Plan Types and Information

  • Getting ready to retire? Does your IRA make you retirement ready?

    When you’re getting ready to retire, it’s important to remember that a “one size fits all” approach is unwise for retirement planning. Each plan is different, particularly when you factor in how close someone is to his or her target retirement date. How do you know when you’re retirement ready? Depending on how much longer you have before you’re ready to retire, your goals and focus will vary greatly. Take a look at the breakdown below. Getting ready to retire in 30 or more years. By contributing to an IRA when you’re this far away from being retirement ready, you’re giving yourself the best chance to reach your financial goals. When you have 30 or more years for your investments to grow, you can consider speculative investments for your portfolio. Having more time will give those investments the greatest likelihood of paying off and, if they don’t, you still have time to make up any funding shortfalls. If you are this far away from retirement, you should also deemphasize any Social Security earnings that may currently be in your retirement budget; you may not be able to count on that income stream. Getting ready to retire in 20 years. If you’re 20 years away ...

  • The Most Important Retirement Planning Questions You Need to Consider

    Planning for retirement can be a significant undertaking. While the principles of successful retirement planning are easy to understand (e.g., begin saving early in life, try to max out your tax advantaged contributions each year, and invest according to your personality and risk profile), reaching your retirement goals can often be quite a challenge. There are plenty of important questions you should ask you financial advisor, of course, but first you need to ask yourself a few questions: When do you want to retire? This is probably the first question that every individual considers when they begin thinking about how they’re going to handle their own retirement. Asking yourself this question is important because the longer you have between now and your target retirement age, the more options you’ll have on how to get there. What do you want your retirement to look like? The next question to ask yourself is what you want your retirement to be like when you reach that age. Where do you want to spend your retirement years? Do you want to relocate to another part of the country (or to another part of the world)? Do you envision your retirement as a luxurious one, or a more ...

  • Best Practices for Growing Your Family’s Wealth with a Self-Directed IRA

    For many individuals, their self-directed IRA will eventually become the biggest single financial asset they have. Over the course of several decades of maximum contributions and smart investing, their account can end up contributing significantly to their family’s overall wealth. Here are some best practices for helping you use your self-directed IRA to grow your own family’s wealth. Convert to a Roth Self-Directed IRA The first idea is misunderstood by many, even though it can provide significant long-term wealth creation. Apart from the differences in deductibility of contributions, the main difference between a Roth IRA and a traditional IRA is the taxation of investment gains within the account. Investment gains on a traditional IRA are taxed upon withdrawal – which means that they are “tax deferred” in the long term. But withdrawals from a Roth IRA during retirement are never taxed. This means that the investment growth within a Roth account is truly “tax free.” This distinction can lead to much greater wealth for your family in the long term. Think Outside the Box Using your self-directed IRA for estate planning purposes is one of the most obvious ways to grow your family’s wealth, but it’s certainly not the only one. If we look at ...

  • Can You Deduct Your Self-Directed IRA Contributions Deductible In 2015?

    Being able to deduct your self-directed IRA contributions from your tax return can be a great incentive for you to maximize those contributions each year. But not all IRA contributions are deductible. Roth vs. Traditional Self-Directed IRA. The first consideration in determining whether you can deduct your 2015 contributions to your self-directed IRA is whether your account is set up as a Roth account or as a traditional account. Contributions to Roth accounts are never deductible, and contributions to traditional IRAs are sometimes deductible. Let’s examine the circumstances under which contributions to your traditional self-directed IRA can be deducted on your 2015 tax return. You Aren’t Covered By an Employer Sponsored Retirement Plan. If you don’t participate in an employer retirement plan (such as a 401(k) plan, profit-sharing plan, SEP, SIMPLE-IRA or certain defined benefits plans that you participate in), then your contributions to your self-directed IRA will be fully deductible, regardless of your income, if either (a) your tax filing status is single or (b) you file a joint return with your spouse but your spouse is not covered by a retirement plan at their employer. If you file a joint return but your spouse is covered by a retirement plan at ...

  • Is Now a Good Time to Invest in Real Estate With Your Self-Directed IRA?

    In most parts of the United States, the real estate market has recovered from its down period in 2007-2008. And in many cases, the growth has resumed at an impressive pace. This leads many retirement savers to ask themselves whether now is a good time to invest in real estate with their self-directed IRAs. The short answer is that it’s almost always a good time to invest in real estate, or any other asset for that matter, depending on how and where you invest. For example, if you look to invest in a part of the nation that might not be close to you, or even to invest abroad, or perhaps even to invest in a type of property that you hadn’t previously considered, then you’re likely to find a number of opportunities. But the more important set of questions you need to ask yourself prior to making any real estate investment related more to your investment outlook, tolerance for risk, and other issues. How Will You Manage the Property? One important factor in your investment decision-making process should be how you plan to manage any properties you purchase. For example, do you intend to manage them yourself, or will you hire a professional ...

