Why You Can’t Get a Self-Directed IRA at Fidelity

Why You Can’t Get a Self-Directed IRA at Fidelity

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When it comes to planning for retirement, choosing the right investment vehicle is crucial.

Many investors turn to Self-Directed Individual Retirement Accounts (IRAs) for their flexibility and the broader range of investment options they offer.

However, if you're looking at Fidelity Investments for a Self-Directed IRA, you'll find that this option isn't available.

Let's explore why this is the case and what it means for you as an investor.

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Main Takeaways 

  • Self-Directed IRAs allow investing in various assets, unlike standard IRAs.
  • Fidelity offers traditional retirement services but not Self-Directed IRAs.
  • The complex regulations of Self-Directed IRAs might deter Fidelity from offering them.
  • Fidelity prefers simpler, less risky investment options in line with its philosophy.
  • Fidelity tries to compensate for not offering Self-Directed IRAs with other investment vehicles.
  • Investors interested in Self-Directed IRAs can explore specialized firms or REITs and commodity ETFs.

What Are Self-Directed IRAs?

Self-Directed IRAs (SDIRAs) offer a unique approach to retirement savings, providing a level of investment freedom not found in traditional IRAs.

While standard IRAs typically limit your choices to stocks, bonds, and mutual funds, SDIRAs open the door to a diverse array of assets, including real estate, precious metals, private placements, and more.

This flexibility is particularly appealing to savvy investors who are keen on diversifying their portfolios in a tax-advantaged setting. One of the key features of SDIRAs is that they are managed directly by the account holder, rather than by a custodian or trustee.

This means you have the autonomy to choose and manage your investments, but it also requires a higher level of due diligence and understanding of the investments you're making. For instance, investing in real estate through an SDIRA involves not just purchasing property but also managing it, which can include dealing with tenants, maintenance, and property taxes.

Moreover, SDIRAs come in two flavors: traditional and Roth. With a traditional SDIRA, you can make tax-deductible contributions, but you'll pay taxes on withdrawals during retirement. On the other hand, Roth SDIRAs offer tax-free distributions, but contributions are made with after-tax dollars.

This distinction is crucial when planning your investment strategy, as it affects both your current tax situation and your financial planning for retirement. However, it's important to be aware of the potential risks and complexities associated with SDIRAs.

For one, they often involve a more complicated fee structure compared to regular IRAs, including charges for account setup, annual maintenance, and investment transactions. Additionally, some investments within SDIRAs, like real estate or private placements, can be less liquid than traditional stocks or bonds, which could be a concern if you need to access funds quickly.

Furthermore, the responsibility for ensuring compliance with IRS rules rests entirely on you, the account holder. This means you need to be vigilant about the types of investments you're making and how they're managed. For example, investing in prohibited assets or engaging in transactions that violate self-dealing rules can lead to significant tax penalties.

Fidelity’s Retirement Services Portfolio

Fidelity's commitment to providing a comprehensive suite of retirement services is evident in their diverse offerings. Catering to a wide range of investors, from those who prefer a hands-off approach to those who seek active portfolio management, Fidelity's retirement services are designed to meet various investment needs and goals. Let's delve deeper into these services to understand how they benefit different types of investors.

Traditional IRAs

Traditional IRAs at Fidelity are a cornerstone for retirement planning, offering tax-deferred growth potential. This means you don't pay taxes on the earnings until you withdraw the funds, typically during retirement when you might be in a lower tax bracket.

This account is ideal for investors who anticipate a lower tax rate in retirement compared to their current rate. It's a powerful tool for long-term growth, as the compounding of earnings can significantly increase the value of your investments over time.

Fidelity's Traditional IRA is particularly beneficial for those who may not have access to a workplace retirement plan or who want to supplement their existing retirement savings.

Roth IRAs

The Roth IRA, another key offering from Fidelity, provides tax-free growth and withdrawals in retirement, provided certain conditions are met. This is particularly advantageous for investors who expect to be in a higher tax bracket in the future.

Unlike Traditional IRAs, contributions to a Roth IRA are made with after-tax dollars, meaning there's no tax deduction upfront.

However, the trade-off is the ability to withdraw your earnings tax-free in retirement. This type of account is especially appealing to younger investors or those just starting their careers, as they can benefit from decades of tax-free growth.

401(k) Plans

Fidelity's 401(k) plans are tailored to meet the needs of both employees and employers, but their options are limited.  That is why some investors opt for a 401k rollover to another company that better suits their investment goals.

For employees, Fidelity's 401(k) plans offer a convenient way to save for retirement directly from their paycheck, often with employer matching contributions, which is essentially free money towards their retirement savings.

These plans also offer tax advantages, either through pre-tax contributions, which reduce taxable income, or through Roth 401(k) options, providing tax-free growth. For employers, Fidelity provides robust plan administration and support, helping them offer a valuable benefit to their employees, which can aid in talent retention and overall employee satisfaction.

Fidelity's Investment Options

Across these accounts, Fidelity offers a wide range of investment options, including stocks, bonds, mutual funds, gold IRAs, and ETFs. This variety allows investors to tailor their portfolios to their specific risk tolerance and investment goals.

For those who prefer a more hands-off approach, Fidelity offers target-date funds, which automatically adjust the asset mix as the target retirement date approaches. For the more active investor, Fidelity provides resources and tools to research, track, and manage their investments in line with their unique strategies.

Tools and Resources

Fidelity supports its clients with extensive tools and resources. Their online platform provides easy access to account management, investment research, and educational materials.

Investors can track their portfolio performance, adjust their investment strategies, and access insights from Fidelity's experts. Additionally, Fidelity offers personalized financial planning and advice, catering to those who seek more guidance in their retirement planning journey.

