Why You Can't Get a Self-directed IRA at Fidelity

Why You Can’t Get a Self-directed IRA at Fidelity

A self-directed retirement account allows you some level of agency over the way the investments are handled. Typically, when you visit an institution and sign up for one, you will simply indicate what mixture of assets you want by ticking the provided box on a form.

Unlike a regular IRA, the self-directed option allows you access to alternative investments. While these may not be very appealing to some people, they are great for those who have some level of experience with these kinds of investment vehicles.

Below is a wealth of information to help you understand these IRAs more, as well as a look at why Fidelity is not a good option if you want to open one.

What Are Self-directed IRAs

Starting with the tax benefits, these accounts are very similar to their regular counterparts that are offered by brokerage firms, banks, or IRA companies. As indicated before, the real reason you will want one is the opportunity it provides for you to invest in non-standard assets.

Apart from the obvious level of control and taxation advantages, diversification is another great reason to open one. After all, you don’t want to create a situation where your entire portfolio becomes yesterday’s news because one investment type didn’t work out.

Considering that the mixture in your self-directed IRA could include anything from mutual funds to real estate, you could provide yourself with a pretty strong layer of resistance to the failure of a single asset.

What Advantages Come from a Self-directed IRA

Here’s an even better look into the reasons to opt for these kinds of retirement accounts.

Tax Benefits

Paying taxes on investments has never been a welcome thing, and anyone would understand if you have become sick of doing so. Well, you could consider an Equity Trust self-directed account, which will allow you to enjoy either tax-deferred or tax-free withdrawals. Of course, this is one of several options you could use.

Estate Planning Benefits

Estate planning should always be a part of mapping the way for anyone who has beneficiaries that they want to take care of upon passing away. A self-directed retirement account can be set up to allow the listed beneficiaries to receive the assets in the account once the owner has died. The best part is that this can be done with no tax implications to worry about.

Greater Investment Options

The alternative investments and how they can benefit your retirement savings were both covered before and they still hold true. You can think of these kinds of IRAs as virtually limitless since there are so many kinds of investments you could consider.

Sure, more typical assets such as stocks and bonds are great. However, nothing is wrong with capitalizing on the potential of other options such as cryptocurrency, notes, private equity, or real estate.

More Flexibility and Control

The stock market can be incredibly uncreditable and the last thing you want is to be living at its mercy because it has a chokehold on your retirement funds. This is why the power of choice is great. It means playing to your strengths and weaknesses. You may not understand the stock market very well but maybe you are an expert in the world of precious metals.

Creation and Management of a Self-directed IRA

Management of a Self-directed IRA

Self-directed IRA services are offered by trust companies or custodians. Some promoters and administrators offer similar third-party services. However, do not make the common mistake of assuming that they are custodians as they are not.

The first step is to choose your self-directed IRA custodian. You may find that the process to get your account going is so simple that you can get it done online. Of course, the availability of this sign-up option depends heavily on what is offered by the custodian you have chosen.

There are several options as far as funding your IRA goes. For example, You could use a 401(k) or an existing typical IRA account.

As is the case with the standard variations of retirement accounts, self-directed IRA rules allow you to choose from traditional, Roth, SIMPLE, Soolo 401(k), or SEP IRAs.

Note that if you should transfer funds from one of your existing IRAs to the self-directed one, it does not count as a taxable event. You could complete this process by either using a transfer or a rollover.

The former is a lot easier since the funds will go directly from one company to the next. With a rollover, the funds are given directly to you. There’s a 60-day window within which you must complete the deposit to the self-directed IRA custodian.

Should you fail to meet that window, the funds will then be treated as a withdrawal and any applicable taxes or penalties will be in full effect. It stands to reason that doing a transfer is almost always recommended where possible.

With your account funded, you can then let your custodian know what you’re interested in so the acquisition element can begin. Note that these investments are not titled in the name of the account holder. Instead, the IRA name will be used. This allows for greater separation of concerns since any investment-related expenses will be paid directly from the IRA, with income being put directly into it as well.

Choosing Your Custodian

As you can imagine, the self-directed IRA company that you choose to work with for your standard and alternative assets will have a huge hand in your success or lack thereof. Therefore, you need to go over your prospects with a fine-toothed comb before you settle on any of them. Here’s a look at the criteria you should be working with.


Depending on where self-directed IRA companies are located, they will be regulated by some kind of federal or state entity. Bear in mind that registered businesses have no reservations about showing off their accreditations, so if you have to search for it, know that there is probably no regulatory body that this business answers to.


This is another big one that these businesses tend to place front and center for the whole world to see. Think about it. If you offered a service that was doing well and customers were leaving reviews to tell other people that, wouldn’t you want everyone to see?

It’s a good idea to look at external review sites since you can never tell the extent to which a custodian may exercise some level of control over the reviews that you are seeing on their site.

