What Happens to a Self-Directed IRA When You Retire

Retirement is the goal of a Self-Directed IRA. But you might be surprised how little many investors think about what happens to their account once they reach retirement age. That may be because the answers vary depending on what’s inside your portfolio.

So, what happens to a Self-Directed Traditional IRA or Self-Directed Roth IRA in retirement? Here are the key benefits—and limitations—of each.

What Happens to a Self-Directed IRA at Retirement Age

Reaching retirement doesn’t mean your Self-Directed IRA stops working. It simply means the focus of the account may shift. Instead of building wealth, you begin thinking about how to use it—whether through generating income, taking distributions, or allowing certain assets to continue growing.

With a Self-Directed Traditional IRA, one of the biggest changes is required minimum distributions (RMDs). These typically begin at age 73 (based on current law). Each year, you must withdraw a calculated amount based on your account balance. This requirement applies regardless of the types of assets you hold, which can create planning challenges if your investments are not liquid.

A Self-Directed Roth IRA works differently. Because contributions are made with after-tax dollars, qualified distributions are generally tax-free. Additionally, there are no required minimum distributions during your lifetime. This allows you to leave the account untouched if you don’t need the income, which can be a major advantage for long-term planning or estate strategies.

Managing Investments Inside a Self-Directed IRA in Retirement

The assets you hold will shape how simple—or complex—your retirement strategy becomes.

If your account includes cash or easily liquidated investments, distributions are typically straightforward. However, many IRA investors hold alternative assets such as real estate or private investments, which are not always easy to convert to cash.

For example, rental income from a property can help support distributions over time. This can work well if the income is steady. But if an asset does not generate cash flow, you may need to plan ahead.

Some investors:

Another option is an in-kind distribution, which allows you to take ownership of an asset directly from the IRA instead of selling it. This can be useful in certain situations, but it requires proper valuation and may have tax implications (especially for Traditional IRAs).

Planning Ahead for a Smoother Retirement

Retirement isn’t just about reaching a certain age—it’s about being prepared for how you’ll use your assets once you get there.

As you approach retirement, it becomes increasingly important to think about:

These decisions can be more complex with alternative investments, so planning ahead is key.

What remains consistent is control. Even in retirement, your IRA is still your account. You decide how to manage it, how to take distributions, and how to align it with your financial goals and lifestyle.

That level of control is one of the main reasons investors choose Self-Directed IRAs in the first place. Interested in learning more about Self-Directed IRAs?  Contact us at 866-7500-IRA (472) for a free consultation or download our free guide.