Making Money Moves: Understanding IRA Transfers and Rollovers

When you leave your job, one of the things you will have to consider is what you will want to do with your old 401(k). A common option is to roll it over into an IRA at a custodian who can help invest your money in publicly traded investments. For some people, this is great. However, for those who want to take true control of the hard-earned money they have been saving and have the options to diversify their investment portfolio… they take a different route. Moving your old 401(k) into a Self-Directed IRA, like the accounts we have at Quest, allow investors the option to put their money in alternative investments and privately held assets. Even for those who may already be investing an IRA and do not have a 401(k) anymore, your investment options expand whenever you perform a rollover or transfer into truly self-directed IRA.

What Account Do I Move My Money To?

Moving your money between accounts might seem like a daunting task at first, but we’ve broken it down to explain the way retirement accounts move. One of the first couple of things you will want to ask yourself are “What type of self-directed account do I want to have?” and “What type of account do I currently have?” Asking yourself these two questions will help you make sure you move your funds to the correct self-directed accounts. Not all IRA accounts have the same tax benefits, and it is very important to remember what tax advantages each account has, that way you can always do your best to accurately move your funds to the correct account, keeping the taxes the same. This eliminates tax reporting you could create for yourself and ensures the smoothest movement from one custodian or entity to another.

So, what’s the actual difference between a rollover and a transfer?

How do you know when to initiate a transfer or when to do a rollover? These terms often get confused and misused, but they have very certain traits that define the type of movement they perform. It’s important to know the difference between the two, also. The most distinguishable difference is that an IRA transfer occurs when you move funds between like accounts or one IRA to another IRA, for example Traditional IRA to Traditional or Roth IRA to Roth IRA. If you want to move money between two different types of retirement accounts, for example a 401(k) to IRA, that’s would be considered a rollover. Rollovers between IRAs can be done, but certain rules are attached when this movement occurs.

IRA to IRA rollovers can occur, but it’s very important to be aware of the rules. Often times, custodian processing times can vary anywhere from a couple of days to weeks; this will depend on your current IRA custodian’s transfer procedures. If you don’t want to wait on a custodian to go through the transfer process, you do have the option to do what is called a “60 day rollover”, meaning you have 60 days from when you get the funds to put the funds back into an IRA account In this scenario, the funds are sent to you and you are responsible for putting them into a retirement account. Whatever portion is not rolled back into an IRA will generally be taxable and subject to a 10% penalty. You are limited to doing only 1 of these IRA to IRA rollovers per year, and if you exceed this number, the second rollover is then treated as an excess contribution.

There are other characteristics that define the two, and rollovers have certain rules that must be followed. This chart outlines the common characteristics of a Transfer vs a Rollover.

How do I initiate a transfer/rollover?

Now that you know the difference between the two and have decided which is going to be the best for you and your account, you can begin moving your funds. To initiate a transfer, you will want to complete your receiving custodian’s Transfer Form by printing and sending back a completed copy to the office. This will allow the receiving custodian to send this off on your behalf. Some custodians will require original forms, notary or medallion stamps, and statements of your current; others will simply accept a fax. Calling your self-directed custodian can help during this process if you are unsure of a custodians requirements. Once the form is sent, the last step is to simply wait for the funds to arrive back at your new account. It is helpful in the meantime or even before, to let your current custodian know you want to liquidate your assets that way your account is in a cash state. This can eliminate rejections that can sometimes occur when transfer requests are made. Typically, within a few days or weeks, the transfer will be complete.

If you are going to be initiating a rollover, you will need to be aware that there are usually more forms for this movement, often at the former employer or custodian. Distribution paperwork from the employer you are leaving or the IRA custodian you are moving from is customary. Contacting them to provide your account number and any delivery instructions on their distribution forms will need to be done in order for this movement to occur. The custodian receiving the funds may have an internal form (like the Rollover Form) that will need to be completed for the incoming funds, but it’s important to note that this form does not initiate the actual movement. That is done by the account holder initiating the distribution/rollover request from the previous/former custodian.

