Plan Types and Information

  • Steps to Consider if You Need to Start Taking Required Minimum Distributions Next Year

    One of the more confusing aspects of an individual retirement account is the concept of required minimum distributions. Required minimum distributions (or “RMDs”) are distributions or withdrawals that certain IRA account holders must make every year once they reach age 72. If you find yourself in a situation where you need to begin taking these RMDs next year, you may wish to start planning now for how they’re going to affect you, and how you’re going to respond. Here are some steps to consider if you need to take these distributions from your IRA next year. Understand the General Rules. The starting point should be to understand exactly what the rules regarding RMDs require. First of all, these distributions only apply to traditional IRAs – Roth accounts are exempted. Second, the amount of each annual required minimum distribution is calculated every year, based on your age and the balance in your traditional IRA. Finally, the annual RMD amount is only a minimum; you’re free to withdraw more than that amount. Understand That Planning May be Necessary. Keep in mind that the rules on RMDs apply whether or not you’re ready to liquidate any of the assets in your account, whether or not doing so would ...

  • The Upsides of Taking Early Withdrawals from Your Self-Directed IRA to Help Your Grandchildren

    You know that a self-directed IRA is an extremely powerful retirement savings vehicle. These accounts offer an attractive combination of tax-deferred (or in the case of a self-directed Roth IRA, tax-free) investment growth plus significant freedom investment choices. While the account was setup to enable individuals to save for their own retirements, they can be used for other things as well. For example, if you’re in a position to make early withdrawals from your self-directed IRA without compromising your own financial future, you can take early withdrawals from your account to help your grandchildren. Most early withdrawals will incur a financial penalty, but there are two exceptions that are of particular interest. To Help Them Purchase Their First Home. One of the early withdrawal exceptions is to permit the account holder to take up to $10,000 out of their account to help them by their first home. You can also help your grandchild by using funds from your self-directed IRA to assist them with buying their own first home. The IRS regulations authorize a penalty-free withdrawal for up to $10,000 to help the account holder buy a new home (provided that they have not owned a home at any time in the past ...

  • Using Your Self-Directed IRA to Match Your Investing Philosophy and Outlook

    Owning a self-directed IRA gives you a number of different freedoms over having your account with a traditional IRA custodian. For example, you can use a self-directed IRA to invest in all the different asset classes that are legally permissible, but which traditional IRA custodians won’t allow. These include real estate, precious metals, and various types of private equity and debt investments. This means that you can use your self-directed IRA to execute upon your own personal investing philosophy and outlook with the widest possible range of investment choices. But to do this effectively, of course, you will need to understand just what your investing philosophy and outlook are. What Kind of Investor Are You? There are a number of resources online to help you determine your investing philosophy. You can take an online quiz, or go back and review some of your past investment activities. Do you enjoy the “rush” of high-risk / high-reward investing, even when some of your past investment choices haven’t worked out the way you wanted? Or have you deliberately tended to shy away from the riskier side of the investment spectrum in the past, being willing to give up some potential gains in order to be more ...

  • Getting Started with a Self-Directed IRA When Your Nest Egg is Small

    While you might have been initially drawn to a self-directed IRA because of the investment flexibility that this account type offers when compared to IRAs with traditional custodians (e.g., being able to invest in precious metals, and real estate, and private companies), it’s true in all areas of investing that not every investment option is suitable for every investor. Make the Maximum Contributions Every Year. When your self-directed IRA balance is relatively small, it’s vital that you make the maximum contributions to your account each and every year. If you fail to make the maximum contribution in any given tax year (the contribution limit for the 2021 filing period is $6,000, with an additional $1,000 allowed for taxpayers age 50 and over), you won’t be able to make up for that lost opportunity in later years. Once the chance to make the maximum deposit has passed, it’s gone forever. Consider Maintaining Two Accounts. It’s a common misconception, but taxpayers are not limited to having a single IRA. In fact, it can be good practice to maintain both a traditional self-directed IRA as well as a Roth self-directed IRA, and then decide where to make your deposits each year based on the tax ...

