Exploring the Power of a Self-Directed SEP IRA

If you’re self-employed or own a small business, you’ve probably heard about SEP IRAs. These retirement accounts are particularly known for high contribution limits and simple setup. But when you combine a SEP IRA with self-direction, you open up a world of investing opportunities beyond the stocks and bonds many investors focus on. A Self-Directed SEP IRA gives you the best of both worlds: the high annual contributions of a SEP and the alternative asset flexibility of a Self-Directed IRA. That can be a game changer for anyone who wants a different style of investing while having all sorts of great tax benefits along the way.

Why Contribution Limits Matter with a Self-Directed SEP IRA

One of the biggest draws of a SEP IRA is how much you can contribute. In 2025, the limit is up to 25% of compensation or $70,000—whichever is less. That’s significantly more than a Traditional or Roth IRA, which is especially nice if you have a large income that you’d like to tap into.

For business owners looking to put away serious money for retirement, this matters. And with a Self-Directed SEP IRA, you can make those contributions work even harder by investing in real estate, precious metals, private loans, and more. Ultimately, a SEP IRA is another tool you can use to make sure that your investments are getting the most juice for the squeeze, especially as you consider the tax consequences of using a simple traditional and taxable brokerage account.

More Options for Growth

What about all this “self-directed” talk? Why is it so beneficial, anyway? With self-direction, you get more choices. With a Self-Directed SEP IRA, you're not limited to what Wall Street offers. You can use the account to invest in assets you understand—like rental property or private notes. That flexibility allows you to build a portfolio that reflects your knowledge and risk tolerance.

And because SEP IRAs are employer-sponsored, you can also offer them to employees (if applicable), making them a potential retention tool in your business. Of course, you typically have to have the right arrangements in place before you open a Self-Directed SEP IRA, which is something American IRA can help you understand.

A Long-Term Strategy With More Control

Self-Directed SEP IRAs also work well for long-term planners. You can build a diversified portfolio, generate income, and grow value tax-deferred. And because you’re the one making the investment decisions, you stay in control. You can make choices based on a wider range of investments, which gives you more options for finding investments that you think are more likely to generate the kind of consistent long-term returns you need.

As always, you have to follow IRS rules about disqualified persons and prohibited transactions. But if you’re already comfortable managing your own business, chances are good that managing a Self-Directed SEP IRA won’t feel all that different.

That’s where the power of alignment really kicks in. When your retirement strategy reflects how you already think as a business owner—strategic, forward-looking, and in control—it starts to feel less like a plan you’re supposed to follow and more like a tool you can actively use. You’re not handing off your future to someone else’s model. You’re shaping it based on what you know, what you value, and what kind of legacy you want to build. And that clarity can carry you a long way.

Want to give it a try? Here at American IRA, we’re happy to talk you through the process of opening your first Self-Directed SEP IRA. Just give us a call at 866-7500-IRA today.