SDIRA Investing · Retirement Strategy · Alternative Assets
Self-Directed Roth vs. Traditional IRA for Alternative Investments
Key Takeaways
- A Self-Directed IRA (SDIRA) allows investment in alternative assets — including mortgage note funds — beyond the stocks and bonds offered by traditional custodians.
- The Self-Directed Roth IRA uses after-tax contributions; qualified withdrawals in retirement are 100% tax-free, including all growth and income distributions.
- The Self-Directed Traditional IRA offers tax-deductible contributions (subject to income limits); growth is tax-deferred and distributions in retirement are taxed as ordinary income.
- For alternative investments generating consistent monthly income — like an 8–10% preferred return from a mortgage note fund — the Roth SDIRA typically produces superior after-tax long-term outcomes.
- Traditional SDIRAs require minimum distributions (RMDs) starting at age 73; Roth SDIRAs have no RMDs during the account holder's lifetime.
- Existing 401(k) and IRA balances can be rolled over into an SDIRA without triggering taxes, bypassing annual contribution limits.
- Both account types are subject to IRS prohibited transaction rules — always work with a qualified SDIRA custodian and tax advisor.
- Self-employed investors can also use SEP IRAs (up to $70,000/year) or SIMPLE IRAs — both can be rolled into a Self-Directed Traditional IRA to access alternative investments, with significantly higher contribution capacity than a standard IRA.
If you're an accredited investor exploring alternative investments like mortgage note funds, you've likely discovered that a Self-Directed IRA can significantly amplify your returns — by allowing real estate-backed income to compound inside a tax-advantaged account rather than flowing to you as taxable income each year.
But the question most investors face next is: Roth or Traditional? The answer matters more with alternative investments than it does with conventional assets, because the income profile is different — monthly distributions, preferred returns, and note fund payoffs all have distinct tax implications depending on which account structure holds them.
This guide breaks down the core differences between Self-Directed Roth vs Traditional IRAs, how each handles the income generated by alternative investments, and which structure tends to be the better fit for different investor situations.
What Is a Self-Directed IRA?
- Self-Directed IRA (SDIRA)
- A Self-Directed IRA is a retirement account that allows investment in alternative assets beyond conventional stocks, bonds, and mutual funds. Available in both Traditional and Roth structures, SDIRAs are held by specialized custodians who permit the account holder to direct investments into assets like mortgage note funds, real estate, private equity, and other private placements. The tax treatment of the account depends on whether it is structured as a Traditional or Roth IRA.
A standard IRA — whether at Fidelity, Vanguard, or your bank — only permits investment in publicly traded assets. An SDIRA removes that restriction, opening the door to the broader universe of alternative investments that have historically been accessible primarily to institutional investors and high-net-worth individuals.
The "self-directed" in SDIRA refers to investment selection — not account structure. The tax rules, contribution limits, and withdrawal requirements for SDIRAs are identical to those of standard IRAs. What differs is the custodian's willingness to hold non-traditional assets, and the investor's responsibility to conduct due diligence on those assets independently.
What Is the Core Difference Between a Roth and Traditional SDIRA?
The fundamental distinction is timing: when do you pay taxes?
Contributions are made with after-tax dollars. You receive no upfront tax deduction. In exchange, qualified withdrawals in retirement — including all growth and income generated inside the account — are completely tax-free.
Contributions may be tax-deductible depending on your income and workplace retirement plan access. Growth is tax-deferred — you pay ordinary income tax on withdrawals in retirement, including all the growth generated inside the account.
For most alternative investment scenarios — particularly those involving consistent monthly income distributions — this timing difference has a compounding effect over time that makes the choice consequential.
How Does the Tax Treatment Compare?
With conventional investments like index funds, the tax difference between Roth and Traditional is meaningful but relatively predictable — you're primarily deferring or eliminating capital gains and dividends. With alternative investments that generate monthly income distributions, the math shifts further in favor of the Roth structure.
Traditional SDIRA: Tax-Deferred Growth
When your mortgage note fund distributes monthly income into your Traditional SDIRA, those distributions compound tax-deferred inside the account. No tax is owed in the year the income is received. However, when you withdraw funds in retirement, the entire balance — original contributions, all growth, and all accumulated income — is taxed as ordinary income at your then-current tax rate.
Roth SDIRA: Tax-Free Growth
When your mortgage note fund distributes monthly income into your Roth SDIRA, those distributions compound completely tax-free. When you take qualified withdrawals in retirement (after age 59½ and after the account has been open at least five years), the entire balance — every dollar of preferred return that has compounded over years — is withdrawn tax-free.