  • The Little IRA That Could

    A Self-Directed IRA (SDIRA) differs from a standard IRA due to the unique investments it can hold. Unlike standard IRAs which hold publicly traded assets, such as stocks and bonds, a SDIRA can hold a wider scope of investments – such as real estate and private notes. While the freedom and versatility that come with an SDIRA sound appealing for many individuals looking to invest, some worry they do not have enough capital to get started with an SDIRA account. Below we explore real-life examples that prove that as long as you have the relevant knowledge, you have enough capital to begin investing in an SDIRA. The power of a little IRA If you are interested in investing in real estate, you may be wondering how a little IRA can help you secure a property. Smaller IRAs, such as a health savings or children’s Coverdell account, can be partnered with larger accounts to create a greater return. For example, a married couple partnering their Roth IRAs with their son’s Coverdell ESA to buy a property. After flipping the house each of the investors saw their percentage of interest returned, with the son’s smallest IRA out of the three netting a $2,500 growth. ...

  • The “Perfect Time” to Contribute to Your IRA might be TODAY!

    A common question you hear in the retirement world is “how can I retire comfortably”, and we are constantly reminded how important it is to save for the future. IRAs (Individual Retirement Accounts) and Solo 401(k)s are some of the best tools created for those who choose to save money and create wealth for retirement through investing. Vehicles like this provide tax advantages for retirement savings, deferring taxes until distribution age or potentially making it to where an individual never has to pay taxes on growth at all! But what do you do with your IRA when a global epidemic hits and all of your plans shift? More recently, THIS has become the most common question. At first glance, the thought of maximizing your IRA and the contribution limits of IRAs can seem intimidating. Setting aside hefty sums of money for the future may not seem all too appealing when you really need it now! The truth is, contributing to a retirement plan just may not be an option for each and every person right now and that is okay! For those who can take advantage of building their IRA during this time, understanding many different ways and options to maximize ...

  • When Does It Make Sense To Do A Joint Venture W/ Guest John Hyre – Part 2

    Sarah: So, with all the complexity… what due diligence needs to be taken, whether it’s on the person or on the documents before getting into a joint venture? John: First, you look at the person and the history. It’s amazing how many people don’t look at IRA money as real money, which is ironic because it’s more precious than normal money, right? IRA money can be tax-free or tax deferred, unlike normal money. But some people – since they don’t have it in their hand – they don’t look at it as “real”, which is very dangerous. You have to actually take the time. If you’re going to invest real IRA money, do a search – not just a local search of the courthouse records or the search where they live.  You want to get more.  Sarah: Are there any ways you suggest doing due diligence to get more information? Not just surface level? John: Background checks nowadays are so cheap. Information wants to be free! You can get so much: every address they’ve lived or worked at, social security number, everyone they’re related to, and most importantly, a comprehensive list of both civil lawsuits and criminal issues across the country. At a ...

  • Are You Up to Date with the Latest Secure Act 2.0 Changes?

    It may seem like it’s been a while since an update has come out regarding the Secure Act 2.0, but that just changed! As of last Monday, the proposed bill has passed the House of Representatives and is now at the Senate level. There are several important sections in the bill, but there are a few that stick out. Below, we have outlined seven sections we believe will affect Self-Directed IRA account holders the most and have provided a brief Secure Act 2.0 overview. If you would like to learn more about protecting your account, access the direct link to the Secure Act bill to continue reading. Additionally, if you would like a more detailed analysis of a particular section, you can click on the hyperlinked title at the start of each individual paragraph. Section 101: Automatic Enrollment This section states that if you meet the vesting requirements of your 401(k) provider through your employer, then you will be forced to enroll in your company’s 401(k) plan. If you have met the vesting requirements for automatic enrollment, then a minimum of 3% of your paycheck will be contributed. Once in effect, that percentage will be increased by 1% each year, not to exceed ...

  • When Should You Start Your Estate Planning?

