IRA Financial Blog

Self-Directed SEP IRA

How to make SEP IRA a self-directed IRA

The Self-Directed SEP IRA

A Self-Directed SEP IRA is a great way for individuals who are self-employed to establish a retirement account. Contrasting a traditional SEP IRA, a Self-Directed SEP IRA allows individuals to diversify their retirement accounts by investing in alternative assets. The decision to open a Self-Directed SEP IRA allows individuals to diversify their retirement accounts by investing in what the know. However, it is important to note that not all Self-Directed SEP IRA custodians allow individuals to purchase the same assets. Instead, some companies only allow individuals to purchase Cryptos or precious metals. At IRA Financial, your Self-Directed SEP IRA allows you to invest in a wide range of diversified assets.

Read More: Alternative Investments in an IRA


The SEP IRA was designed for self-employed individuals and small business owners. This is very similar to the Solo 401(k), but with a few differences. Any contributions you make to an SEP IRA are tax-deductible. Additionally, earnings within the account are tax-free until you make a withdrawal. However, before opening a Self-Directed SEP IRA, it is important to consider its benefits and limitations. For example, did you know you can invest more in a Solo 401(k)? In addition, a Self-Directed 401(k) has unique features such as the ability to take a loan against your retirement funds, and the ability to use non-recourse financing to invest in real-estate.

Learn More: Why Choose a Solo 401(k) vs. a SEP IRA

How to Fund a Self-Directed SEP IRA

There are multiple ways that individuals can fund their new Self-Directed accounts. Individuals can easily open an account with IRA Financial through our app, online, or by calling one of dedicated professionals. Individuals who wish to open a Self-Directed SEP IRA can easily begin funding their new accounts by transferring money directly from your bank. In other cases, individuals may want to change IRA custodians. For example, you may already have a Self-Directed SEP IRA with another provider. Individuals have the option to roll their existing Self-Directed IRAs to IRA Financial.

One common reason that individuals decide to move their existing Self-Directed SEP accounts to IRA Financial is due to our fee structure. Although many Self-Directed IRA custodians offer “free accounts,” they fail to mention account valuation fees, and transaction fees. IRA Financial is one of the few Self-Directed IRA Custodians that use a flat fee structure. This means, you pay a pre-established fee annually.

Another common reason individuals decide to move their Self-Directed SEP IRA to IRA Financial is due to the large diversity of assets you can hold in your IRA. Although many companies offer Self-Directed SEP IRAs, some simply offer the ability to invest in Cryptos or precious metals. However, at IRA Financial, you can invest in almost anything. While there are some stipulations on Self-Directed investments, we commonly see individuals use their retirement funds to purchase real-estate, hard-money loans, invest in private companies, and more!

Many people ask if they can use their existing retirement accounts to fund a Self-Directed IRA. Individuals can use their existing retirement accounts to fund their Self-Directed SEP IRA or Solo 401(k) plans. The process is called a transfer or a rollover. Transfers and rollovers are types of transactions that allow movements of assets between like IRAs. For example:

  • Traditional IRA to Traditional IRA. This includes Traditional IRAs that contain simplified employee pension (SEP) contributions.

A Self-Directed SEP IRA transfer is the most common method of funding a Self-Directed IRA LLC or Self-Directed Roth IRA.

Transfer a SEP IRA to a Self-Directed SEP IRA

A transfer of Traditional IRA-to Traditional IRA is one of the most common methods of moving assets from one IRA to another. This includes Traditional IRAs that contain Self-Directed SEP IRA contributions.

A transfer usually occurs between two separate financial organizations. However, a transfer may also occur between IRAs at the same organization. If an IRA transfer is handled correctly the transfer is neither taxable nor reportable to the IRS.

With an IRA transfer, the IRA holder directs the transfer, but does not actually receive the IRA assets. Instead, the distributing and receiving financial institutions will complete the transfer.

Basically, in order for the IRA transfer to be tax-free and penalty-free, the IRA holder must not receive the IRA funds in a transfer. Rather, the check must be payable to the new IRA custodian. Also, there is no reporting or withholding to the IRS on an IRA transfer.

Self-Directed SEP IRA with IRA Financial Group

The retirement tax professionals at the IRA Financial Group will assist you in funding your Self-Directed IRA LLC. Our specialists will transfer your current SEP IRA funds to your new Self-Directed SEP IRA structure tax-free and penalty-free.

How to Transfer a SEP IRA to a Self-Directed IRA

You receive a retirement tax professional to achieve a Self-Directed SEP IRA. He or she will work with you to establish your new Self-Directed IRA account at a new FDIC and IRS approved IRA custodian.

Then, the new custodian will request the transfer of your SEP IRA assets from the existing IRA custodian. Of course, they will only do this after your consent. The transfer will be tax-free and penalty-free.

Once the transfer of IRA funds is either complete by wire or check tax-free to the new IRA custodian, the new custodian will be able to invest the IRA assets into the new IRA LLC “checkbook control” structure. With the newly funded IRA LLC, you become manager of the LLC. This provides you with checkbook control over your retirement funds and investments.

60-Day Rollover Rule for the Self-Directed SEP IRA

Most IRA holders have 60 days from receipt of the eligible rollover distribution from a SEP IRA account to fund the Self-Directed IRA LLC.

The 60-day period starts the day after the individual receives the distribution. Usually, no exceptions apply to the 60-day time period. However, in cases where the 60-day period expires on a Saturday, Sunday, or legal holiday, the individual may execute the rollover on the following business day.

Rollover All or a Portion of your Funds/Assets

If you receive an eligible rollover distribution, you can rollover the entire amount you receive or just a portion. The amount of the eligible rollover distribution that doesn’t go into an IRA is generally included in your gross income. As a result, it may be subject to a 10% early distribution penalty if you are under the age of 59 1/2.

Self-Directed IRA Transfer Experts & Advantages

The retirement tax professionals at the IRA Financial Group will assist you in transferring your SEP IRA tax-free and penalty-free to a “checkbook control” Self-Directed IRA LLC solution.

You work with a retirement tax professional to establish to Self-Directed SEP IRA. We structure the IRA in the most tax efficient manner. It will not be in violation of any IRS Rules.

At IRA Financial Group, we setup a Self-Directed SEP IRA so you have the ability to make alternative asset investments. This includes:

  • Real Estate
  • Tax Liens
  • Cryptocurrency
  • Much more!

Additionally, you will be able to control your retirement funds with checkbook control. All investment decisions are truly yours. You no longer have to rely on a custodian to approve investment decisions. As a result, this does away with custodian delays and fees.

You cannot do this with a traditional SEP IRA. It’s still has all the features of a SEP IRA, such as contribution limits, however you can now broaden your investment opportunities.

Therefore, if you wish to make investments outside of stocks, bonds and mutual funds, the best route is the Self-Directed SEP IRA.

Get in Touch

Do you still have questions about the advantages or setup of a Self-Directed SEP IRA? Get in touch with IRA Financial Group directly at 800-472-0646. You can also fill out the form to speak with an IRA specialist – they’re on-site and available to answer all your questions.

Did You Know?

Your current SEP IRA can be changed over to a Self-Directed SEP IRA structure, tax- and penalty-free. And when your new custodian handles all the paperwork, it can be a relatively painless alteration.

Contact us today to learn more or to get started.


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