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Top 5 Questions For Self Directed IRA

By John Coktostin

Naturally the first question should be, “What is a Self Directed IRA?” A Self Directed IRA is the same as a regular IRA except that you have control of how it is invested. A truly Self Directed IRA lets you invest your IRA money where you want to.

The next question is often, “Is this legal?” In 1975 Congress passed ERISA in the Securities Act. This brought about brokerage houses and banks marketing IRA and 401K plans. They encouraged you to buy what they wanted to sell: stocks, bonds and mutual funds.

There was nothing in the IRS code that stated you could only invest with a brokerage house (or bank), or that you could only invest in stocks, bonds and mutual funds, but that is what the population came to believe. Banks and brokerage houses want you to invest in those, because that is how they make money. They don’t want you to know you can invest in other things as well.

Since the stock market drop, and with corporate scandals and corruption, many investors have become frustrated and began looking for alternative ways to invest their money. They wanted to control their own investments. Some wanted to invest in more tangible assets like real estate.

When investors ask about these options, they are often told it can’t be done. This isn’t true, it’s just that their brokers won’t allow it. You can’t make these other investments through your broker, so they suffer financially when you make that move, and won’t encourage you to do so.

So, “What can my IRA invest in?” A better question is, “What can’t my IRA invest in?” Very strict regulations must be followed for an IRA. However, the IRS doesn’t give you a list of what you can invest in, instead they tell you what you cannot invest in: live insurance contracts and collectibles.

Here are some of the things you could invest in: residential or commercial real estate, raw land, trust deeds and mortgages, private notes and loans. You can invest in private stocks, Limited Liability Companies (LLC), Limited Partnerships (LPs), and tax certificates. There are also stocks and bonds, mutual funds, annuities, currency, futures, options, receivables, and commercial paper to invest in.

Our final question for today, “What is ERISA?” The Employee Retirement Income Security Act has come to be called ERISA for short. This act moved the responsibility for an employee’s retirement plan from the employer to the employee. The two investments it prohibits are life insurance contracts and collectibles.

NAFEP (The National Association of Financial and Estate Planning) is a leading provider of self directed IRA and self directed 401k products, administrative and custodial services.

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Article Citation
MLA Style Citation:
Coktostin, John "Top 5 Questions For Self Directed IRA." Top 5 Questions For Self Directed IRA. 8 Jul. 2010. 24 Aug 2015 <>.

APA Style Citation:
Coktostin, J (2010, July 8). Top 5 Questions For Self Directed IRA. Retrieved August 24, 2015, from

Chicago Style Citation:
Coktostin, John "Top 5 Questions For Self Directed IRA"

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