Crypto/self-directed IRAs: Smart or Not?

Are you tired of being restricted to plain-vanilla investments in your IRA such as stocks, bonds, and mutual funds? If you want to walk on the wild side and invest your retirement money in assets such as real estate or cryptocurrency, a crypto/self-directed IRA could be for you.

What Is a Crypto/self-directed IRA?

As far as the IRS is concerned, you can invest in anything through an IRA (or SEP-IRA or SIMPLE IRA) other than collectibles such as art and antiques, life insurance, and S corporation stock.1

But when you establish a traditional IRA with a bank, a brokerage, or a trust company, you are ordinarily limited to a narrow range of investment options, such as publicly traded stocks, bonds, mutual funds, ETFs, and CDs. The IRA custodians in these instances will not permit you to invest in alternative investments such as real estate, precious metals, or cryptocurrency.

On the other hand, if you establish a crypto/self-directed IRA (marketing slang, basically, by the way), you are not subject to these custodian-imposed restrictions. Instead, you are free to invest in a wide array of assets, including, but not limited to the following:

Real estate

International real estate

Private businesses

Trust deeds and mortgages

Tax liens