The longer the investment horizon and the higher the income yield, the more the Roth advantage compounds. An 8–10% preferred return compounding tax-free for 15–20 years produces meaningfully more after-tax wealth than the same return compounding tax-deferred — especially in a rising tax rate environment.
Full Side-by-Side Comparison
| Feature | Self-Directed Roth IRA | Self-Directed Traditional IRA |
|---|---|---|
| Contribution Type | After-tax dollars (no deduction) | Pre-tax or after-tax (deduction subject to income limits) |
| 2026 Contribution Limit | $7,000 ($8,000 if age 50+) | $7,000 ($8,000 if age 50+) |
| Income Limit to Contribute | Yes — phases out at higher incomes | No income limit to contribute (deductibility may phase out) |
| Tax on Growth | None — grows tax-free | Tax-deferred — taxed at withdrawal |
| Tax on Qualified Withdrawals | None — 100% tax-free | Ordinary income tax rate |
| Monthly Fund Distributions | Compound tax-free in account | Compound tax-deferred in account |
| Required Minimum Distributions | None during account holder's lifetime | Required starting at age 73 |
| Early Withdrawal (Under 59½) | Contributions only — no penalty; earnings subject to tax + 10% penalty | 10% penalty + ordinary income tax on entire amount |
| Rollover Eligible | Yes — via Roth conversion (taxable event) | Yes — direct rollover from 401(k), 403(b), other IRAs |
| Best For | Investors expecting higher tax rates in retirement; longer time horizons; high-income alternative investments | Investors expecting lower tax rates in retirement; those needing upfront deduction now |
How Do Alternative Investments Like Mortgage Note Funds Work Inside an SDIRA?
When an SDIRA invests in a mortgage note fund like the Labrador Lending Integrity Income Fund, the mechanics work as follows:
Your SDIRA custodian — a specialized firm like Directed IRA, Equity Trust, or Millennium Trust — holds the fund investment on behalf of your retirement account. The investment is titled in the name of the IRA, not in your personal name.
Each month, the Integrity Income Fund's distributions — based on the 8–10% annual preferred return — are paid directly to your SDIRA custodian account, not to you personally. The money stays inside the IRA.
Inside a Traditional SDIRA, those distributions accumulate tax-deferred. Inside a Roth SDIRA, they accumulate tax-free. Either way, there is no annual tax bill on the income while it remains inside the account.
Accumulated distributions can be reinvested — either back into the same fund (if the fund permits) or directed to other investments inside the SDIRA, compounding the tax-advantaged growth over time.
In retirement (after age 59½), you can withdraw from the SDIRA. Traditional SDIRA withdrawals are taxed as ordinary income. Roth SDIRA qualified withdrawals are completely tax-free — the preferred return income that compounded for years exits the account with no tax owed.
What Does Monthly Income Look Like Inside Each Account?
The tax treatment difference becomes most visible when you model out the monthly distributions from a fund investment over time. The following illustration uses a $100,000 SDIRA investment in the Integrity Income Fund at a 9% annual preferred return.
Illustration: $100,000 SDIRA Investment at 9% Annual Preferred Return
For illustrative purposes only. Assumes consistent preferred return, no additional contributions, and reinvestment of distributions. Actual results depend on fund performance, tax rates, and individual circumstances. Consult a qualified tax advisor.
If $750/month in distributions compounds tax-free inside a Roth SDIRA for 20 years at the same 9% rate, the account grows significantly more than the same amount compounding in a taxable account — or even a Traditional IRA where taxes are owed upon withdrawal. The longer the time horizon, the greater the Roth advantage for high-income alternative investments.
What Are Required Minimum Distributions — and Why Do They Matter for SDIRA Investors?
Required Minimum Distributions (RMDs) are one of the most important — and most frequently overlooked — differences between Roth and Traditional SDIRAs for alternative investment holders.
Traditional SDIRA: RMDs Required at Age 73
Under current IRS rules, Traditional IRA holders must begin taking RMDs starting at age 73. The annual RMD amount is calculated based on your account balance and IRS life expectancy tables. You must withdraw this minimum amount each year regardless of whether you need or want the income.
For Traditional SDIRA investors holding illiquid alternative investments — like a mortgage note fund with a minimum commitment period — this creates a practical problem: how do you satisfy an RMD from an account holding an illiquid fund investment? This requires careful planning with your custodian and tax advisor well in advance of age 73.