If you ever have any questions or need assistance, call us at 855-FUN-IRAS and a Quest representative can help with this process.

There’s no need to be intimidated when rolling over or transferring IRA funds. From beginning to end, the process is quite seamless once you understand the different types of movements and their processes. At Quest, we have a whole department focused on the portability of your funds and can help with a transfer or rollover question you might have. If you’re ready to start moving your funds over to a self-directed account to invest, let us know how we can help with the process or simply provide more education! For more information, visit www.questtrustcompany.com .

Here is a helpful portability chart to help you decide which accounts can be move between each other!

Check out this video on how to fund your Quest account today!

Can I Move My 401k Into a Self Directed IRA?

Did you know 45% of Americans fear they will run out of money during retirement?

If you have started taking more steps towards planning for retirement, then you are already ahead of the game. Those who want to be more in control of their money typically like to explore the options available, like a self-directed IRA.

What Is a Self-Directed IRA?

In short, a self-directed IRA has many similarities with other traditional IRAs. With a self-directed IRA, you can get tax advantages that will help you save for retirement. 

However, it’s essential to keep in mind the IRS will limit the types of investments you make. The IRS will allow your self-directed IRA to make investments in real estate, developmental land, mineral rights, cryptocurrency, and livestock. 

How Does a Self-Directed IRA Work?

If you plan to switch to a self-directed IRA, the first step is to pick a custodian from a brokerage or investment firm. The custodian’s job is to manage the IRA assets and coordinate the sale and purchase of the investments. 

Keep in mind the same rules of a traditional IRA apply to self-directed IRAs. For 2020, the maximum IRA contribution is capped at $6,000. However, those over the age of 50 can make an additional contribution of $1000 to catch up. 

Who Should Switch to a Self-Directed IRA?

If you’re wondering about switching to a self-directed IRA, it’s important to learn if it’s the right move for you. Those who decide to switch to a self-directed IRA do it for several reasons. 

You want to diversify your portfolio and plan to split your savings between a conventional IRA and a self-directed IRA.

You’re worried about your retirement investments after the 2008 financial crisis and want a safer investment. 

You’re an experienced investor in a specific type of investment, such as real estate. 

How to Set Up a Self-Directed IRA?

To qualify to set up a self-directed IRA, you need to fulfill specific requirements. For starters, you need to prove you earned taxable income during the current financial year. 

Some employers might offer their employees the option of enrolling in a self-directed IRA.

To set up a self-directed IRA, you can start by requesting the transferring of funds from the traditional IRA to the new one. Some people choose to transfer any profits they make into a self-directed IRA. Another way to do it is by deferring income directly to the account.

Can You Move Your Managed 401k?

The short answer is yes. However, you need to consider if it’s the right move for you. Remember to learn how a self-directed IRA works, who can benefit from one, and all pertinent details. 

A self-directed IRA could be a great move for you. Contact a Quest Trust Company IRA specialist today for a consultation.

A Wise Investment: Your Guide to Investing in IRS Tax Liens

In an age where interest rates are at rock-bottom, and the US property market no longer promises strong returns, alternative forms of investment are on the rise.

One of these is tax liens, which have attracted billions of dollars of investment in recent years. Put simply; an IRS tax lien is when the government places a ‘lien’ on a property where the owner has not paid their taxes.

The government can then sell that lien to an investor as a means of recouping delinquent taxes.

If you have the know-how, determination, and skill to make a success of it, then investing in federal tax liens can be a significant boon to your portfolio. Read on to find out everything you need to know. 

1. How Do I Invest in an IRS Tax Lien?

If you want to invest in an IRS lien on property, then you will need to bid for a lien at auction.

The IRS and local governments routinely organize lien auctions, both online and at auction houses. You can conduct an IRS tax lien search online to find out where and when your nearest auction is taking place. 

Here, you can bid against other investors to obtain the rights to a delinquent taxpayer’s lien.

Typically, the winner is whoever is willing to pay the highest premium or accept the lowest rate of interest. If you bid successfully, the lien is yours. 

