And for good reason I might add.
Don't get me wrong, IRAs are a great tool, so is a putter on the green, but from 200 yards out it doesn't work as well as a 4 iron.
The same goes for certain types of investors and investments.
Self directed 401(k)s for individuals are really Solo 401(k)s.
These were formed by Congress and came to life in late 2006.
Sole proprietors, the self employed, and anyone who has income from a business can have a Solo 401(k).
401(k)s have several features that are superior to IRAs.
Higher contribution limits $51,000 per person vs.
$6,000 for an IRA.
Roth contributions up to $20,000 with no income limits, unlike Roth IRAs.
Much less onerous prohibited transaction penalties than IRAs.
Loan provisions are possible.
No UDIF tax.
That last one is for real estate.
If you purchase a property with an IRA and finance part of it you will still owe taxes on the capital gains of the percentage of the property that was financed.
For example, the purchase price is $200k and you finance $100k.
You will pay taxes on 50% of the capital gains.
If that same property is purchased and financed the same, but with a 401(k), there is NO tax due.
Pretty cool huh.
There are other smaller differences but those depend more on the expertise of the 401(k) provider.
Also husband and wife can combine efforts here in a solo 401(k) and roll existing IRAs and old 401(k) funds into a newly formed solo 401(k).
The only thing you can't roll in is a Roth IRA.
There is a little more administration work to be done but not enough to deter someone from having there own 401(k).
Of course it can be set up so it has the same flexibility that any other self directed account would have.
An overriding need to being successful is to have the proper support for the 401(k) and the investments.
Set up is not a do it yourself proposition and you need someone with expertise to keep everything going smoothly.