Investment Options

The whole idea of going the self-directed route with your own investments, like others have before you, is to get access to different alternative asset types, which go a long way in creating the kind of portfolio diversity that you need.

It stands to reason then that you want to at least know that the custodian deals in the assets that you are interested in.

Years in Business

Sure, a brand-new business can be able to yield a great customer experience. It may even have experienced people behind the scenes. However, you’re much more likely to have a good time by sticking to businesses that have been in the industry for a notable period. The longer, the better!


Understanding various account fees is non-negotiable since they can affect the amount of your income you are allowed to retain. The fee profile may have different elements.

For example, many custodians will have a one-time fee that you will need to pay to have your account set up. Additionally, there may be an annual fee that you are expected to hand over for the maintenance of the account.

If you’re looking to use an asset such as gold, the IRS states that precious metals associated with an IRA cannot be stored in the home. Therefore, the services of an approved depository would be needed. This comes at yet another cost.


When you have questions that need to be answered, can you get any guarantees that someone will be there to answer your call or respond to your email? Support is an essential piece of the custodian puzzle. Some will even demonstrate the extent to which they take care of people, by giving you a wealth of information and being attentive even before you are officially a customer.

Dispelling Self-directed IRA Myths

The idea of a self-directed IRA can be intimidating to many, and some of that boils down to misinformation that has been spread. Therefore, here is a moment to look at some of the most common myths and have them dispelled:

  1. If you are to invest in a self-directed IRA, you’re looking at more paperwork than you would need to deal with if you were to use another investment type. Realistically, this is one of the purposes of the custodians. With a reputable one in your corner, you should find the process rather simple.
  2. When you become responsible for having to identify and select your own investment vehicles, you will have a tough time knowing where to look to locate resources that help eliminate fraud. As is the case with any other kind of investment, the onus is on the investor to conduct the required due diligence to ensure that there are no stones unturned. Additionally, there are many resources available, as well as custodians who are willing to lend their guidance.
  3. Using a traditional brokerage means that you would have fewer fees to deal with than those you must pay for working with a self-directed IRA. What’s happening is many people don’t understand the sheer amount that they’re paying for their retirement account. Look at the statements with a high level of scrutiny and you may just find that fees are seriously eating away at your earnings.
  4. If you don’t have an outstandingly large balance in your account, the idea of investing in a self-directed IRA is not for you. There are more ways than you can imagine to make smaller IRAs work for investors who do not have large amounts to invest.

What Kinds of Retirement Services Does Fidelity Offer?

The idea behind Fidelity is to ensure that there is a comprehensive set of retirement services. This is achieved through the creation of diverse offerings meant to appeal to different kinds of clientele. Some people will want a more hands-off approach while others want to be able to manage their portfolios closely by themselves.

Traditional IRA

With Fidelity, traditional IRAs are very popular as an element of retirement planning. The attractive element is the tax-deferred growth potential offered. Contributions are made here using pre-tax dollars, which means that there is no worry about paying any kind of taxes until withdrawal time comes around.

This account is aimed at those who expect that the tax rate around the time of retirement will be lower than it is in the present. When used correctly, a traditional IRA works great for long-term growth.

Roth IRA

Fidelity also offers the Roth IRA type that shares a lot of similarities with its traditional counterpart. The major difference is that after-tax dollars are used for contributions here, which means there is no taxation to worry about during retirement time when withdrawals become necessary. As you can imagine, those who see where the current tax rates are likely to be lower than future ones will go this route.

401(k) Plans

The plans offered by Fidelity are meant to ensure that both the needs of employees and employers are met. This boils down to a very convenient way to save for retirement directly from salaries when paid. Note that tax advantages are a big part of the equation too with a standard 401(k) using pre-tax dollars, or the Roth variation that allows for tax-free growth.

Why Are No Self-directed IRAs Available at Fidelity?

Complexity and Oversight of Investments

Since there are so many different alternative investments offered by self-directed IRAs, it can create a lot of management overhead. This is in addition to the specialist knowledge that would be needed by the service provider.

Investment Philosophy

The philosophy that Fidelity sticks to is accessibility through inclusiveness. In other words, whatever investment options are offered need to be able to fit the needs of both rookie and advanced investors. Mutual funds, ETFs, managed accounts, etc., fall under this category.

Client Focus

Risk management happens to also be a big part of the approach that Fidelity takes. Alternative investment options are known for being on the more volatile and less liquid side of the fence. The idea is to be a bit more conservative in an attempt to balance risks with returns.

Investor Impact

The lack of self-directed IRA options doesn’t have as large an impact as you may think. That’s because Fidelity has a wide array of other investment options that can promote growth.

The Bottom Line

Self-directed IRAs allow for the investment in alternative assets such as real estate or cryptocurrency. One of the biggest advantages is the ability to choose your investment types. This means that you can set up your diversification approach using one.

Finally, while Fidelity may not offer these kinds of accounts, it has a ton of other options to make up for the absence.

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