Self-Directing a Roth IRA

October 04, 2023

Mat Sorensen

What is a Roth IRA?

A Roth IRA is a savings vehicle designed to motivate us to save for retirement. You might be asking yourself, how are we motivated to save for retirement with a single account”? The Answer = TAX BENEFITS! A Roth IRA receives taxed contributions, so there is no tax deduction when you make contributions to this account (unlike a Traditional IRA). So, why would someone want to make taxed contributions to a retirement account? The growth and earnings on investments you make with your Roth IRA grow TAX-FREE or some say TAX-NEVER.

This means you can contribute to this account and earn an uncapped amount on those contributions. When you retire (or at age 59 1/2), you can take tax-free withdrawals from the contributions and uncapped growth.

Sounds too good to be true? This is one of those rare cases where there is no catch with the IRS. The account grows tax-free, period, hence the motivation mentioned above.

If you have a Roth IRA with Directed IRA, that account is also, by default, self-directed. This means your Roth IRA can be invested into a wider range of investment options commonly referred to as alternative assets. For example, these alternative assets could be real estate, private lending, syndications, small business & startups, and many more investment types. You can learn more about the investment types available to self-direct here, https://directedira.com/investment-types/.

They are considered “alternative” to the publicly traded assets (i.e. stocks, bonds, and mutual funds) you’re typically stuck with choosing when you have a Roth IRA at a traditional custodian or brokerage firm.

Who can have a Roth IRA?

Anyone can have a Roth IRA. There are some simple hurdles to overcome if you “make too much” income, but that doesn’t mean you cannot have your very own Roth IRA today.

If you have earned income below certain income limits, you can contribute directly to the Roth IRA. If you have too much earned income, you can contribute to a Traditional IRA and convert to a Roth IRA regardless of how much you make. Here are the limitations for 2023 per the IRS.

*If you are reading this article after 2023, please refer to the IRS’s website for the most up-to-date income limits for contributing to a Roth IRA.



If your filing status is… And your modified AGI is… Then you can contribute…
married filing jointly or qualifying widow(er) < $204,000 up to the limit
married filing jointly or qualifying widow(er) > $204,000 but < $214,000 a reduced amount
married filing jointly or qualifying widow(er) > $214,000 zero
married filing separately and you lived with your spouse at any time during the year < $10,000 a reduced amount
married filing separately and you lived with your spouse at any time during the year > $10,000 zero
single, head of household, or married filing separately and you did not live with your spouse at any time during the year < $129,000 up to the limit
single, head of household, or married filing separately and you did not live with your spouse at any time during the year > $129,000 but < $144,000 a reduced amount
single, head of household, or married filing separately and you did not live with your spouse at any time during the year > $144,000 zero


Not sure what your Adjusted Gross Income (AGI) is? Check out this article to calculate exactly what qualifies as part of your income.

Why do you want a Self-Directed Roth IRA?

The easiest way to answer this question is with another question: who doesn’t want tax-free growth and income in retirement? Having tax-free income during retirement allows you to enjoy less tax burdens during your golden years.

A Self-Directed Roth IRA is perfect for anyone who wants to invest in alternative asset options such as single-family rental homes, multi-family properties, hard money lending, cryptocurrency, and many more. With a normal Roth IRA, your custodian restricts your investment options to only publicly traded assets such as stocks, bonds, and mutual funds.

How can you start a Self-Directed Roth IRA?

You are only two, easy steps away from having a Self-Directed Roth IRA. This begins by opening a Self-Directed Roth IRA with Directed IRA. As a custodian, Directed IRA specializes in self-directed retirement plans. This means any account type you open with us has the freedom to invest in private or alternative assets.

Here’s the two-step process to getting your Self-Directed Roth IRA started:

That’s it! By opening a Roth IRA with us and transferring your assets, you now have the ability to invest in what you know and what you are most comfortable with.

Be sure to use this discount code for $50 off your first year’s annual fee: BLOG50.

Check out some of the most common asset classes we see here to start gathering ideas for your next self-directed investment.

Mat Sorensen

Mat Sorensen

Mat has been at the forefront of the self-directed IRA industry since 2006. He is the CEO of Directed IRA & Directed Trust Company where they handle all types of self-directed retirement accounts, which are typically invested into real estate, private company/private equity, IRA/LLCs, notes, precious metals, and cryptocurrency. Mat is also a partner at KKOS Lawyers. He is published regularly on retirement, tax, and business topics, and is a VIP Contributor at Entrepreneur.com. Mat is the best-selling author of The Self-Directed IRA Handbook, the most widely used book in the self-directed IRA industry.