Forge Trust

How to Open a Self-Directed IRA

By Zander Koallick
Key Takeaways
  • Self-Directed IRAs (SDIRAs) offer “Do-It-Yourself” (DIY) investors the opportunity to own alternative assets in their retirement accounts.

  • To open a self-directed IRA, you’ll first need to select a custodian, figure out which kind of SDIRA is right for you, and provide some required information.

  • Once you fund your self-directed IRA, you can then go about making investment decisions. Just remember that your custodian is not permitted to offer any recommendations or guidance when it comes to what you hold in your SDIRA.

Self-Directed IRAs (SDIRAs) offer numerous potential benefits for individuals saving for their retirement. As we talked about in a prior article, SDIRAs allow investors the ability to own alternative assets — which may not be permitted in regular IRAs — in a qualified retirement account.1 Self-directed IRAs can be attractive for DIY types who value the freedom to choose among a wide range of investments. In this piece, we’ll offer a deeper discussion about the information you’ll need before opening a self-directed IRA. We’ll also walk you through the general steps on how to open a SDIRA.

Self-Directed IRAs: Where DIY Retirement Savings Meets Alternative Assets

A self-directed IRA allows investors to hold assets such as private debt, investment real estate, and private company shares, in addition to publicly traded stocks and bonds. Alternative assets have the potential for higher returns and may offer compelling diversification benefits, though they also tend to be less liquid than publicly traded securities and many alternatives are only available to accredited investors.2

Just like regular IRAs, SDIRAs must be administered by a custodian. However, in the case of a SDIRA, the custodian cannot provide any investment guidance or recommendations. Not surprisingly, these accounts tend to be suitable for those individuals who don’t want to be limited to only owning publicly traded assets in their retirement portfolios.

Prepare to Open a Self-Directed IRA

Now that you’ve decided a self-directed IRA is right for you, here’s what you need to open an account. First, you need to find a custodian (like Forge Trust) that offers SDIRAs. Next, determine which type of account is best for you.3 Please note that the IRS and SEC have specific rules for each type of account, so it’s important to understand each option before making a selection.4

There are four different kinds of self-directed IRAs, with the first two being the most common.

Traditional IRA

This is a tax-deferred retirement account, and contributions are generally tax-deductible. With a Traditional IRA, capital gains and income (such as interest or dividends) can compound tax-free. You pay income taxes on withdrawals during retirement.5


Roth IRA is a tax-advantaged retirement account funded with after-tax dollars. Capital gains and income may also accumulate tax-free in these accounts. And when taken as Qualified Distributions, withdrawals from a Roth IRA are generally tax-free.6


SEP (which stands for “Simplified Employee Pension”) IRAs are tax-deferred retirement accounts for self-employed individuals and small business owners. Like Traditional IRAs, capital gains and income grow tax-free until withdrawal.


SIMPLE (which stands for “Savings Incentive Match Plan for Employees”) IRAs are tax-deferred compensation plans for employees. Until they are withdrawn, capital gains and income grow-tax free in these accounts.

Once you’ve identified which self-directed IRA is right for you, it’s time to gather all your current account information and paperwork. Many SDIRAs are funded via Rollovers or Transfers from existing retirement accounts. You’ll also want to familiarize yourself with which investments are allowed and which are prohibited in a self-directed IRA.7

Steps to Open a Self-Directed IRA

Below is a simplified path to opening a self-directed IRA:

  • Sign up on a custodian platform (such as Forge Trust)
  • Select the type of account you want to open
  • Provide your personal information, such as name, contact information, and other important details needed to establish your account
  • Fund the account. Transfers and Rollovers are the most common way to fund)
  • Prepare your SDIRA to make an investment by submitting the applicable paperwork.
    • Remember that the investor in this situation is your IRA and not you as an individual. Be sure you know the IRS rules and guidelines before making any investment in your SDIRA.8

The first step to open a SDIRA is selecting a custodian that offers these plans. If you’re looking to open a self-directed IRA, Forge Trust can help you set up an account today..

Frequently Asked Questions About How to Open a Self-Directed IRA


What do I need to set up a self-directed IRA?

To set up a self-directed IRA, you must first select a custodian that handles this kind of account. Second, you’ll need to identify the type of SDIRA you want to open (Traditional IRAs and Roth IRAs are the most common). Third, you’ll be asked to provide standard financial account opening information. Fourth, you will need to fund the account (Transfers and Rollovers are the most popular way to do so). And fifth, you can now make investments in your self-directed IRA, knowing you have access to a range of alternative assets not available in IRAs offered by traditional brokerages.


Can anyone open a self-directed IRA account?

Yes, anyone can open a self-directed IRA, provided you have a U.S. taxpayer ID (a social security number [SSN] or Individual Taxpayer Identification Number [ITIN]).


Can I manage my self-directed IRA investments myself?

Yes! With a self-directed IRA, you MUST manage your investments yourself. Your custodian is not permitted to offer any investment guidance or recommendations.


What are the fees associated with opening a self-directed IRA?

Fees associated with self-directed IRAs may include fees to set up the account, transaction fees, and account/asset maintenance fees.

1 Bankrate

2 Preqin







About the Author

Zander is a seasoned product leader with a 12-year history in financial technology, specializing in private market investments. His tenure includes roles at LTSE, Alto, and IHS Markit, where he focused on product management and strategy. Zander holds an MBA from Vanderbilt University, focusing on International Business, and a B.A. in Economics from Colby College.

Please read these important disclosures.

Forge Trust Co. does not give legal, tax, or investment advice, and is solely a passive custodian for IRAs. This blog post is intended to provide general education regarding SDIRAs. Nothing in this post is an endorsement or recommendation of any investment, promoter, or investment product. You should seek your own legal, tax, and/or investment advice if you wish to proceed with a self-directed IRA.