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Quest Trust Company›Blog›Can Quest Trust Company purchase an investment ?›Qualify To Open a Self-Directed IRA?
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Qualify To Open a Self-Directed IRA?

Posted on October 20, 2012 by questadmin

Investors are always looking for new opportunities to help them build their retirement savings accounts as large as possible. In recent years, this search has led many to consider opening a “self-directed” IRA.

Contrary to some widely held (but mistaken) beliefs, self-directed IRAs are not any different from the traditional or Roth IRAs – at least from a legal perspective. The reason that self-directed IRAs have a greater number of investment choices is that the account custodian permits them. Custodians who specialize in self-directed IRAs, like Quest Trust Company, assist their clients in making any investment that’s authorized by the rules governing IRAs, rather than just simple stock and mutual fund purchases.

Opening a Self-Directed IRA is the Easy Part. Eligibility usually isn’t an issue for opening any type of IRA, including self-directed IRAs. In general, anyone can open an IRA (so long as they meet whatever requirements their custodian imposes). The real eligibility is how and when an account holder can make contributions to their IRA.

Eligibility for Full IRA Contributions. Whether or not you’re eligible to contribute to an IRA in a given year, and how that contribution will be treated for tax purposes in that year, will depend on your income level and what type of self-directed IRA you hold.

For traditional self-directed IRAs, you’re eligible to contribute the maximum amount (currently $5,000 per year for those age 49 and below, and $6,000 for those age 50 and over) and to deduct the full amount from your taxes – provided that you’re not covered by a retirement plan (including a 401(k)) at work. If you are covered by an employer-sponsored plan, then you can only deduct the full amount of your IRA contribution if your Modified Adjusted Gross Income (“MAGI”) is less than $56,000 if you have a “Single” tax status. Those who file jointly can deduct the full amount of their contribution if their MAGI is less than $90,000. For those who earn up to $10,000 more than those amounts, there is a sliding scale of partial deductibility.

Eligibility for Full Roth IRA Contributions. For Roth IRAs, there are income ranges in which a person can make a maximum contribution, a reduced contribution, or is not eligible to make a contribution at all. For IRA owners who file with a “Single” tax status, a MAGI of up to $110,000 is eligible to make a maximum contribution. A Single filer with a MAGI between $110,000 and $125,000 will be eligible to make a partial contribution. Single filers with a MAGI above $125,000 cannot contribute to a Roth IRA. Roth IRA owners who file jointly and have a MAGI of up to $173,000 qualify for a full contribution. Owners with a MAGI between $173,000 and $183,000 are eligible for a partial contribution, and those with a MAGI of over $183,000 are ineligible to make Roth IRA contributions.

Do You Have “Earned Income”? In order to make any contributions to a self-directed IRA, you need to have at least as much “earned income” as you want to contribute to your account. So if you’re living off investment income, but don’t have any salary or wages for the year, then you won’t be able to contribute to your IRA for that year.

If you anticipate having problems making a full deduction this year to a new IRA, but you already have a traditional or Roth IRA with another custodian, you can also consider a rollover to your new account.

Posted in Can Quest Trust Company purchase an investment ?Tagged A Self Directed Ira, Directed Ira, Individual Retirement Account, Investment Choices, ira, Ira Contributions, Open An Ira, self directed ira, Self Directed Iras, self-directed IRA, Types Of Ira
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Over the last 15 years I’ve used Quest Trust Company to invest in closely held stock, private equity real estate partnerships and in direct real estate.  Everyone there has always been friendly, helpful and genuinely interested in seeing my retirement funds grow.  For anyone interested in using their IRA to invest in non-traditional opportunities, I’d… Read more “I’d certainly recommend Quest Trust”

Quest Trust Company is a fabulous company that provides a ton of training, seminars, and special events to network and learn how to put your IRA money in alternative investments. All the employees are well trained and always helpful to answer any questions you might have on self directing your IRA. They are very prompt… Read more “Quest Trust Company is a fabulous company…”

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5 Steps to purchasing Real Estate, Notes, and other private investments in your self-directed IRA

Quest Trust Company makes the process of buying private assets with your self-directed IRA, smooth and painless. Take a look at these common investment options and the process by which to fund them.

See the Options

 

DISCLAIMER: Quest Trust Company does not render tax, legal, accounting, investment, or other professional advice. If tax, legal, accounting, investment, or other similar expert assistance is required, the services of a competent professional should be sought.