2. How Do I Make Money from a Tax Lien? 

A common misconception of a federal lien is that you can use it to gain control of a property and flip it. However, this almost never happens, and there are a ton of laws in place to prevent this from happening.

Instead, investors make money from the interest that the property owner must pay on the lien. Their overdue tax goes, naturally, to the IRS. Any interest due on that overdue tax goes directly to you – or in other cases, your Self-Directed IRA.

Most homeowners (about 98%) manage to redeem their property before the foreclosure process can begin. This means that you should not expect a bargain-basement home as a result of your investment. 

3. Do I Gain Ownership of the Property? 

As mentioned already, you will most likely not gain ownership of a property once you have invested in a federal tax lien.

If the homeowner does not manage to clear their debts, you do reserve the right to begin the foreclosure process.

If this is successful, then you will be able to take control of the property. However, this is a vanishingly rare occurrence, and you should not count on it when making your investment. 

4. What Are the Risks Involved? 

No investment is risk-free, and this is especially true of tax liens. If property owners refuse to pay their taxes or interest, then you won’t get a dime. Your only option after this is to begin foreclosure.

This will involve considerable expense on your part that might nullify the initial investment returns. You will have to hire security and clearance professionals to help you vacate the property.

After this, you will have to deal with the expense and effort of home maintenance in your attempt to sell. Also, even when bidding for a lien in the first place, you might find that interest rates are driven so low that it is barely worth it. 

Learn More 

Investing in an IRS tax lien can be challenging, but the returns can be substantial. In order to fully understand the ins-and-outs of tax investments, make sure to contact a Quest IRA specialist today for all of the expert advice to learn more about how these types of investments can be done in a Self-Directed IRA.

Know Your Value: A Guide to Fair Market Values

You want to get the most out of your investment. After all, the point of any investment is to make money, so the last thing you want is to be getting less than you deserve.

The problem is that you don’t really know the fair market value. You don’t want anyone ripping you off after all of your hard work, so what do you do to make sure this never happens?

This article will show you exactly what you need to know about fair market values. Read on to find out more.

What Is Fair Market Value, Exactly?

The first thing you need to learn is what fair market value actually is. To put it simply, the fair market value is the price that an asset (such as your investment) would sell for on the open market. It’s the typical value under normal circumstances.

There’s a bit more to this, of course. For starters, it has to be a clean trade. Specifically, both the buyer and seller have to be reasonably knowledgeable about the asset, they have to be free of any pressure to trade, and they need enough time to complete the transaction.

Because of this, the fair market value should represent an accurate valuation of the product in question.

How to Calculate the Fair Market Value

Although there are nuances to calculating the value of your asset, for the most part, it’s actually pretty simple to add things up.

In the case of your investment, you’re going to take the price of your asset during the time of your original purchase and subtract values due to factors such as general wear and tear, depreciation, or any sudden damages that may have lowered the value.

In some lucky cases, you may be adding more to the original price. In that case, you would add any increase that accumulated to the price you originally paid for the asset, and get a new value for your investment.

This is an extremely simple way to calculate your investment’s value and get the most out of your product that you deserve.

The Company You Can Trust

Now you know about the fair market value and how it applies to your investment. However, the investment world can be a tricky one, and you’ll want all the help you can get to navigate it carefully and successfully. We’re the right team to have on your side.

At Quest Trust Company, we offer investment aid in fair market values, general investments, and even real estate. We also work with all types of IRAs, including traditional, Roth, SEP, and Simple IRA.

Ready to get started? So are we. Simply reach out to us and we’d be more than happy to lend you a hand.

We look forward to helping your investment reach its fullest potential!

5 Tips for Finding an Ideal Self-Directed IRA Account Custodian

Money.

You work hard for it and you are careful about who you trust with it. You have decided to open a self-directed IRA account.

Who is the best person to handle your investments? What questions should you be asking? How can you find them?

Keep reading for five tips on how to choose the right IRA custodian to handle your investment account: 

1. Customer Service

Finding an IRA custodian that provides excellent customer service is vital for your business relationship as they handle your investments for years to come. Their availability in communication is an area to focus on when evaluating their customer service. If you have a question or want to make a change, you never want to question whether they will be available to provide assistance. 