    For some people, any mention of the term “estate planning” is likely to conjure up images of an extremely wealthy individual preparing a complicated series of wills and trusts in order to pass down their assets, money and real estate holdings to various family members, friends and charities. In truth, estate planning is a concept that’s much broader than that (estate planning can also be accomplished with beneficiary designations on your financial accounts and by holding real estate with right of survivorship, for example), and is an important consideration for individuals of many different income and wealth brackets. While everyone’s estate planning needs are different, it’s likely that you may need to begin your estate planning efforts sooner than you might think. Estate Planning is for Everyone. First things first – estate planning is the act of making sure that your assets will disposed of in whatever manner you desire after you pass away. This is true regardless of the size of your estate. Even if you don’t believe that you’re particularly wealthy, chances are good that you want certain things to happen with those resources after you’re gone. Estate planning is the means by which you achieve those types of ...

  • Does My Level of Retirement Savings Justify a Self-Directed IRA?

    A self-directed IRA can form the foundation of anyone’s long-term retirement savings plan. With a self-directed IRA at a custodian such as Quest Trust Company you can invest in a far wider range of asset types and classes than you could with a traditional IRA. But because some individuals use their self-directed IRAs to purchase investments such as real estate, it leads some to wonder whether having that particular type of account only makes sense for retirement savers who have high levels of savings. In short, the answer is “no.” Just about anyone can benefit from a self-directed IRA – let’s examine the reasons why. Self-Directed IRAs are Flexible. As noted above, self-directed IRAs provide you with the greatest number of options in terms of the kinds of investments you can make for retirement. Savers with relatively small account balances can still benefit from this flexibility. It’s true that you can use a self-directed IRA to make large-scale investments in real estate, such as apartment buildings or commercial developments. But you can also make investments in much smaller properties, including those in the lower price ranges. Furthermore, you can use your funds within a self-directed IRA to gain exposure to the real estate market ...

  • Getting A Head Start On Your Annual Self-Directed IRA Contributions

    How much do you plan to contribute to your self-directed IRA this year? The annual limit for IRA contributions for 2021 remains unchanged at $6,000, with an additional $1,000 contribution permissible for taxpayers aged 50 and older. Hopefully you plan to contribute the maximum allowable amount, and you’ve been making such maximum contributions every year for quite a while. Now the trickier question; when do you plan to make those contributions? If you’re like most IRA account holders, you’ll wait until the end of the year to make your contributions. But when you think about it, there’s no reason to automatically consider your IRA contributions to be an end of the year financial matter. By getting a head start on your annual contribution, and making the contribution to your account earlier in the year, you’ll give your money the most time and greatest opportunity to grow. Here are some tips for getting that jump on your future. Use Your Tax Refund. If you’ve already planned for how you’re going to spend your next tax return, then you might want take another look at your plan. This might seem like a tough adjustment the first year you make the change, but if you can ...

  • Is Now the Time to Invest in Oil & Gas with Your Self-Directed IRA?

    You’ve likely noticed that gas prices are at the lowest level in years. And while that’s great news for consumers when they fill up their tanks, it’s presented investors in the oil and gas industries with a number of challenges. For example, lower energy prices mean that the development of new natural gas extraction operations has come to a virtual standstill in the northern Midwest and western plains — areas which just a few years ago were experiencing explosive growth in these types of activities. In fact, some developers are choosing to “cap” or decommission their natural gas wells until market conditions improve. As with any disfavored asset class, you’re faced with the question of whether the low price merely represents a buying opportunity, or if it means there’s been a fundamental shift in the circumstances surrounding that asset. Let’s examine some of the factors surrounding that discussion. Types of Assets. There are a wide range of investment options in the oil and gas industries. You can make direct investments (in the form of equity or debt) in exploration and development companies, as well as in the companies responsible for refining the petroleum products. It’s important to note that various types of investment in ...