  • Laying a Foundation for a Tax-Free Future

    What are tangible assets? Tangible assets have a physical value: think real estate, notes, and even private businesses. These are different from intangible assets, which are investments in the market and include stocks, bonds, and mutual funds. Why should I invest in them? To diversify your funds. Diversification is the main reason people choose to invest in tangible assets to grow their retirement savings. Putting all of your money in stocks and bonds subjects your retirement fund to the whims of the stock market. So, your income during retirement will be highly dependent on the state of the stock market at the time of your retirement. Diverting some of your funds to tangible assets can provide a buoy to even out investments in the stock markets since the value of your intangible assets is unlikely to be affected by market changes. To avoid inflation. The value of stocks and bonds is dependent on the market and lessens over time due to inflation. However, intangible assets have inherent value. This means that their worth will not be affected by inflation. Real estate is a good example of this. Even when the dollar decreases in value, real estate appreciates over time. To pursue your interests Tangible ...

  • How does a Solo 401k Work?

    Solo 401k plans are employer-sponsored retirement accounts that offer self employed individuals with no common law employees other than a spouse the opportunity to establish a Profit Sharing Plan.  Many companies offer solo 401k accounts to their employees, but not many people understand exactly how they work.  Here’s what you need to know about your solo 401k before you get started: You are the Employer and Employee of the Account Although your solo 401k is an employer plan, it allows the business owner to be the Trustee of the plan, granting them access to make fiduciary decisions. The Trustee will work with a financial institution to set up the account, and they will determine where to hold the funds, how much you contribute to the plan, and what investment to partake in.  Rollover of previous accounts into the Solo 401k You may have pre-existing 401k plans or IRA’s that you may want to consolidate inside of your Solo 401k. As long as those funds are pre-tax they can be rolled into the plan.   If you are looking for a Roth Solo 401k, you may conduct “in plan Roth conversions” to convert your pre-tax funds to Roth.  You are not able to move Roth IRA’s or previous Roth 401k’s into ...

  • Why Bother With a Non-Deductible IRA?

    Many individuals first become interested in opening an Individual Retirement Account when they learn that in some situations their annual contributions are deductible on their current year’s tax return. It’s important to understand that the term “deductible IRA” refers to traditional IRAs, as opposed to the Roth IRA structure. But it’s also important to know that the actual deductibility will depend on a number of factors, and that not all contributions to a traditional IRA are deductible. The concept of a “non-deductible IRA” therefore refers to Roth IRAs and sometimes to traditional IRAs. Here are some reasons why, despite the non-deductibility of contributions to those accounts, they can still be an extremely valuable part of your retirement planning. To Save on Taxes Later in Life If you have a Roth IRA, the withdrawals you make in retirement will not be subject to federal income tax. Since the majority of your IRA account balance will likely be comprised of earnings, the total value of tax savings down the road will far exceed the value you’d obtain from having your contributions be tax deductible. To Avoid the Rules on Required Minimum Distributions Once you reach age 70½, you must begin taking annual distributions from a traditional IRA, ...

  • Top Tax Friendly States for Retirees

    Many retirees are surprised to find that tax planning remains important even when they enter retirement. In fact, for some retirees who have stopped working full time, giving sufficient thought to their tax situation is at least as important (and in some respects is even more important) than it was prior to retiring. This is due in no small part to the fact that different states have sometimes vastly different methods for taxing (or not taxing) their residents. Because these differences can sometimes be significant, it’s not uncommon for perspective or near retirees to move to a new state largely for reasons of saving on their annual tax bill. With that in mind, here is a brief survey of some of the most tax friendly states for retirees. Alaska: Alaska has long been a preferred retirement destination for some, in large measure because the state imposes no tax whatsoever on individual income, and has no statewide sales or use taxes. Florida, Nevada, South Dakota, Texas, Washington and Wyoming: As with Alaska, these six states are currently free from income tax. These states do, however, have sales taxes of varying levels. Tennessee and New Hampshire: Neither Tennessee nor New Hampshire as a general statewide income ...

  • Can You Use a Self-Directed IRA to Invest in Tax Liens?

    When you have a self-directed IRA as part of your retirement strategy, you’ll have a much wider range of investment options available for your nest egg. With a custodian such as Quest Trust Company, you’ll be able to invest in precious metals, private equity, and real estate. Individuals who first become interested in opening a new self-directed IRA often get that interest because they think they might be interested in making real estate with their retirement funds. But direct investments in property are only one way to invest in real estate related items. You can use a self-directed IRA to make private mortgage loans secured by real estate, and you can invest in tax liens as well. What are “Tax Liens”? A tax lien is essentially an encumbrance worked at that place on certain property (usually real estate) when the owner of that property fails to pay their taxes. There are several important legal implications of tax claims. For the property owner, the most important implication is that if they fail to make good on their tax debt, then the taxing authority (generally a local government) will eventually have the legal right to foreclose and force a sale of the property in order ...

