Any type of IRA can be structured as a self-directed IRA with checkbook Control. The account type you set up will correspond to the type of funds you are bringing in, whether that's a rollover from a prior employer plan, a transfer from an existing IRA, or new cash contributions.
The following IRA types are all compatible with the IRA Trust and IRA LLC structure:
The tax treatment of the account follows the source funds. A Traditional IRA remains tax-deferred; a Roth IRA retains its tax-free growth status. Self-direction changes how investments are executed, not how the account is taxed.
A single IRA can only hold funds of compatible tax treatment and ownership. You cannot combine Traditional IRA and Roth IRA funds in one account, and you cannot combine personal IRA funds with inherited IRA funds. If you are bringing in multiple pools of money with different tax status or ownership, separate IRA accounts are required.
Which fund combinations can and cannot be consolidated into one IRA?
Compatible funds can be combined. Incompatible funds require separate accounts. Common examples:
Can I self-direct an inherited IRA?
Yes. An Inherited Traditional or Inherited Roth IRA can be set up as a self-directed checkbook IRA. Funding must be via direct trustee-to-trustee transfer from one or more existing inherited IRAs that share the same original account owner and the same beneficiary designation.
Important: inherited IRAs are subject to specific distribution requirements that do not apply to standard IRAs. Depending on your relationship to the original owner and the date of their passing, your account may be subject to annual Required Minimum Distributions, a mandatory 10-year distribution period, or both. Consult a qualified tax professional to confirm the requirements that apply to your specific account.
What about a SIMPLE IRA?
A SIMPLE IRA can be self-directed, but there is one timing restriction: a SIMPLE IRA that has been open for less than two years can only be transferred to another SIMPLE IRA. Once the two-year period has passed, it can be transferred to any compatible tax-deferred IRA.
This information is provided for educational purposes only and should not be interpreted as tax, legal, or investment advice. Readers are encouraged to consult a qualified professional who can offer guidance based on their personal situation.