  • Steps for setting up a self-directed IRA

    The Internal Revenue Service is restrictive on the type of assets that you can own through the IRA. For instance, it prohibits ownership of alcoholic beverages, some precious metals, jewelry, collectibles, and life insurance. It does, however, allow investment in private stocks held in corporations or limited liability companies. The steps for setting up a self-directed IRA are as outlined below: Identify a custodian It’s important that you identify a third party administrator or a trustee who is willing to hold your assets under your self-directed IRA. The trustee(s) must have the authorization from the IRS to act in this capacity. The trustee must also be specialized in financial planning and be experienced in handling the Retirement Investment Fund. Open an account with the trustee Open an account with the chosen custodian and fund it with up to $6,000 ($7,000 if 50 or older). Alternatively, you can execute a trustee-to-trustee rollover transfer. It’s a directive to your old IRA to move your assets to the new IRA under the new trustee. Your new custodian will give you the forms required to finalize this paperwork. Identify the desired area of investment With an account ready, you can now choose the type of business that you want to ...

  • In Kind Transfers: How They Work and When to Use Them

    Opening a brokerage account and beginning to invest in assets can help individuals grow their wealth and save for retirement. According to information from the PEW Research Center, over 50 percent of U.S households are currently invested in the stock market.  Brokerage accounts give individuals the ability to buy and sell securities on the financial markets. Investors will deposit money and instruct the broker on what assets to buy or sell. But, what happens when you want to transfer to a different brokerage?  Selling your equity can get expensive with all the taxes and fees, luckily there’s another option – in kind transfers. Keep reading this guide to learn more about in kind transfers and when you should use one. What Are In Kind Transfers? When it comes to transferring assets, you have a few options, either you can sell your investments and transfer the remaining cash balance to a new brokerage, or you can use what is called an in kind transfer.  Individuals will transfer to another brokerage for a number of reasons, including: Lower fees More variety Minimum requirements Better service  Promotions An in kind transfer doesn’t involve any selling – it’s simply just moving your investments from one brokerage to another. This is as opposed to doing a ...

  • Growing Your Retirement by Investing in What You Know Best: Getting Back to the Basics

    Building wealth and saving enough for retirement can get overwhelming, but it doesn’t have to be. Most people think that they can only invest in publicly traded investments like stock, bonds, mutual funds, and CDs… but that isn’t true at all. With self-directed IRAs, you can diversify your investment portfolio into private assets like real estate, notes, land, oil and gas, and other private entities. The best part? It’s all on your terms. Self-directed IRAs truly allow people to take back control of their retirement savings and invest in assets that make sense to them.  What is a Self-Directed IRA? Self-directed IRA custodians make investing fun while putting the control back in your hands. A self-directed IRA is like any other IRA account; the term “self-directed” is just used to describe the type of account it is. The difference between a regular traditional IRA and a truly “self-directed” IRA is the types of assets they hold. With a self-directed IRA, you have the ability to choose from the broadest possible spectrum of investments, including those not traded on a stock exchange. You get to make all the decisions about your financial future. Most people find that they make more money and feel ...

  • How Syndicators Benefit from Self-Directed IRAs

    Raising capital for deals may be easier than you thought when you have a trusted IRA custodian working alongside you! With over 28 trillion dollars sitting in retirement accounts, self-directed IRAs can be a great option for syndicators looking to raise money. For investment sponsors looking to broaden their investment possibilities, companies like Quest Trust Company makes it easy to tap into the trillions of dollars in Self-Directed IRAs for private assets. Introducing self-directed retirement accounts to your network can provide huge benefits to you and your syndications. For syndicators looking to raise capital, self-directed IRAs can be a great source because many SDIRA investors like to use their retirement accounts to invest passively – something syndications offer. Plus, the funds in retirement accounts must remain in the accounts until a certain age to avoid taxes and penalties, so the time frames that come along with involvement in certain syndications is usually not a concern to SDIRA investors. What are the Benefits of Using Quest Trust Company  as a Syndicator? A Dedicated Senior Level Relationship Manager Ability to Submit Requests 100% Online Required Reporting Access to Local and National Events Expedited Transaction Processing Account Access and Visibility Continued Education and our IRA Specialists When you have a custodian like Quest ...