Why Fidelity Might Not Offer Self-Directed IRAs

Fidelity Investments offers a wide array of investment products and services. However, their portfolio does not include Self-Directed IRAs (SDIRAs), a choice that may seem puzzling at first. Let's delve deeper into the possible reasons behind this decision, exploring how it aligns with Fidelity's service model and the broader spectrum of their offerings.

Regulatory and Compliance Challenges

SDIRAs come with a unique set of regulatory requirements. The Internal Revenue Service (IRS) has stringent rules governing these accounts, especially concerning prohibited transactions and disqualified persons.

Managing these accounts requires a deep understanding of the tax code and an ability to navigate complex legal landscapes. Fidelity's decision to not offer SDIRAs could be influenced by the potential risks and the intensive compliance demands associated with these accounts.

Investment Complexity and Oversight

SDIRAs allow investments in a diverse range of assets, including real estate, precious metals, and private placements. Managing these types of investments often requires specialized knowledge and a different approach compared to traditional stocks or bonds.

Fidelity, focusing on a broader client base, might find that the niche and complex nature of SDIRAs does not align with their primary service offerings, which are designed to be more accessible and user-friendly.

Fidelity's Investment Philosophy

Fidelity's investment philosophy centers around providing accessible investment options to a wide range of clients. This includes offering products like mutual funds, ETFs, and managed accounts, which align with the needs of both novice and experienced investors.

The introduction of SDIRAs, which cater to a more specialized investor, might not resonate with Fidelity's commitment to simplicity and broad accessibility in investment choices.

Focusing on Client Needs and Risk Management

Fidelity's decision not to offer SDIRAs could also be a reflection of their risk management strategy. SDIRAs, by nature, can involve investments in less liquid and more volatile assets.

Fidelity's approach might be more conservative, focusing on providing investment options that balance risk and return in a way that aligns with the financial well-being of their broad client base.

Impact on Investors

While Fidelity doesn't offer Self-Directed IRAs, they provide a comprehensive range of investment vehicles that cater to various retirement goals. This approach ensures that investors have access to a diverse array of options, each tailored to different investment strategies and risk tolerances.

One of the key offerings is the Fidelity Roth IRA, which allows for tax-free growth and withdrawals, a significant advantage for long-term retirement planning. This account is particularly beneficial for those who anticipate being in a higher tax bracket in the future, as it offers tax-free withdrawals in retirement.

Additionally, Fidelity's Traditional IRA offers tax-deferred growth, meaning you pay taxes on your investments only when you make withdrawals, potentially reducing your tax burden in the present. For investors seeking a more hands-off approach, Fidelity Go®, the firm's robo-advisor service, provides automated investment management.

This service is ideal for those who prefer to have their investments managed professionally without the need to actively make investment decisions. With no minimum investment requirement, it's accessible to a wide range of investors, from beginners to those with more experience.

Fidelity also offers a comprehensive brokerage account for DIY investors. This account allows you to manage your own investments, including stocks, ETFs, mutual funds, and CDs. It's supported by Fidelity's extensive research and investment resources, making it a robust platform for those who prefer a more active role in managing their investments.

For investors interested in cash management, the Fidelity® Cash Management Account offers an alternative to traditional banking. It combines the features of a checking and savings account, providing both spending flexibility and the ability to earn interest on your balance.

While the absence of Self-Directed IRAs at Fidelity might seem like a limitation, the firm compensates with a broad spectrum of investment options. Whether you're a hands-on investor or prefer a more guided approach, Fidelity's offerings are designed to meet a wide range of investment needs and goals.

This diversity ensures that every investor can find a suitable vehicle for their retirement planning, aligning with their financial objectives and risk tolerance.


What are some common alternatives to Self-Directed IRAs for investors interested in non-traditional assets?

While Fidelity doesn't offer Self-Directed IRAs, investors interested in non-traditional assets like real estate or precious metals have other options. They can consider opening a Self-Directed IRA with a firm that specializes in these accounts.

Additionally, investors can explore Real Estate Investment Trusts (REITs) or commodity ETFs within a traditional IRA or brokerage account for similar exposure to these asset classes. It's important to research and understand the risks and rewards associated with each alternative before investing.

Can I transfer my existing IRA to a Self-Directed IRA at another institution if I'm currently with Fidelity?

Yes, you can transfer your existing IRA from Fidelity to a Self-Directed IRA at another institution. This process, known as a rollover, involves moving your retirement funds without incurring tax penalties.

However, it's crucial to ensure that the receiving institution is equipped to handle the specific types of investments you're interested in. Always consult with a financial advisor or tax professional to understand the implications and process of the rollover.

How does Fidelity support investors in making informed retirement planning decisions?

Fidelity offers a range of resources to support informed decision-making for retirement planning. This includes educational content on their website, investment tools, and access to financial advisors.

Fidelity's platforms provide insights into various investment strategies, market trends, and retirement planning basics, helping investors to align their choices with their long-term financial goals.

Are there specific risks associated with Self-Directed IRAs that Fidelity's traditional retirement accounts avoid?

Self-Directed IRAs often involve investments in non-traditional assets, which can carry different risks compared to traditional stocks and bonds. These risks include higher volatility, lack of liquidity, and the potential for lower regulatory oversight.

Fidelity's traditional retirement accounts, focusing on stocks, bonds, and mutual funds, generally offer more liquidity and are subject to stringent regulatory standards, potentially offering a more stable investment environment for the average investor.


Fidelity's decision not to offer Self-Directed IRAs is a strategic one, aligning with their broader focus on traditional retirement solutions. While this may limit options for some investors, Fidelity still provides a robust range of investment vehicles suitable for various retirement planning needs. 

As always, thorough research and a clear understanding of your investment goals are key to making the best choice for your retirement.

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