The account type determines the tax treatment, not the investment

Self-direction is a feature, not an account type. A self-directed Roth IRA is a Roth IRA. It follows every Roth rule: the same contribution limit, the same income phase-outs, the same five-year rules, the same distribution treatment. What self-direction changes is the menu of assets the account can hold.

Traditional IRA

Contributions may be tax-deductible depending on income and workplace plan coverage. Growth is tax-deferred, and withdrawals in retirement are taxed as ordinary income. Required minimum distributions apply.

For 2026, the contribution limit is $7,500, or $8,600 if you are age 50 or older. The catch-up rose to $1,100 and is now indexed to inflation for the first time. If you are covered by a workplace retirement plan, the deduction phases out between $81,000 and $91,000 of modified adjusted gross income for single filers, and between $129,000 and $149,000 for married filing jointly. If you are not covered but your spouse is, the phase-out runs from $242,000 to $252,000.

Roth IRA

Contributions are made after tax with no deduction. Qualified growth and withdrawals are federal income tax-free, and there are no required minimum distributions during the original owner's lifetime.

The 2026 contribution limit matches the Traditional IRA: $7,500, or $8,600 at age 50 and older. Eligibility phases out between $153,000 and $168,000 of MAGI for single filers and heads of household, and between $242,000 and $252,000 for married filing jointly. Married filing separately phases out between $0 and $10,000.

There is no income limit on converting a Traditional IRA to a Roth IRA. A conversion is a taxable event in the year it occurs.

SEP IRA

An employer-funded plan used by self-employed individuals and small business owners. For 2026, contributions are limited to the lesser of 25% of compensation or $72,000. Only the employer contributes, and employees make no salary deferrals.

SIMPLE IRA

Designed for businesses with 100 or fewer employees. The 2026 employee deferral limit is $17,000, with a higher $18,100 limit for certain smaller employers. The age-50 catch-up is $4,000, and the age 60 to 63 catch-up is $5,250.

Individual(k) / Solo 401(k)

For owner-only businesses with no full-time employees other than a spouse. The 2026 employee deferral limit is $24,500, plus an $8,000 catch-up at age 50 or older, or $11,250 for those ages 60 through 63. Combined employee and employer contributions cap at $72,000 before catch-up. Beginning in 2026, if your prior-year FICA wages exceeded $150,000, catch-up contributions must be made as Roth contributions.

Health Savings Account

An HSA paired with a qualifying high-deductible health plan offers a triple tax advantage: deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. HSAs can also be self-directed.

You can hold more than one

Many investors run a Traditional IRA and a Roth IRA in parallel, or pair a SEP with a personal Roth. The $7,500 IRA limit is combined across all Traditional and Roth IRAs you own. It is not a per-account limit. SEP, SIMPLE, and Individual(k) limits are separate.

Which structure fits depends on your current tax bracket, your expected bracket in retirement, your business structure, and your liquidity needs. Discuss your specific situation with your own financial advisor or CPA.

Frequently Asked Questions

How much can I contribute to a self-directed IRA in 2026?

$7,500 if you are under age 50, and $8,600 if you are age 50 or older. That limit is combined across all Traditional and Roth IRAs you own, not per account. You must have earned income at least equal to the amount you contribute. SEP, SIMPLE, and Individual(k) plans carry separate, higher limits.

Can I convert a Traditional IRA to a self-directed Roth IRA?

Yes. There is no income limit on Roth conversions. The converted amount is treated as taxable income in the year of conversion, so the tax cost should be modeled before you convert. Once inside the Roth, qualified growth and withdrawals are federal income tax-free.

What are the 2026 Roth IRA income limits?

Roth contribution eligibility phases out between $153,000 and $168,000 of MAGI for single filers and heads of household, and between $242,000 and $252,000 for married filing jointly. For married filing separately, the range is $0 to $10,000.

Which self-directed account is best for a self-employed person?

It depends on income level and whether you have employees. A SEP IRA allows up to $72,000 for 2026 and is simple to administer. An Individual(k) often allows a larger contribution at lower income levels because it combines an employee deferral with an employer contribution. A CPA can model both against your actual numbers.

Do self-directed IRAs have different contribution limits?

No. Self-direction changes what the account can invest in, not how much you can contribute. Every IRS limit, deadline, and phase-out applies identically.

When is the deadline to contribute for a tax year?

Generally the tax filing deadline without extensions, which is April 15 of the following year. Contributions made between January 1 and April 15 must be designated for the prior year, or they will be recorded as current-year contributions.

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