There’s a stat that stopped me cold when I first heard it.
In Australia, 24% of all retirement funds are self-directed.
That doesn’t mean that one in four Australians looked at the traditional system and said: no thanks, I’ll do it myself. This is a quarter of funds, not a quarter of investors.
What it actually means is wealthy Aussies have figured out there are massive tax advantages to managing your own retirement, and are pouring funds in like crazy.
Regardless, this figure is far lower in the US. America’s self-directed IRAs represent just 3–5% of total IRA assets.
Australians aren’t smarter investors, they were just given better tools earlier, and word got out. In the US, that word is finally spreading.
You already know that terrific investment opportunities often live outside public equities. But if you’re only investing with after-tax dollars, you may be leaving real money on the table.
That’s the gap Self-Directed IRAs were designed to close.
Today we’ll explore SDIRAs through the lens of a company that has hustled to make them accessible for modern alternative investors: IRA Financial.
We’ll also touch upon a rarely discussed topic that few people seem to know about: The Self-Directed HSA (Health Savings Account) 💊
(The team at IRA Financial was kind enough to give Alts readers a special deal: Get $100 off if you sign up with code ALTS.)
Most American retirement accounts look something like this:
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A 401(k) from work
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Maybe a Roth IRA on the side
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Both invested in a handful of index funds chosen from a limited menu.
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Real estate they’re hoping to sell (downsizing or rightsizing)
It’s not a terrible system. But it’s a limited one.
The IRA has been around since 1974. The basic idea is simple: contribute money, get a tax break now or later, and let your investments grow without the IRS taking a cut along the way.
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The traditional IRA reduces your taxable income in the year you contribute; you pay taxes on withdrawal.
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The Roth IRA flips this: you contribute after-tax dollars, but growth and qualified withdrawals are completely tax-free.
The problem is what most custodians let you put inside them.
A Self-Directed IRA is simply an IRA administered by a custodian, willing to hold a much broader range of assets.
Same tax advantages. Dramatically wider investment universe.
Alternative investments have a few characteristics that make them especially well-suited for tax-advantaged accounts.
When an alt investment goes very right, capital gains taxes take a serious bite.
Gains inside a Roth IRA are completely tax-free; inside a traditional IRA, they’re tax-deferred. Either way, you keep more.
Private credit and real estate can throw off significant income annually. In a regular brokerage account, that income is taxed each year.
Inside an IRA, you reinvest it without the drag.
Many alternatives are illiquid by nature. Farmland, real estate, startups, etc.
The long time horizons of IRAs are a feature, not a bug, when paired with assets meant to be held for years.
The list is long:
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Real estate
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Private equity
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Startups
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Private credit
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Precious metals
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Cryptocurrency
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Farmland
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Timber
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Tax liens
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and more..
Now, there are few things the IRS explicitly prohibits:
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Life insurance
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Most collectibles (art, antiques, coins)
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That bottle of Japanese whisky you were eyeing (sorry!).
The prohibition exists to prevent people from using tax-advantaged accounts to acquire personal-use assets.
There’s also a critical concept called the prohibited transaction rule (i.e., “self-dealing“)
Basically, your SDIRA cannot engage in transactions with you, your family members, or any entity you control. Violating this rule can disqualify the entire account and trigger immediate taxes and penalties.
Most SDIRAs work through a custodian: you find a deal, instruct your custodian to make the investment, they cut the check.
This works, but it’s slow.
The Checkbook IRA solves this by adding an LLC layer — your IRA owns an LLC, and you control the checking account directly. Faster, more flexible, fewer per-transaction fees.
The Solo 401(k) is a different vehicle designed for self-employed individuals with no full-time employees.
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It offers much higher contribution limits ($70,000 in 2025 vs. $7,000 for an IRA)
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Built-in checkbook control
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And the ability to make both employee and employer contributions.
For the right person, it’s one of the most powerful retirement vehicles in existence. Both are available through IRA Financial.
There’s a telling line on IRA Financial’s website: “We don’t sell investments. We engineer retirement plans.”
Most financial services companies make money when you invest in something. IRA Financial makes money when you set up and maintain an account. That’s it.
Their incentive is to build you the best possible structure, not to push you toward any particular deal.
The company was founded in 2010 by Adam Bergman, a tax attorney specializing in tax law, ERISA, and retirement strategy.
What he kept seeing was wealthy clients using sophisticated retirement structures that most Americans had never heard of, and a custodian industry with no interest in making those structures accessible. So he built one that did.
Today, IRA Financial has helped more than 27,000 clients take control of their retirement savings, with over $7 billion in assets under custody.
One dashboard for everything
Until recently, if you wanted both alternative asset exposure and traditional market access in a single retirement account, you simply couldn’t do it. You’d need an SDIRA at one custodian for your real estate and private equity, and a separate brokerage IRA at Fidelity or Schwab for your stocks. Two accounts, two sets of fees, no consolidated view.
