For many investors, retirement planning goes beyond stocks and bonds. Self-directed IRAs can provide another path, allowing investors to use tax-advantaged retirement funds to access alternative investments such as multifamily real estate, self-storage, senior living, oil and gas, and other private opportunities.
On the Momentum Multifamily podcast, host Dustin Miles spoke with Steve Csobaji of Camaplan, a self-directed IRA custodian, about how these accounts work, what investors should know before moving retirement funds, and why choosing the right custodian matters.
What Is a Self-Directed IRA?
Traditional retirement accounts typically limit investors to publicly traded investments. A self-directed IRA expands those options by allowing retirement funds to be invested in certain alternative assets.
Camaplan has specialized in self-directed retirement accounts for more than two decades. The company supports accounts including Traditional and Roth IRAs, SEP and SIMPLE IRAs, Solo 401(k)s, HSAs, and Coverdell Education Savings Accounts.
For real estate investors, this can create an opportunity to use existing retirement capital to participate in investments such as multifamily syndications and other private real estate deals.
How Does a Self-Directed IRA Work?
The process is relatively straightforward:
- Choose the investment. The investor identifies an opportunity, such as a multifamily or self-storage deal.
- Open the appropriate account. A self-directed IRA or another eligible tax-advantaged account is established with the custodian.
- Transfer the funds. Existing retirement funds can generally be transferred directly between custodians without creating a taxable event when the transaction is structured correctly.
- Direct the investment. The investor submits instructions telling the custodian where the retirement funds should be invested.
- Complete compliance review. The custodian reviews the investment documents to ensure the transaction does not contain prohibited elements under IRS rules.
- Invest and receive returns. Once completed, investment returns flow back into the tax-advantaged account.
An important distinction is that a custodian is not evaluating whether an investment is a good deal. Its role is to administer the account and help ensure transactions comply with applicable rules.
Rolling an Old 401(k) Into a Self-Directed IRA
One of the most useful strategies discussed during the interview was moving retirement funds from an old employer-sponsored 401(k) into a self-directed IRA.
A direct rollover can generally allow eligible funds to move from a former employer’s retirement plan into an IRA without current taxation or penalties.
Csobaji emphasized the importance of setting up the IRA first and directing the former plan administrator to send the funds directly to the new custodian rather than making the check payable to the investor.
Investors also need to pay attention to the tax treatment of their retirement funds. Pre-tax 401(k) money generally belongs in a Traditional or Rollover IRA, while Roth 401(k) funds need to be handled appropriately to preserve their tax-advantaged status.
Because rollover rules can be complex, investors should consult a qualified tax or financial professional before moving retirement funds.
Choosing the Right Custodian
Cost is an important consideration when selecting a self-directed IRA custodian, but Csobaji stressed that service and accessibility matter, too.
Private real estate and other alternative investments can be time-sensitive. Delays, unclear instructions, or difficulty reaching a custodian can potentially cause an investor to miss an investment deadline.
Beyond fees, investors should consider how responsive the custodian is, how clearly it communicates, and how experienced it is with the types of investments the investor plans to pursue.
Do Your Due Diligence
A self-directed IRA gives investors more control over where their retirement dollars go—but that control comes with responsibility.
Investors still need to perform thorough due diligence on both the investment sponsor and the underlying deal. Important factors include the sponsor’s track record, investment strategy, communication practices, and experience.
Csobaji also emphasized that Camaplan’s role is educational and administrative rather than advisory. The company does not endorse specific investments or sponsors.
For investors considering self-directed retirement strategies, the takeaway is simple: more investment flexibility doesn’t eliminate the need for careful research.
Final Thoughts
Self-directed IRAs can give investors another way to diversify retirement portfolios beyond traditional stocks and bonds. For real estate investors, they can also provide a way to put existing retirement capital to work in alternative investments such as multifamily real estate.
But the strategy requires investors to understand the rules, choose a capable custodian, carefully evaluate investment opportunities, and seek professional advice when appropriate.
Dustin’s conversation with Steve Csobaji highlighted an important point for investors exploring alternative assets: the right retirement account can create more investment options, but the responsibility for choosing and evaluating those investments ultimately remains with the investor.