An IRA custodian that provides a high level of customer service will walk you through the information and make sure that you understand everything about each investment.

2. Look at Cost and Fees

When searching for an IRA custodian, it is important to consider the cost and fees that are associated with the service. On our website, we have a general fee schedule that breaks down the fees. 

You are already entrusting the custodian with your investments, so you should be aware of what they are gaining in return. 

3. Experience

Knowledge is a powerful thing, especially when money is involved. You want to look for an IRA custodian that has experience working in the investment areas that you are interested in. For example, if you are looking to invest in real estate, you are going to want a custodian that is familiar with the terminology of real estate. You may be new to this but you want to make sure that they are guiding you with previous experience to make the best financial choices with your investments. 

Knowing which areas you would like to invest in prior to starting your search will help narrow down which person would be best to work with.

4. Frequency of Transactions

Depending on your investment strategy, you could be holding on to assets for a long period of time or potentially trade several within a week. Working with an IRA custodian that can properly handle multiple transactions and has the systems in place complete those transactions is important. 

Simply put, you want to be sure that the IRA custodian that you pick can handle the workload and is flexible to changes within your investment strategy. 

5. Ask Questions to an IRA Custodian

Think of it as an interview. Once you have found someone that you think you would like to work with, ask them questions prior to committing to a partnership. 

Asking about what investment areas they specialize in and how accessible they are for future communication will help you see if they are a match for you. 

Call Us Today!

Please contact a Quest IRA specialist today and we can help answer any questions you may have. We look forward to working with you and serving as your IRA custodian for years to come!

Brokerage Accounts vs IRAs

According to statistics from the Investment Company Institute, IRAs have enjoyed a 10% growth rate each year and are now worth over $5 trillion dollars.

IRAs are a popular and effective way to save and invest money. At the same time, they are complex enough that it can be difficult to understand exactly how they work. In particular, they are often mixed up with brokerage accounts.

Read on to learn about brokerage accounts vs IRAs and better understand the difference!

Brokerage Accounts vs IRAs

One of the reasons that brokerage accounts and IRAs are so easily mixed up is because they function almost identically. In fact, if someone were to describe a brokerage account and IRA to you, you might not be able to tell which was which.

The differences between brokerage accounts and IRAs basically come down to their purpose rather than their function. IRA stands for investment retirement account, so it’s designed to grow your savings into a nest egg you can retire on. A brokerage account is also designed to grow your savings, the only difference being that the money may not be explicitly intended for retirement.

Now, you might think, if those are all the IRA and brokerage account differences, then does it really matter which one you get? Because of the different purposes of the two types of investments, they have a few different rules, so it does matter which one you choose.

How Is a Brokerage Account Different?

Brokerage accounts are about growing your wealth. People who buy them can remove their money from the account more or less at any time. This provides a lot of flexibility.

At the same time, like other ways of making money, the government takes a cut. If you profit off of a brokerage account, that profit is called “capital gains.” Your capital gains will be subject to the capital gains tax.

On top of that, brokerage account investments do not receive any tax advantages.

The Advantages of IRAs

The government wants to encourage people to prepare for their retirement. As a result, they provide several incentives to invest in IRAs.

IRA investments can be tax-free if done properly. As long as you’re not withdrawing money early, you can actually avoid paying taxes on income that you place in an IRA.

On top of that, when the time comes to withdraw your money in retirement, you won’t be taxed on it! Even though your money may have grown by a significant amount, that profit will be yours to keep.

The only downside to IRAs are that they are designed to be used in retirement. While you technically can take your retirement money out early, you’ll pay a penalty to the IRS to do so. As long as you intend to let the money sit and grow for your retirement, IRAs are the way to go!

Apply Your Knowledge of Brokerage Accounts vs IRAs

We hope you learned something helpful about brokerage accounts vs IRAs in this brief review of them. To learn more about how you can make the most out of investing in IRAs and the benefits of alternative investments, get in touch with us here.

What Common Mistakes Can I Avoid When Setting up a Self-Directed IRA?