Roth SDIRA: No RMDs During Your Lifetime
Roth IRAs are not subject to RMDs during the account holder's lifetime. Your Roth SDIRA can continue compounding tax-free indefinitely, with no forced withdrawals. This makes the Roth structure significantly more flexible for investors holding alternative investments with defined commitment periods.
If you hold illiquid alternative investments in a Traditional SDIRA, plan for RMDs well before age 73. Options include maintaining a liquid portion of the SDIRA to satisfy RMDs, timing fund redemptions to align with RMD requirements, or aggregating RMDs across multiple IRAs. Failure to take required RMDs results in a 25% excise tax on the amount not withdrawn. Always work with a qualified tax advisor on RMD strategy.
Which SDIRA Is Better for Alternative Investments?
There is no universally correct answer — but there are clear patterns by investor profile. Here's a framework for thinking through the decision:
How Do You Open a Self-Directed IRA?
Opening an SDIRA requires working with a specialized custodian rather than a conventional brokerage. Here's the process:
Decide between Roth and Traditional based on your tax situation, time horizon, and income expectations. Consult a tax advisor before making this decision.
Choose a custodian experienced with alternative investments. Common SDIRA custodians for private fund investing include Directed IRA, Equity Trust, Millennium Trust, and Alto IRA. Confirm they can hold mortgage note fund investments before opening the account.
Fund through a new annual contribution (up to $7,000 / $8,000 for 50+), a direct rollover from an existing 401(k) or IRA, or a Roth conversion from an existing Traditional IRA (taxable event).
Instruct your custodian to invest the SDIRA funds into the mortgage note fund. Complete the fund's subscription agreement and any required direction of investment forms with your custodian.
Fund distributions flow directly to your custodial account. Review monthly statements and ensure distributions are correctly recorded as IRA income — not personal income.
What About SEP and SIMPLE IRAs for Self-Employed Investors?
If you're self-employed, a freelancer, a consultant, or a small business owner, you have access to retirement account types with significantly higher contribution limits than standard IRAs. Both SEP IRAs and SIMPLE IRAs can be powerful vehicles for deploying larger amounts of capital into alternative investments — though they work differently and have distinct rules around self-direction and rollovers.
What Is a SEP IRA?
- SEP IRA (Simplified Employee Pension)
- A retirement account available to self-employed individuals and small business owners. Contributions are made by the employer (which may be you, if self-employed) and are tax-deductible. The 2026 contribution limit is up to 25% of compensation or $70,000 — whichever is less — making the SEP IRA one of the highest-contribution retirement vehicles available. SEP IRAs function like Traditional IRAs for tax purposes: contributions are pre-tax, growth is tax-deferred, and withdrawals in retirement are taxed as ordinary income.
SEP IRAs can be self-directed. A Self-Directed SEP IRA follows the same rules as a standard SEP IRA but is held by a specialized SDIRA custodian that permits investment in alternative assets like mortgage note funds. For self-employed accredited investors, a SEP SDIRA can represent a significantly larger capital deployment opportunity than a standard IRA — up to $70,000 per year versus $7,000.
What Is a SIMPLE IRA?
- SIMPLE IRA (Savings Incentive Match Plan for Employees)
- A retirement plan available to small businesses with 100 or fewer employees. Both employees and employers can contribute. The 2026 employee contribution limit is $16,500 ($20,000 if age 50+). SIMPLE IRAs also function like Traditional IRAs — contributions are pre-tax, growth is tax-deferred, and withdrawals are taxed as ordinary income. SIMPLE IRAs can be self-directed, though fewer custodians offer this option compared to SEP SDIRAs.
SIMPLE IRAs have a critical restriction: funds cannot be rolled over to another IRA type — including a Self-Directed IRA — until two years after your first contribution to the SIMPLE IRA plan. Rolling funds out before the two-year mark triggers a 25% early withdrawal penalty (vs. the standard 10%). If you have a newer SIMPLE IRA and want to access alternative investments, you may need to wait until the two-year window passes before rolling into an SDIRA.
