The 1031 Exchange Institute

Welcome to The 1031 Exchange Institute™. The 1031 Exchange Institute is your complete online resource for 1031 exchange, 1033 exchange, 1034 exchange, 721 exchange, 453 installment sale and 121 exclusion information.  Information will also be provided regarding Self-Directed IRAs, including Traditional IRAs, ROTH IRAs, SEP-IRAs and SIMPLE IRAs. 

The 1031 Exchange Institute is dedicated to educating and informing real estate investors and their advisors on the benefits of 1031 tax-deferred exchanges and other tax deferred and tax exlcusion strategies so they can make better informed investment decisions.

What is a Self-Directed IRA?

Generally, a Self-Directed Individual Retirement Account, or "SDIRA" for short, is defined as an IRA where the account owner makes his or her own investment decisions and investments on behalf of their IRA. 

All IRAs Are Self-Directed IRAs

However, in reality, all individual retirement accounts are Self-Directed IRAs because the account owner always decides or chooses which financial institution to place or deposit his or her own IRA.  The account owner can choose to place his or her Self-Directed IRA at a bank, trust company, securities broker dealer, insurance company, or other IRS approved or authorized IRA Custodian.

Investment Flexibility

The real issue is how much flexibility (i.e. how much self-direction) the IRA Trustee or Custodian will permit the account holder to have in the selection of his or her investments to be made inside of the self-directed IRA.  What type of assets will the IRA Trustee or Custodian permit to be acquired and held inside the account owner's Self-Directed IRA?

Different IRA Trustees or Custodians will allow different types of investments or assets.  Bank IRAs permit various types of bank deposit products, trust companies and securities brokerages permit publicly traded securities, etc.  The majority of IRA Trustees and Custodians limit account holders to bank deposit products and/or publicly traded securities such as stocks, bonds, and mutual funds. 

The account owner should decide what type of assets he or she wishes to invest in and then select an Self-Directed IRA Trustee or Custodian that will permit those types of investments inside of an individual retirement account.

Self-Directed IRAs

Financial institutions or Third-Party Administrators ("TPAs") that market their IRAs as "Self-Directed IRAs" generally permit a greater range of investment options or choices above and beyond the traditional publicly traded securities, including real estate, notes secured by deeds of trust, promissory notes secured by mortgages, franchises, partnerships, private equity, limited liability companies ("LLCs") and tax lien certificates.