IRAs and alternative investments.
Personal Support
Access to a team that can help you understand account procedures and requirements.
Get Started
Interested in Taking More Control of Your Retirement Investments?
Learn whether a Self-Directed IRA may fit your retirement strategy and how Preferred Trust can help you get started.