How Do SEP and SIMPLE IRAs Compare to Standard IRAs for Alternative Investing?
| Feature | Standard IRA (Roth or Traditional) | SEP IRA | SIMPLE IRA |
|---|---|---|---|
| 2026 Contribution Limit | $7,000 ($8,000 age 50+) | Up to $70,000 (25% of comp) | $16,500 ($20,000 age 50+) |
| Who Can Contribute | Individuals with earned income | Employer only (can be self) | Employee + employer match |
| Tax Treatment | Roth (after-tax) or Traditional (pre-tax) | Pre-tax only (like Traditional) | Pre-tax only (like Traditional) |
| Self-Directed Option | Yes — widely available | Yes — via SDIRA custodian | Yes — fewer custodians offer this |
| Rollover to SDIRA | Yes — direct rollover available | Yes — rolls into Traditional SDIRA | Yes — but only after 2 years |
| Required Minimum Distributions | Traditional: Yes at 73 / Roth: No | Yes — starting at age 73 | Yes — starting at age 73 |
| Roth Option Available | Yes (Roth IRA) | No — pre-tax only | SIMPLE Roth IRA available (2024+) |
| Best For | All investors; Roth for tax-free growth | Self-employed with high income; maximum contribution flexibility | Small business owners with employees |
How Self-Employed Investors Access Alternative Investments Through These Accounts
The most straightforward path for a self-employed investor wanting to invest a SEP IRA or SIMPLE IRA into an alternative investment like a mortgage note fund is to roll existing balances into a Self-Directed Traditional IRA:
Select an SDIRA custodian that accepts SEP or SIMPLE IRA rollovers and has experience with private fund investments. Confirm they can hold mortgage note fund investments before proceeding.
Direct a tax-free rollover from your existing SEP or SIMPLE IRA into the new Self-Directed Traditional IRA. For SIMPLE IRAs, confirm you are past the two-year holding requirement before initiating the rollover.
Instruct your custodian to invest the SDIRA balance into the mortgage note fund. Because SEP contributions can be up to $70,000 annually, a self-employed investor can potentially deploy significantly more capital than the standard $7,000 IRA limit.
While SEP and SIMPLE IRAs don't have a direct Roth contribution option (with limited exceptions), you can convert existing Traditional SDIRA or SEP IRA balances to a Roth SDIRA — paying tax on the converted amount now in exchange for tax-free growth going forward. This strategy works best in lower-income years or when tax rates are expected to rise.
For a self-employed accredited investor earning $200,000+, a SEP IRA allows contributions of up to $50,000 per year (25% of $200,000). Directed into a Self-Directed SEP IRA invested in a mortgage note fund at 9% annual preferred return, that generates approximately $4,500/year in tax-deferred monthly distributions from year-one contributions alone — compounding over a career into a substantially larger tax-deferred retirement asset than a standard IRA could ever build at $7,000/year. Consult a tax advisor to determine the right contribution amount for your business structure.
What Are Prohibited Transactions in an SDIRA — and How Do You Avoid Them?
SDIRAs come with strict IRS rules designed to prevent self-dealing. Violating these rules — even unknowingly — can result in the SDIRA losing its tax-advantaged status entirely, with the full account balance treated as taxable income in the year of the violation.
Who Are Disqualified Persons?
- You (the account holder)
- Your spouse
- Your lineal ascendants and descendants (parents, children, grandchildren)
- Spouses of lineal descendants
- Any fiduciary of the IRA
- Companies owned 50%+ by any of the above
Common Prohibited Transaction Examples
- Investing SDIRA funds in a business you personally own or control
- Lending SDIRA money to yourself or a disqualified person
- Personally benefiting from an SDIRA investment (e.g., living in a property owned by the SDIRA)
- Using SDIRA funds to pay expenses you personally owe
- Receiving compensation from the SDIRA beyond allowable fees
Investing your SDIRA in a third-party private fund — like the Labrador Lending Integrity Income Fund, which has no connection to you or disqualified persons — is generally not a prohibited transaction. The IRS concern is self-dealing, not alternative investments generally. However, always confirm with a qualified SDIRA custodian and tax advisor that your specific investment does not involve any disqualified persons or self-dealing.
Key Terms Glossary
- Self-Directed IRA (SDIRA)
- A retirement account that permits investment in alternative assets — including mortgage note funds, real estate, and private equity — beyond conventional stocks and bonds. Available in both Traditional and Roth structures.
- Roth SDIRA
- A Self-Directed IRA funded with after-tax contributions. Growth and qualified withdrawals are 100% tax-free. No required minimum distributions during the account holder's lifetime.
- Traditional SDIRA
- A Self-Directed IRA that may accept tax-deductible contributions (subject to income limits). Growth is tax-deferred. Withdrawals in retirement are taxed as ordinary income. Subject to RMDs starting at age 73.