  • Minimize Your 2013 Tax Bill with a Self-Directed IRA

    One of the most popular ways for individuals to reduce their personal income tax bill is by making deductible contributions to an Individual Retirement Account. The contribution limits to IRAs are computed on an annual basis, but once you file your taxes you don’t get to go back and make any additional contributions for years in which you failed to make the maximum. It’s therefore important to get the biggest tax break you can by making the maximum IRA contribution each and every year. First Consider Deductible IRA Contributions Most taxpayers will first look to see if they are eligible to make tax deductible contributions to their traditional IRA. If you’re eligible, this is one of the best ways to reduce your 2013 tax bill. This deductibility will only apply to traditional IRAs, and only if you meet certain other requirements. These requirements basically relate to your level of adjusted gross income if you or your spouse is covered by an employer-sponsored retirement plan such as a 401(k). Contributions to Roth IRAs are never deductible. Drawbacks to Employer-Sponsored 401(k) Plans Speaking of 401(k)s, you may hear people claim that these plans are far and away the best retirement savings vehicle. After all, the annual contribution ...

  • Can You Start Self-Directed IRAs for Your Children?

    One question that often comes up when a new parent begins considering their child’s future finances is whether they can start an IRA on their behalf. Since the time value of money is perhaps the greatest power of a self-directed IRA, it’s easy to see why parents would try to make this happen. Unfortunately, IRAs can only be opened by individuals for themselves, with money they earn themselves. Let’s take a closer look. The Earned Income Requirement. The biggest hurdle you’ll have to overcome when you work to help your child opened a self-directed IRA is the IRS requirement of earned income. In order to make any contribution to an IRA, the account holder must have earned income of at least that amount for the year of contribution. So, for example, let’s consider an individual who has accumulated a significant amount of assets in their non-retirement accounts and now lives off of their investment earnings. Even if that individual earns $100,000 per year in investment income, they won’t be able to make contributions to an IRA unless they have earned income as well. Earned income is essentially what someone receives in exchange for their time or services. This might be salary or ...

  • First Time Using Your Self-Directed IRA to Invest in Private Stock?

    As you look to use your self-directed IRA to broaden your investment holdings, you may come across opportunities to invest in private stock. Among many individuals, this type of investment is among the least familiar, and potentially most confusing. Let’s take a look at some of the basics about using your self-directed IRA to invest in private stock. Let’s first make sure we understand what we’re talking about when we use the term “private stock.” In the broadest possible terms, shares of “stock” in a company represent ownership interests in that company. Depending on the type of stock the company chooses to issue, this ownership interest may include the right to receive dividends (should the company choose to pay them), to vote on certain matters relating to the company’s governance, and to receive money back in the event of a company liquidation (if there are funds available after repaying company debts and other obligations). Most individuals who are saving for retirement are familiar with stocks in the context of “publicly traded” securities. Publicly traded stocks on those in which buyers and sellers conduct their transactions on a public stock exchange, subject to the rules and requirements of the exchange. In the United ...

  • Will This Be The First Year You’re Subject To Required Minimum Distributions On Your Self-Directed IRA?

    While the U.S. government wants to encourage individuals to save for retirement by providing tax incentives for using the IRA structure, they don’t want to forego the tax revenue entirely. For example, you’ll potentially be able to take a tax deduction for contributions you make to a traditional self-directed IRA, and won’t have to pay taxes on any investment growth or gains that occur and remain within your account, but you will have to pay taxes when you make withdrawals from your account. One important way that the IRS rules manage the balance between allowing tax breaks for retirement savings, but requiring that the account holder pays taxes at some point, is the set of rules on required minimum distributions (“RMDs”). RMD Basics. Once a traditional IRA account owner reaches age 72, they must begin taking distributions from their account, and those distributions must meet certain minimum amounts that are calculated based on the account balance and the account holder’s age. The account holder must withdraw the calculated minimum amount from their account every year. It’s important to note that because the required minimum distribution amounts are only minimums, the account holder is always free to take larger or more frequent distributions from ...

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