What is a Self-Directed IRA?

Whether it’s a Traditional IRA or a Roth IRA, a Self-Directed IRA (SDIRA), gives you all the tax advantages of an IRA with the freedom and flexibility of a wider array of investment instruments. The opportunity to take control of your financial future with greater asset diversification is one reason to invest in a self-directed IRA.

  • Regular IRAs allow investments in stocks, bonds, mutual funds, ETFs, and CDs. 
  • With a self-directed IRA, your investment options increase to include real estate, tax lien certificates, private market securities, promissory notes, and other investment opportunities. 
  • Building wealth with the tax advantages of an IRA while diversifying your retirement investment fund allows you to seek higher returns than a regular IRA. 
  • Higher yields and less volatility are another advantage of an SDIRA.

There are restrictions on what is permissible within IRS guidelines for an SDIRA. 

  • For example, you cannot borrow money from your SDIRA, sell the property to it, or enter into deals with relatives for it. 
  • You should also know that your IRA custodian cannot provide investment advice. 
  • Your IRA custodian can and should advise you of all prohibited transactions for your SDIRA.

The annual contribution limits are the same as a regular IRA: for those below the age of 50, $6000, and those older than 50, $7000. With the current and future problems with pensions, health care, Social Security, and other government programs, it is more important than ever to have a solid foundation for your financial future.

Quest Trust Company IRA Specialists can answer your questions about an SDIRA. Consider the benefits of an SDIRA with Quest Trust Company as your custodian: 

  • While most companies have only one option for your SDIRA, Quest Trust Company offers seven. 
  • Quest, there is no minimum cash balance. 
  • Transaction processing can exceed over two weeks with some companies; Quest processes transactions within 24-48 hours.

Quest offers the following for FREE (Other companies charge a fee for all of the following items):

  1. Expedited Services
  2. Processing Incoming Wires
  3. Processing Incoming Checks
  4. Roth Conversions
  5. Re-Characterizations
  6. Change Account Type Fee
  7. Certified Mail Fee
  8. Paper Statement Fee
  9. Distribution Processing
  10. Required Minimum Cash Balance (No minimum cash balance)

Contact a Quest IRA Specialist today! And discover how a self-directed IRA will fit into your retirement investment strategy. At Quest Trust Company, we help you take control of your retirement. 

Qualifying for an IRA: Three Things You Need to Know

Whether you have just entered the work force or have been earning income for years, saving for retirement should be one of the top priorities in your monthly budget. Even teens can start a retirement account with the money from their first job. In fact, it is highly encouraged since they will simultaneously have fewer expenses, making it easier than it ever will be to contribute. While it’s never too early to start saving, there is such a thing as too late and missing the opportunity to grow your assets for retirement. Listed below are a few restrictions for IRA accounts to help you determine if you qualify to start one now.

  1. To open an IRA, you do have to earn taxable income. The contribution limits for both traditional IRAs and Roth IRAs are $5,500 per year (or $6,500 if you are older than 50). However, if you earn less than the maximum contribution limit, you can only contribute up to your full income amount. Since Roth IRAs grow tax free, there are income limitations for contribution qualification related to these accounts. The amount you are able to contribute will start to decrease, or phase out, if you earn more than $118,000 as a single person or $186,000 as a couple filing jointly. If you earn more than $133,000 as a single person or $196,000 as a couple filing jointly, you are no longer eligible to contribute to a Roth IRA, but still have the option to contribute to a traditional IRA given that you don’t also have a workplace retirement plan (401K).
  2. As long as you’re earning income, your age won’t disqualify you from contributing to a traditional IRA until you’ve reached 70 ½. You may start taking distributions at age 59 ½ without an early withdrawal penalty, and minimum required distributions (RMDs) are required by age 70 ½. RMDs are calculated based on the amount of funds in your account and your life expectancy. Roth IRAs are not subject to RMDs, account holders are allowed to contribute up to any age, and distributions may be taken at any time without penalty as long as the account has been open for at least five years or the account holder has turned 59 ½, whichever comes first.
  3. Marital Status. As soon as you say, “I do,” you’re entitled to a whole host of benefits—one being spousal IRAs. If you don’t personally earn income, but your spouse does, you can still open an IRA in your own name using your spouse’s income for contributions. In this way, you as a couple can effectively double the maximum contribution limit by contributing $5,500 to each of your accounts every year, given that your spouse earns at least $11,000 per year. This advantage can help your assets grow tremendously for retirement.

Given the importance of saving for retirement and the incredible resource IRAs are for growing your assets, it’s a puzzle as to why there aren’t more restrictions placed on these types of accounts. If you meet the requirements for either a traditional or Roth IRA, talk to your financial advisor today about setting up an account. Your future self thanks you.