A self-directed IRA (SDIRA) is a retirement account that allows you to invest in a wider range of assets, such as real estate, private companies, and precious metals, that are not available in traditional IRAs. Like other IRAs, SDIRAs offer tax-advantaged growth, but they require you, the account holder, to choose all investments and comply with complex IRS rules yourself. The custodian's role is limited to holding and administering the assets, not advising on them.  

Key features

• Wider investment options: Unlike traditional IRAs, which are limited to publicly traded stocks, bonds, and mutual funds, SDIRAs can hold alternative assets. 
• Investor responsibility: You are responsible for all investment decisions, due diligence, and compliance with IRS rules, including penalties for self-dealing or other prohibited transactions. 
• Tax advantages: SDIRAs offer the same tax benefits as Traditional or Roth IRAs, depending on the account type. 
• Higher fees: These accounts may have higher fees due to the more complex investments they hold. 

Potential risks

• IRS rules: You must follow complex IRS rules and regulations. Violations can lead to penalties, loss of tax-deferred status, or even the loss of the account. 
• Fraud: The flexibility and complexity of SDIRAs can also make them a target for fraud, and investors must be diligent in their research and due diligence.

Before opening an SDIRA

• Consult a professional: It is highly recommended to consult with a financial advisor, tax advisor, and potentially an attorney to ensure any potential investments and strategies comply with all IRS rules. 

https://www.trustetc.com/blog/self-directed-accounts-taxes-overview/?utm_source=sfmc&utm_medium=email&utm_campaign=research_education&utm_term=nur_sdira_tofu_account_taxes&utm_content=link_body_account_taxes

https://www.nerdwallet.com/retirement/learn/self-directed-ira#:~:text=Diversification.,in%20traditional%20or%20Roth%20IRAs.

https://www.finra.org/investors/insights/self-directed-IRAs-risk-of-fraud#:~:text=Exploitation%20of%20Tax%2DDeferred%20Account,other%20types%20of%20investment%20accounts.

https://www.fool.com/retirement/plans/roth-ira/self-directed/