- Required Minimum Distribution (RMD)
- A minimum annual withdrawal required from Traditional IRAs starting at age 73 under IRS rules. The amount is calculated based on account balance and IRS life expectancy tables. Roth IRAs are not subject to RMDs during the owner's lifetime.
- Roth Conversion
- The process of transferring funds from a Traditional IRA to a Roth IRA. The converted amount is subject to ordinary income tax in the year of conversion. After conversion, the funds grow tax-free inside the Roth account.
- Backdoor Roth IRA
- A strategy allowing high-income earners who exceed the Roth IRA contribution income limits to contribute to a Roth IRA indirectly — by making a non-deductible Traditional IRA contribution and then converting it to a Roth. Consult a tax advisor for current rules.
- Prohibited Transaction
- Any IRS-disallowed transaction between an SDIRA and a disqualified person — including the account holder, spouse, and lineal family members. Prohibited transactions can result in the SDIRA losing its tax-advantaged status, triggering full account taxation.
- Disqualified Person
- An individual or entity prohibited from transacting with an SDIRA — including the account holder, their spouse, lineal descendants and ascendants, and companies owned 50%+ by any of the above.
- SDIRA Custodian
- A specialized financial institution that holds SDIRA assets, processes transactions, and provides IRS-required reporting. SDIRA custodians — unlike conventional brokerages — permit the account holder to direct investments into alternative assets.
- SEP IRA (Simplified Employee Pension)
- A retirement account for self-employed individuals and small business owners with a 2026 contribution limit of up to $70,000 (25% of compensation). Functions like a Traditional IRA — pre-tax contributions, tax-deferred growth, taxable withdrawals. Can be self-directed to invest in alternative assets.
- SIMPLE IRA (Savings Incentive Match Plan for Employees)
- A retirement plan for small businesses with ≤100 employees. 2026 employee contribution limit is $16,500 ($20,000 age 50+). Functions like a Traditional IRA. Funds cannot be rolled over to another IRA type until two years after first contribution — a critical rule for investors considering an SDIRA rollover.
- Preferred Return
- The minimum return investors in a private fund receive before fund managers earn profit distributions. For the Labrador Lending Integrity Income Fund, the preferred return is 8–10% annually, paid monthly — a return that compounds powerfully inside a Roth SDIRA.
Frequently Asked Questions
What is a Self-Directed IRA (SDIRA)?
A Self-Directed IRA is a retirement account that allows investment in alternative assets — like mortgage note funds, real estate, and private equity — beyond the stocks and bonds available at conventional brokerages. SDIRAs are held by specialized custodians and come in both Traditional (tax-deferred) and Roth (tax-free growth) structures. The IRA tax rules are the same; only the investment options differ.
What is the difference between a Self-Directed Roth IRA and a Self-Directed Traditional IRA?
The core difference is when you pay taxes. With a Self-Directed Traditional IRA, contributions may be tax-deductible and growth is tax-deferred — you pay ordinary income tax on withdrawals in retirement. With a Self-Directed Roth IRA, contributions are made with after-tax dollars, but qualified withdrawals in retirement are completely tax-free — including all growth and income generated inside the account. For high-yield alternative investments, the Roth's tax-free compounding typically produces superior long-term outcomes.
Can I use a Self-Directed IRA to invest in a mortgage note fund?
Yes. Both Self-Directed Traditional and Roth IRAs can invest in mortgage note funds. Monthly fund distributions flow directly into your SDIRA custodial account and compound inside the IRA — tax-deferred in a Traditional SDIRA, or tax-free in a Roth SDIRA. The Labrador Lending Integrity Income Fund is SDIRA-eligible and accepts investments from both account types.
Which SDIRA is better for investing in a mortgage note fund?
For most income-focused investors with a long time horizon, the Self-Directed Roth IRA offers superior outcomes. Monthly distributions at an 8–10% preferred return compound completely tax-free inside a Roth SDIRA, and qualified withdrawals in retirement are 100% tax-free. The Traditional SDIRA is better suited for investors who expect to be in a significantly lower tax bracket in retirement, or who need the current-year tax deduction. Always consult a qualified tax advisor before making this decision.
Do Self-Directed IRAs have required minimum distributions?
Self-Directed Traditional IRAs require minimum distributions starting at age 73 under current IRS rules. This can create planning challenges for holders of illiquid alternative investments — you must take a minimum withdrawal regardless of whether the investment can be liquidated. Self-Directed Roth IRAs have no RMDs during the account holder's lifetime, making them significantly more flexible for alternative investment holders.
