Self-directed IRAs are a specialized kind of IRA that allows investors to broaden the scope of their investments. For example, traditional IRAs are generally limited to stocks, bonds, and mutual funds. Self-directed IRAs, so long as certain criteria are met, can hold things like businesses, real estate, tax liens, and a great deal more on top of that. In addition, self-directed IRAs give investors more control over their investments than do traditional IRAs. These investments are allowed to accrue passive income tax-free.What is a Roth IRA?Roth IRAs were introduced by Congress in 1997. With a traditional IRA, investments are allowed to mature tax-free, but once you either cash out the IRA or begin taking distributions, the money immediately becomes taxable. Not so with a Roth IRA. Distributions from a Roth IRA are tax-free. But there are some caveats, restrictions, and stipulations to be aware of.Contributions are Not Tax-Free, But…The most important thing to be aware of is that the contributions themselves are not tax-deductible. This is because contributions made to your Roth IRA are made with money that has already been taxed. With a traditional IRA, contributions are tax-free and then taxed on their way out. Roth IRAs are just the opposite. Contributions are taxed on their way in but not on their way out. Earnings are tax-deferred and in some instances, they can be tax-free, so long as certain conditions are met. This depends on whether or not the distribution qualifies under certain guidelines. If it does, you’ll never pay any tax on your Roth IRA distributions. Conditions include the age of the individual receiving distributions and the age of the IRA itself.As Long as You Have Earned Income, You Can Contribute to Your Roth IRAWith a traditional IRA, you cannot make contributions to the IRA beyond the age of 70 and a half. So long as you have some kind of earned income, you can continue to make contributions to your Roth IRA so long as they don’t exceed the accept $5,500 per year if you are under the age of 50, and $6,500 per year if older. Other Limitations on Roth IRAsRoth IRAs were instituted as a form of tax relief for individuals below a certain income threshold. So the IRS limits what your contribution can be to a Roth IRA depending on how much you make. As of 2016, the cutoff for making any contribution at all was $132,000 for single filers and $194,000 for married couples. Once a single individual reaches $117,000 the amount they’re allowed to contribute becomes smaller and smaller until it reaches zero at $132,000. For married couples that number begins at $184,000.The Bottom LineFor those that qualify for a Self-Directed Roth IRA and can make contributions based on their income status, the ability to allow their investments to grow tax-deferred and then collect distributions tax-free is an incredible opportunity.