IRA Financial changed that. Investors can now access both alternative assets and traditional investments within a single self-directed retirement account, all for one flat fee.
The traditional investing side is powered by Interactive Brokers, one of the world’s largest electronic trading platforms. You can hold farmland and Apple stock in the same account, under one custodial structure, with the same tax advantages — no separate Interactive Brokers account required.
Prohibited transaction rules are easy to run afoul of as your portfolio grows and deals get more creative. Most custodians handle recordkeeping and leave compliance entirely to you and your accountant.
IRA Financial has compliance services in-house. When you have a question about whether a deal structure is permissible, you get an answer from someone who actually knows, not a generic FAQ page.
Most financial services companies charge fees as a percentage of assets. The more your investments grow, the more you pay, even if the service hasn’t changed.
IRA Financial charges a flat annual fee regardless of account balance. No AUM fees, no per-transaction fees. You can invest in 50 different deals and pay the same fee as someone who made one.
Alts community members can use code ALTS at signup to receive a $100 discount on the first year’s annual fee.
I was chatting John Maas lasts week, and he brought up a tax trick I had never heard of before.
Most Americans have heard of Health Savings Accounts, which let you set aside pre-tax money for medical expenses. Useful (and very American!) But not exactly exciting.
What most people don’t know: an HSA is the most tax-advantaged account in existence.
It’s the only account with a triple tax benefit:
Compare that to a traditional IRA (taxed on the way out) or a Roth (no upfront deduction). The HSA does all three!
Just like a self-directed IRA, a self-directed HSA can hold alternative assets.
Your medical savings don’t have to sit in a money market fund earning nothing. It’s amazing more people don’t know about this.
IRA Financial offers a self-directed HSA. In fact, they’ve recently expanded to include stock trading through the same Interactive Brokers integration, with a debit card for qualified medical expenses.
To contribute:
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You need to be enrolled in a high-deductible health plan.
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Contribution limits for 2025 are $4,300 for individuals and $8,550 for families.
Not enormous numbers. But compounded over years, inside a tax-free account investing in alternatives, they add up considerably.
Almost nobody is doing this yet. If you start now, you’re early.
The IRS has rules designed to prevent people from using their IRA for personal benefit before retirement. Your SDIRA cannot engage in transactions with “disqualified persons”: you, your spouse, your parents, your children, or any entity you own or control. In practice: you can’t buy a property with your SDIRA and live in it. You can’t hire yourself to manage an SDIRA-owned property. You can’t lend SDIRA funds to your own business.
The penalty for a prohibited transaction is severe: the IRS can disqualify the entire account, treating its full value as a taxable distribution that year, plus a 10% early withdrawal penalty if you’re under 59½. On a large account, that’s a life-altering tax bill. This is one of the core reasons in-house compliance support matters.
IRA Financial, like all SDIRA custodians, does not evaluate the quality of your investments. They hold what you tell them to hold. If you invest your SDIRA in a deal that goes sideways, that’s on you. Self-direction means real responsibility.
If you’re investing through an Alts SPV or another vetted deal, you’re starting with some independent analysis behind you. For anything you source yourself, apply the same rigor you’d use for any investment — probably more.
Most alternatives are illiquid, and that’s amplified inside an IRA. You generally can’t withdraw before age 59½ without a 10% penalty. Money going into an SDIRA should be money you genuinely don’t need for years.
SDIRAs also require more upfront work than a regular brokerage IRA. The flat-fee model at IRA Financial removes the ongoing fee complexity, but the initial setup is more involved than opening a Roth at Vanguard. For most alt investors, the tax benefits far outweigh the friction. But go in with eyes open.
A self-directed IRA makes the most sense if you’re already investing in alternatives, or planning to, and want to do it in the most tax-efficient way possible. If your entire portfolio is index funds, a regular IRA at a big brokerage is probably fine.
But if you’re reading this newsletter because you believe the best opportunities live outside public markets, the question isn’t really whether an SDIRA makes sense. It’s why you don’t already have one.
Open an Account with IRA Financial →
Use code ALTS to get $100 off.
That’s it for today.
As always you can find me in Altea Community.
Until next time 👋
Stefan
This issue is a sponsored deep dive, meaning Alts has been paid to write an independent analysis of IRA Financial. IRA Financial has agreed to offer a deep look at its business, offerings, and operations. IRA Financial is also a sponsor of Alts, but our research is neutral and unbiased. This should not be considered financial, legal, tax, or investment advice, but rather an independent analysis to help readers make their own investment decisions. All opinions expressed here are ours, and ours alone. We hope you find it informative and fair.
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This issue was written and edited by Stefan von Imhof.
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IRA Financial was able to review an early draft of this article. Final editorial decisions were made by the Alts team.
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Neither Stefan nor Alts currently holds shares or interest in IRA Financial.