Self Directed IRA FAQ

What is a self-directed IRA?

Self-Directed IRA account is very similar to a traditional Individual Retirement Account. While a traditional IRA limits an account owner to investing in exchange traded funds, such as stocks and bonds, a self-directed IRA allows an account owner to invest in a broader set of non-exchange traded assets, such as, alternative investments.

What types of IRA's are available at Groundfloor?

Different types of IRAs include: Roth, Traditional, SEP, and SIMPLE. These accounts offer tax-deferred or tax-free investing on capital gains. For example, if you buy real estate through your self-directed IRA, you will not pay capital gains tax on profit. There are different types of IRAs available, and they all serve a different purpose. If you are looking to self-direct your retirement plan funds, take a look at the types of accounts Groundfloor IRA offers:

Traditional IRA

A Traditional IRA is a tax-deferred retirement savings account. Dividends, interest payments and capital gains compound each year allowing a Traditional IRA to grow faster than a taxable account.

Roth IRA

A Roth IRA is a tax-free retirement savings account that can be funded with after-tax dollars. Funds deposited continue to grow tax-free and can be withdrawn with no penalty.


A SEP IRA is a tax-deferred retirement savings account for self-employed individuals and small business owners. Contributions are tax-deductible until investments are withdrawn.

Simple IRA

A Simple IRA is a tax-deferred incentive match plan for employees. Contributions are tax-deductible, and your investments grow tax-deferred until withdrawn.

Rollover IRA

A Rollover IRA is a traditional IRA that is used by clients who have had multiple employers. Assets accumulated in employee-sponsored accounts such as a 401(k) are sometimes fortified into a single account.

Self-Employed 401(k)

A Self-Employed 401(k), also referred to as an Individual 401(k), is a retirement plan funded with after-tax dollars. There are two versions of an Individual 401(k). Both versions are for sole proprietors who have no employees.

What is the difference between a Traditional and Roth IRA?

Traditional IRA Roth IRA
Contributions Contributions may be tax deductible with a maximum contribution of $5,500 ($6,500 if age 50 or older) D.C. After-tax contributions grow tax and penalty free with a maximum contribution of $5,500 ($6,500 if age 50 or older)
Earnings May grow tax deferred, and are taxed upon withdrawal May grow tax deferred and are not taxed upon withdrawl(after age 59 1/2)
Income No income limitation Adjusted gross income has limitations
Distrubutions RMDs start at age 70 1/2 No RMDs during the lifetime of the original account owner.

Why would I invest in alternative assets with my IRA?

Alternative assets have grown to become a very popular investment, because they offer diversification and the opportunity to increase returns for retirement. When these assets are held in an IRA, earnings may grow tax-deferred (Traditional IRA) or tax-free (Roth IRA).

What should I take into consideration when investing with my IRA?

Take the time to familiarize yourself with IRAs as an investment vehicle and consult an advisor to talk about tax, legal and financial benefits and responsibilities before investing. It's great to be hands-on, but you don't want to risk the chance of being penalized for breaking an IRS rule. Stay in control, and stay ahead of your IRA investing, by consulting a subject matter expert.

Why should I choose Groundfloor?

Opening an IRA can come with costly fees. Groundfloor doesn't charge a yearly fee like our competitors do. We also work with IRA Services- one of the oldest and best custodial trust companies in the industry. IRA Services has been servicing account owners since 1979, offering the lowest fees and best customer service in the industry. IRA Services is an expert on the topic of IRS rules and regulations for holding alternative investments in IRAs. We feel that you couldn't be in better hands. Together, we'll help guide you through the investment and asset maintenance process.

How do I open a Groundfloor IRA Account?

Our clients typically open their accounts online. Groundfloor uses IRA Services' individual retirement account management system which offers bank-grade security for a seamless online experience.

Can I transfer an account to Groundfloor?

Yes. Moving your IRA from another custodian to Groundfloor requires a bit of information. To rollover an account to us from another custodian, please open and log into your account.

How long does it take to transfer/rollover cash into my Groundfloor IRA account?

A request to transfer funds is processed within two business days. Cash-only transfers typically take a few business days.