Do you want to take more control over your retirement investment accounts? Have you been considering a self-directed IRA but worried about the rules?

You want to diversify your portfolio – outside of the traditional investment markets such as stocks and bonds. That’s where a self-directed IRA comes into play. It allows you to diversify while also keeping control of your investments yourself.

However, you need to make sure to avoid some common mistakes and pitfalls that plague many investors.

Read on to make sure that you don’t fall into these common pitfall traps.

A self-directed IRA allows you to invest in alternative financial investments. These can include real estate, promissory notes, oil, and gas, tax lien certificates and more.

However, instead of being administered by a bank or brokerage you instead manage the fund yourself.

Take Control Yourself

You know you need to save your money for your retirement. But it can be daunting, to say the least when you are responsible for it yourself. 

When it comes to your retirement, the only person most invested in your success is yourself. Therefore, it stands to reason that you should be the one to make the final decisions regarding your investments. However, without the correct information, you can make some unfortunate mistakes in your choices

Take control of your financial future and get started with a self-directed IRA today. Contact a Quest IRA specialist and find out how we can help you take control of your retirement.

Avoid the Pitfalls of a Self-directed IRA

When you take control of your financial future with a self-directed IRA, you need to ensure to avoid these common pitfalls.

  1. Prohibited transactions – these can be tricky to navigate so it’s important to know the rules.
  2. Due diligence – As mentioned, the rules can be tricky, and it’s imperative that with a self-directed IRA you make the decisions yourself. Always ensure you do proper due diligence before getting into any investment.
  3. Lack of liquidity – with a self-directed IRA minimum distributions are required at 72, however, the alternative investments allowed can be hard to sell. This lack of liquidity can be a common pitfall if you find yourself in an emergency and can’t get your money out of your self-directed IRA.
  4. Lack of transparency – when it comes to your exit strategy for selling your alternative investments all parties involved must be in agreement. You also must be fully transparent as to the valuation of your investments. Without this full transparency, you can fall into another common pitfall of self-directed IRAs.
  5. Lack of diversity – as most successful investors will tell you: diversity is key to successful investment accounts. However, with self-directed IRA funds, sometimes investors forget to ensure that it is fully diversified.

With a self-directed IRA, you need a trustee or custodian that specializes in these non-traditional investments. However, remember one of the common mistakes with self-directed IRA funds is the self-directed IRA owner not performing proper due diligence on investments.

So this trustee is simply a custodian of your account, not your adviser. You need to work with a company that understands the IRA rules and you can trust.

Stay Educated and Stay out of Trouble

We set up self-directed IRAs to help you prepare for your retirement. The most prepared people for retirement are those that are best educated.Keep continuing your education so you can fully prepare for the best retirement possible. For answers to your questions, contact us today. We can help you open a Quest account to get you started.

Know the Difference: IRA Transfer vs. Rollover

In order to live comfortably during retirement, you’ll need to start saving as soon as you can. Opening an IRA account is widely known as one of the most reliable ways to invest in your future.

There are two major ways to fund your IRA: transfers and rollovers.

Not everyone understands the difference between the two, though. Not sure where to start? Don’t worry, we’ve got you covered.

Let’s take a look at everything you need to know about IRA transfer vs rollover.

An IRA Transfer

When you move money from one IRA account to another, it’s known as a transfer. The same concept applies as when you move money between two separate checking accounts at different banks.

When you move funds from an IRA at one firm to an IRA account managed by another firm, the transfer isn’t reported to the IRS and no taxes are incurred. This is due to the fact that the money in the original IRA account never actually reached the account owner.

If the owner were to instead withdraw the funds and then reinvest them into another account, they would incur taxes upon withdrawal. There may even be tax penalties depending on why the money was taken out of the account.

An IRA Rollover

A rollover occurs when money is either moved from an IRA account to a retirement plan or from a retirement plan to an IRA account. When the money never reaches the account holder, it’s known as a direct rollover.

This type of rollover differs from a conventional transfer because it involves two different types of plans.

Although direct rollovers are reported to the IRS, they generally aren’t taxable since the money was never made payable to the account holder.

