Regular IRAs usually house only stocks, bonds, mutual funds, and other relatively common investments. Self-directed IRAs offer much more possibilities. For example, you could invest in real estate or a private company, or even convert your 401k to a Gold IRA. You'll just need to find a custodian who will accept the deal and you'll be ready to go. With any IRA, you need a custodian or trustee to maintain the account in your name.
Roth IRAs can also be limited based on your income. In the case of a Roth IRA, the more you earn, the less money you can deposit into the account. That amount decreases until you've crossed a threshold that limits your contributions to zero dollars per year. Collectibles include a wide range of items, including antiques, works of art, alcoholic beverages, baseball cards, souvenirs, jewelry, stamps and rare coins (note that this affects the type of gold a self-directed Roth IRA can store).
Remember that Roth IRAs are based on contributions that are taxed on entry, while traditional IRAs are taxed on your way out. A common ruse is to say that the IRA depositary has examined or approves the underlying investment, when, as the SEC points out, custodians generally do not assess “the quality or legitimacy of any investment in the self-directed IRA or its promoters.” Advocates of self-managed IRAs claim that their ability to invest outside the mainstream improves their diversification, but a self-directed IRA can just as easily lack diversity as any other retirement account. If you participate in an employer-sponsored retirement plan, such as a 401 (k) plan or a SIMPLE IRA, you can still make contributions to the self-directed IRA. A self-directed IRA is a traditional or Roth type of IRA, meaning that it allows you to save for retirement with tax advantages and has the same IRA contribution limits.
Given the complexity of self-managed IRAs, you may want a financial advisor with experience managing investment transactions for self-directed IRAs to help you make investments with due diligence. Many people wonder if they can set up a self-directed IRA or an LLC IRA if one spouse earns income during the year. Self-directed IRAs allow you to invest in a wide variety of investments, but those assets are often illiquid, meaning that if you're faced with an unexpected emergency, you may have difficulty getting money out of your IRA.