The self-directed IRA is simply an IRA that allows alternative investments. Instead of using the typical investment options (stocks, bonds, mutual funds) a self-directed IRA allows you to invest in things like real estate, promissory notes, precious metals, private equity, etc.
You can turn any IRA plan type (Traditional, Roth, SEP, SIMPLE) in to a self-directed IRA as long as the account is held by a self-directed IRA custodian. Here is a list of self-directed IRA custodians that you may have heard of:
- Kingdom Trust Company
- Millennium Trust Company
- Midland IRA
- Quest IRA
- Self Directed IRA Services
Before you invest, keep in mind there is a list of prohibited transactions that the IRS does not allow in IRAs.