Compare traditional, Roth and SEP IRAs: which self-directed IRA is right for you?

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Opening a self-directed IRA (SDIRA), with Alto gives you the flexibility to  invest in private market opportunities like startups, real estate,and private equity.

Alto self-directed IRAs are available as traditional, Roth, or SEP accounts, each with different tax benefits and eligibility requirements. The right option depends on your income, employment status, and long-term financial goals.

Comparing contribution eligibility for Traditional, Roth and SEP IRAs

Traditional IRA

Account opening and management is open to anyone, but those with earned income or a spouse with earning income (if married filing jointly) can make contributions.

Roth IRA

Same earned income rules as a Traditional IRA, but with additional contribution restrictions based on gross income. These vary each year, as determined by the IRS.

SEP IRA

Intended for self-employed individuals and and small business owners with no additional employees.

Traditional, Roth and SEP IRAs: Tax treatment, contributions and growth

Beyond eligibility, Traditional, Roth,and SEP IRAs differ in how contributions are made, how taxes are applied, and how investments grow over time. Understanding these distinctions can help you choose the self-directed IRA structure that best fits your income, tax strategy and retirement goals.

FeatureTraditional IRARoth IRASEP IRA
Tax treatment
Tax-deductible
(if eligible)
After-tax
(no immediate tax deduction)
Tax-deductible + employer funded
(if eligible)
Contribution source
Individual
Individual
Employer/ self-employed
Contribution limit
Up to $7,000
($8,000 if age 50+)
Up to $7,000
($8,000 if age 50+)
Up to 25% of compensation or 
$69,000 (whichever is less)
Income limit
Deductibility may phase out
Income limits apply
No income limits
Growth
Tax-deferred
Tax-free
Tax-deferred

IRS rules and regulations apply to each account type. Consult a tax professional for questions about aligning a vehicle with your retirement objectives.

Choosing the right IRA for your goals

There are a range of considerations that factor into which type of IRA is best suited for an individual investor’s needs and goals. Keep in mind:

Selecting an IRA type brings investors one step closer to funding and investing with their self-directed IRA.

Ready to open your self-directed IRA?

Compare account types and start investing with Alto today.

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©Alto Solutions, Inc. 2026 All Rights Reserved.

Alto Solutions, Inc. d/b/a AltoIRA (“Alto”) is an administrator of self-directed individual retirement accounts and is not a registered or licensed broker, dealer, broker-dealer, funding portal, cryptocurrency exchange, investment advisor or investment manager. Neither Alto nor any of its affiliates is an FDIC-insured bank. Banking services provided to Alto are by Needham Bank (Bank) Member FDIC. The FDIC insures each AltoIRA account holder up to $250,000 based on deposit insurance rules in the event of bank failure. Certain conditions must be met for pass-through insurance coverage to apply. Securities and Crypto assets are not insured by the FDIC, may lose value, are not deposits or other obligations of the Bank, and are not guaranteed by the Bank. Alto does not control or monitor the operation or conduct of the Bank or any third-party investment platforms, funds, cryptocurrency exchanges or issuers, or their offerings. Whenever making an investment decision, investors should consult with their tax attorney or financial professional. Investors are responsible for conducting their own due diligence regarding investments, for using their Alto accounts in compliance with law, and for all tax and other risks and obligations arising from account transactions.

Alto Securities, LLC (“Alto Securities”) is a broker-dealer and may act as the placement agent of funds and other investments offered by issuers with which it has a relationship. Neither Alto nor Alto Securities nor any of their affiliates provide any investment advice or make any investment recommendations to any persons, ever, and no communication herein or otherwise shall be construed as investment advice or a recommendation about any specific security offering, investment, asset, or fund. Information provided on this website by Alto and its affiliates does not constitute an offer, nor the solicitation of an offer to buy or subscribe to, any securities to any person in any jurisdiction. Any communication made by Alto or any of its affiliates with regard to opening or using an IRA account shall not be construed as a recommendation, call to action, or investment strategy to establish a particular account type (e.g. traditional, Roth, or SEP). Alto provides investors self-directed accounts and neither recommends an account type to investors for a fee as part of its services or products, nor advises customers in relation to the tax consequences of accounts, including but not limited to penalties associated with withdrawals, application of required minimum distributions, holdings of employer stock, and special features of an existing account.

Investing in private securities, cryptocurrencies, securitized assets, and other alternative investments (“Private Securities”) is intended for highly sophisticated investors and involves substantial risks. These risks include but are not limited to a lack of operating history, leverage, liquidity of the portfolio, segregated portfolio fund risk, diversification and concentration risk, and long-term investment risk. Furthermore, there is a risk that investors may receive little or no return on their investment or may lose part or all of their investment. For example, the success of a fund’s investment objective depends, in part, on the effective deployment of its assets by the managers of the fund. However, there can be no assurance that the managers will successfully achieve the fund’s investment objective or deliver positive returns.

Investing in Private Securities carries a high risk and is considered speculative. There is no guarantee that an issuer or its investment strategies will succeed under all market conditions. The success or failure of a fund, for example, and its value may be affected by numerous factors, including investment performance, realized and projected market returns, fluctuations in market interest rates, and other pertinent factors.

It is important to note with regard to any reference to high-net-worth individuals and institutions, that these investors often have substantial financial resources and longer investment horizons, which may differ from those of individual investors. Potential investors should carefully consider their own financial circumstances, risk tolerance, and investment objectives before participating in these opportunities. Past performance is not indicative of future results, and all investments carry inherent risks. Diversification does not eliminate risk, and there is no guarantee of returns on investments. It is advisable to consult with financial professionals and conduct due diligence before making any investment decisions.

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