During an indirect rollover, the money is distributed to the account holder. But, it isn’t taxed if the money is reinvested in an IRA account within 60 days. This will allow the account funds to remain tax-deferred.

How Should I Prepare For One?

Above all else, it’s important to understand that a rollover will likely take a couple of weeks to complete. This is crucial for those handling indirect rollovers to keep in mind, as penalties occur after 60 days from when the funds are distributed to the account holder.

Additionally, most institutions will require you to fill out paperwork in order to begin the process. Some providers may have specific requirements regarding rollovers that may become a factor when reallocating your funds.

Knowing The Difference Between IRA Transfer Vs Rollover Can Seem Difficult

But it doesn’t have to be.

With the above information about an IRA transfer vs rollover in mind, you’ll be well on your way toward putting money away toward a peaceful retirement.

Want to learn more about how we can help? Feel free to get in touch with us today to see what we can do.

Characteristics of the best IRA custodian

The internal revenue service (IRS) decree holds that Individual Retirement Accounts (IRAs) should have a custodian. The custodian is a financial institution that holds the account’s investments just for preservation. The custodian also ensures that all the government and IRS regulations are honored accordingly. While custodians are very easy to find, the problem is how to make the best choice. First, you have to decide the type of IRA you need and the type of investments you need to make with it. 

Traditional vs. Roth IRA 

Both accounts allow the money to grow free of income tax. The difference between the two is: 

  • In Traditional IRA, a tax deduction is made on the contributions from that year; this defers any tax payments until withdrawals are made years later. 
  • Whereas for Roth IRA, there is no tax break on the amount of money invested. In a nutshell, there are no taxes owed on the amount earned. 

Self-directed IRA

Whether Traditional or Roth, as an investor, you can choose to have your custodian manage the investments for you entirely or be self-directed. 

A self-directed IRA allows for expanded investment options. Although the name self-directed makes it seem like the owner has all the control, that’s not how it is. A Self-directed IRA will allow you to move away from the traditional publicly traded assets and utilize your money for alternative assets: Real Estate, Private companies. 

With this in mind, an investor, whether self-directed or not, would want to get the best custodian. 

The following are characteristics of the best IRA custodian. 

An Experienced Custodian – The best custodian for your self-directed IRA is a financial institution with significant experience in offering that service. Also, a custodian that focuses its efforts on providing self-directed IRA custodial services is more likely to serve your needs.  

Smooth Account Set-up – The process of setting up an IRA with a traditional custodian should be as brief and quick as setting up a self-directed IRA. Quest Trust Company, for example, provides easy downloads for new account information packages and forms on its website. 

Low-fees – Cost is one of the essential factors in business because it determines the total amount of profit expected. The most common fees for a custodian are the annual account maintenance fees, commissions, and loads for the mutual funds. All custodians do not charge the same. For example, maintenance fees are not a must. And if you are thinking of investing in mutual funds, it would be better to look for a custodian offering no-loads. 

Wide Selection – It would be best to have a more excellent variety of investment options, especially the individual stocks and bonds. 

Customer Service – It is imperative to have a knowledgeable person answering your calls and emails. It is very frustrating to receive incomplete or confusing information about your accounts. Therefore, while looking for a custodian, always vet the customer service. 

No Restrictions – As an investor, you must get a custodian that doesn’t limit your investment options. 

Education – Even if you are an experienced investor, you can benefit from an IRA custodian who provides you with educational opportunities. It would be wise to look for custodians who have relevant educational materials on their websites, such as in-person courses, live webinars, and overall educational resources.

Consolidation Savvy – For people having multiple IRA accounts, most custodians advise consolidation of the accounts into one single fund. Therefore it will be advisable to get a custodian who thoroughly understands the rules regarding consolidation.

After considering all of these characteristics, you should be able to make an informed decision about choosing the best custodian to help you set up and maintain your Self-directed IRA. 

At Quest Trust Company, we offer self-directed IRA accounts that place the customer at the heart of the decision-making process. Contact us today to discover how our expert staff can ease the administrative burden and help you to make the investment that is right for you.