While regular IRAs only let you invest in traditional assets like stocks, bonds, mutual funds, and ETFs, self-Directed IRAs (SDIRAs) allow you to hold alternative investments in your Roth or traditional IRA, such as real estate, private equity, fine wine, cryptocurrencies, and precious metals. 

Self-directed IRAs are special types of IRAs. While they follow the same rules, limits, and eligibility requirements of a regular IRA, the only difference is the access to different types of investment options. Major brokerages typically do not offer SDIRAs. To open a self-directed IRA, you’ll have to find an IRA custodian or administrator that allows you to invest your IRA in specific alternative assets.

Also read: What is a Self-Directed IRA?

Best self-directed IRAs

Every self-directed IRA provider has different fees, levels of support, and investment options. Some only allow you to invest in a single asset class (like crypto), and others provide you with a range of alternative assets to choose from. Here are the best SDIRA providers for May 2023.

Alto IRA

Alto IRA lets you open a traditional Roth or SEP IRA and invest in a variety of alternative assets like crypto, farmland, venture capital and startups, private credit, and real estate crowdfunding. Each asset has different requirements. Most start with an initial required investment of around $100 to $1,000, with some only being available to accredited investors.

Many SDIRAs have high fees. Alto IRA is best known for having very reasonable fees at just $10 per month, or $100 per year, for the Starter plan. They also have a dedicated crypto IRA since a large percentage of people only open a SDIRA in order to invest in cryptocurrencies. For their Alto CryptoIRA, there are no account fees and you pay just 1% per trade.

Equity Trust

Equity Trust is another SDIRA provider that gives you many choices in alternative assets to invest in. Through the platform, you could invest in precious metals, crypto, p2p lending, private equity, and real estate. Unlike some of the newer SDIRA providers that have opening, Equity Trust has been in business since 1974, has over 200,000 customer accounts, and manages over $34 billion in assets under management.

Pacific Premier Trust

Pacific Premier Trust is best known for its great customer support. Like Equity Trust, they’ve also been around for a long time, over 30 years, and have over $15 billion in assets under management. Investors like Pacific Premier Trust for investing in real estate and private equity. Fees are higher at 0.30% in annual fees for accounts up to $1 million in assets. While SDIRA custodians are not allowed to give financial advice, Pacific Premier Trust is known for providing great customer service to make sure your investments are IRA-compliant.

Bitcoin IRA

If you’re looking to just invest in bitcoin, BitcoinIRA is a specialized SDIRA that lets you invest in crypto. They give you a crypto wallet that you can use to purchase cryptocurrencies in your self-directed IRA. Most major cryptocurrencies are available on the platform. If you’re like many other people, and just want to use your SDIRA for crypto investments, BitcoinIRA could be a good choice without the added complexity of other asset classes.

IRA Financial

IRA Financial was founded in 2010 and lets you invest in a wide variety of alternative assets. They’re one of the few SDIRA providers that also give you a checkbook control option, meaning you don’t have to invest through a custodian and can write checks and send funds directly yourself. You can still use their SDIRA without checkbook control to invest in real estate, precious metals, private equity, and crypto. Fees can be a little bit steeper at $999 to open a checkbook IRA LLC, plus an annual custodian fee of $360.

Carry IRA

Carry is a new IRA that launched in 2023, and has plans to add a self-directed option for users to invest in alternative assets like crypto, real estate, and private equity. While the alternative asset investing is not available yet, their pricing makes it one of the most competitive on the market. Users pay just $299 for the Basic Plan or $499 for the Professional and get access to the entire suite of Carry products. In addition to IRAs, you also get a self-directed solo 401k, access to a library of finance and business courses, personalized financial plan, and the ability to ask questions to a financial advisor.

Carry is relatively new to the market compared to some of the other providers, but already is gaining popularity for great customer service and the best user experience out of all providers.

What are alternative assets?

Alternative assets (also referred to as alternative investments) are any asset class that aren’t stocks, bonds, or cash.

Why invest in alternative assets

Investing in alternative assets gives you a hedge against inflation because they’re less correlated to standard asset classes. They’re also less regulated by the SEC, have less historical risk and return data, and can often have less liquidity than traditional assets. As a result, alternative assets tend to be higher risk, but have the potential for higher rewards.

While alternative investments are riskier asset classes than traditional investments, they provide greater portfolio diversification, which can lower your overall risk, white also giving you the potential for higher returns.

What are some examples of alternative assets?

Some common alternative investments are:

  • Cryptocurrencies
  • NFTs
  • Real estate
  • Commodities
  • Derivatives
  • Private equity
  • Private debt

Can a 401k invest in alternative assets?

A regular 401k plan that you receive from your employer does not give you the option to invest in alternative assets. Usually, you’re limited to just a handful of mutual funds selected by your employer when they set up the plan.

However, if you’re self-employed, freelance, or own a business, you can open a solo 401k. A solo 401k has 10x the contribution limit of a SDIRA and also comes with checkbook control. This means you have the ability to invest in any asset class, without having to go through a custodian. If you want to make an investment, you have full control over your solo 401k bank account and can write checks or wire funds directly.

A solo 401k is like a supercharged SDIRA if you are eligible. And to be eligible, you only need to have business activity without any full-time W-2 employees that work over 1,000 hours per year in your business.

Set up a new solo 401k in under 10 minutes

Contribute up to $66,000 and invest in any asset class with tax-free compounding.

Anyone who makes money from a business, freelancing, or a side hustle is eligible, as long as you have no employees.

Can you have both a self-directed IRA and a regular IRA?

Yes, you’re allowed to have regular traditional and Roth IRAs and also a self-directed IRA. You can hold traditional assets in your regular IRA and hold alternative assets in your SDIRA.

How much can I contribute to a SDIRA?

For 2023, you can contribute up to $6,500 if you’re under 50 years of age, and up to $7,500 if you’re 50 years of age or older. If you have multiple IRAs, contribution limits are aggregated between all your accounts. The total contributions to all of your traditional and Roth IRAs must not exceed the IRA contribution limit.