What are the contribution limits for a Self-Directed IRA in 2026?
The 2026 IRA contribution limit is $7,000 per year, or $8,000 if you are age 50 or older. This limit applies to the combined total of all Traditional and Roth IRA contributions in a single tax year. Note that direct Roth IRA contributions phase out at higher incomes — consult a tax advisor if your income is above the threshold. Rollovers from existing 401(k) or IRA accounts are not subject to this annual limit.
Can I roll over an existing 401(k) or IRA into a Self-Directed IRA?
Yes. Existing 401(k), 403(b), and traditional IRA balances can be rolled over into a Self-Directed Traditional IRA without triggering taxes. A Traditional IRA can also be converted to a Roth SDIRA through a Roth conversion — but the converted amount is subject to ordinary income tax in the conversion year. Rollovers allow you to deploy existing retirement savings into alternative investments without being constrained by annual contribution caps.
Can I use a SEP IRA or SIMPLE IRA to invest in alternative assets?
Yes. Both SEP IRAs and SIMPLE IRAs can be self-directed, allowing investment in alternative assets like mortgage note funds. The most common path is to roll existing SEP or SIMPLE IRA balances into a Self-Directed Traditional IRA with a qualified SDIRA custodian. SEP IRAs are particularly powerful for self-employed investors because contribution limits are up to $70,000 per year — far exceeding the standard $7,000 IRA limit — meaning significantly more capital can be deployed into alternative investments. Note that SIMPLE IRAs have a two-year waiting period before funds can be rolled over to another IRA type, including an SDIRA.
What is the contribution limit for a SEP IRA in 2026?
For 2026, the SEP IRA contribution limit is the lesser of 25% of compensation or $70,000. For self-employed individuals, compensation is generally calculated as net self-employment income after the deduction for self-employment tax. This makes the SEP IRA one of the highest-contribution retirement vehicles available to self-employed investors. Consult a tax advisor to calculate your maximum SEP IRA contribution based on your specific business structure and income.
What is the SIMPLE IRA two-year rule?
SIMPLE IRA funds cannot be rolled over to another type of IRA — including a Self-Directed IRA — until two years after your first contribution to the SIMPLE IRA plan. If you roll SIMPLE IRA funds before the two-year period expires, you face a 25% early withdrawal penalty (rather than the standard 10%). Once the two-year period has passed, SIMPLE IRA balances can be rolled into a Self-Directed Traditional IRA without penalty, enabling investment in alternative assets like mortgage note funds.
What is a prohibited transaction in an SDIRA?
A prohibited transaction is any IRS-disallowed dealing between your SDIRA and a disqualified person — including yourself, your spouse, or close family members. Examples include lending SDIRA funds to yourself, investing in a business you personally control, or personally benefiting from an SDIRA-owned asset. Violations can result in the entire SDIRA being treated as distributed — triggering taxes and penalties on the full balance. Investing in a third-party private fund with no connection to disqualified persons is generally safe, but always confirm with your custodian and tax advisor.
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Bottom Line: Which SDIRA Is Right for You?
For most accredited investors using retirement funds to invest in mortgage note funds, the Self-Directed Roth IRA offers a compelling long-term advantage. Monthly distributions compounding at 8–10% inside a tax-free account, with no RMDs forcing distributions at an inconvenient time, and qualified withdrawals that exit entirely tax-free — the Roth structure is purpose-built for the kind of consistent, high-yield income that alternative investments like mortgage note funds generate.
The Traditional SDIRA has its place — particularly for investors rolling over large pre-tax retirement balances who want to defer the tax bill, or those who genuinely expect to be in a much lower bracket in retirement. For many investors, holding both types of SDIRAs — traditional for rollovers, Roth for new contributions — provides flexibility and tax diversification in retirement.
What matters most is not choosing perfectly between the two — it's getting the retirement dollars working in a structure that lets alternative investment income compound without unnecessary tax drag. An SDIRA of either type accomplishes that goal far better than a taxable investment account.
The first step is connecting with a qualified SDIRA custodian and tax advisor to determine the right structure for your situation — then exploring how the Integrity Income Fund fits within that account.
References & Further Reading
- IRS — IRA Rules and Guidance
- IRS — Required Minimum Distributions (RMDs)
- IRS — Prohibited Transactions in IRAs
- U.S. Securities and Exchange Commission — Regulation D Private Placements
- Labrador Lending — What Is a Mortgage Note?