  • The Basic Relationship Between Social Security Benefits And Your Self-Directed IRA

    Regardless of whether you envision Social Security to be a significant component of your retirement income, or simply a helpful supplement to your self-directed IRA, it’s important to understand how the two are related. The timing and nature of distributions you take from a self-directed IRA can impact the size of your Social Security benefits, as well as the income taxes you may have to pay on those benefits. First things first. Under current law, your eligibility to receive Social Security retirement benefits, and the amount of those benefits, is a function of your prior work experience and earnings, not how much you have saved. In other words, having a large self-directed IRA or taking significant distributions from your account during retirement won’t make you ineligible for Social Security benefits. However, those distributions may impact the taxability of the Social Security benefits you receive. Finally, it’s important to keep in mind when you’re planning your retirement income strategy that you control when you begin receiving Social Security retirement benefits (anywhere between age 62 and age 70), and you control when you begin taking distributions from your self-directed IRA – with no limit for Roth account, and required minimum withdrawals from a traditional ...

  • The Pros and Cons of Making Illiquid Investments with a Self-Directed IRA

    A self-directed IRA with a custodian such a Quest Trust Company can provide you with the opportunity to invest in a wide range of investment options, including a number of highly illiquid investment types. Before deciding on a particular investment that could take some time and effort to dispose of when you’re ready, consider the following pros and cons: Pro: Assuming you’ve chosen a suitable investment (in terms of your portfolio needs, as well as your investing personality), then having that investment be relatively illiquid can help you avoid the tendency that some investors have to trade too frequently. Con: While it’s generally not advisable to use your self-directed IRA as an emergency fund, you may be faced with a situation where you really do need to take a distribution from your account prior to reaching full retirement age. Having illiquid investments makes it more difficult to do so. Pro: As you acquire more investment experience, you may begin to feel that the traditional and more common investment types — such as stocks, bonds, and mutual funds — simply don’t give you the types of investment exposure you’re seeking. You may want a greater risk/return outlook, or perhaps a greater level of investment ...

  • How can you qualify for a Roth IRA?

    Navigating your financial future can be a daunting task, and most of us would instead not think about it if we didn’t have to. However, thinking about your retirement does not have to be hard or stressful. A Roth IRA can take away some of the guesswork, but how can you contribute? Quest is here to help you understand what you need to do to qualify as well as learn about the best wealth-building investment options available. Moreover, with our genuinely self-directed IRA accounts, you are the one in control. Here are some things to help you get started: Qualifying for a Roth IRA: The IRS has enacted guidelines and restrictions on who can contribute to an account. Your income must fit specific criteria set by the IRS to open a Roth IRA. Also, it all depends on how you decide to file your taxes. It’s important to note that any income you choose to invest should come from work you performed yourself. It cannot come from any other investments. The current Roth IRA income limits for 2019: Single or head of household: You need to earn less than $122,000 (for the year of 2019) to contribute to your Roth IRA Married and filing jointly or ...

  • How Your Self-Directed IRA can Boost Your Tax Refund

    As we inch closer to the April 15, 2014 tax filing deadline, we’re all looking to reduce our tax bill so that we can receive back the largest possible tax refund (or reduce the size of the check we have to send to the IRS). We can decrease the annual tax burden by utilizing the greatest number of deductions that are available. If the deduction for IRA contributions is available to you, it can prove to be an extremely valuable benefit. Here’s how your self-directed IRA can boost your tax refund: Deductible Contributions to Traditional IRAs. For traditional self-directed IRAs, the contribution limit for the 2013 tax year is $5,500 (or $6,500 if you’re age 50 or older). The deductibility of your annual contributions will depend on several factors: your tax filing status; your modified adjusted gross income; and whether or not you’re covered by an employer-sponsored retirement plan such as a 401(k). If you file a single return, then you’ll be able to deduct the full amount of your annual contribution if you’re not covered by an employer retirement plan. If you are covered by an employer plan, then you can still deduct the full value of your IRA contribution if your income ...

  • How to Leverage Your Investment Power With a Self-Directed IRA

    As you invest over the course of years and decades, you become exposed to new types of investments, new investing terminology, and lesser-known investment concepts. One of these less common investment techniques is that of using leverage. What is Leverage? In the simplest terms, leverage is borrowing money in order to invest it. Borrowing money incurs fees and expenses, of course, so the idea behind using investment leverage is that the amount you’re able to make from the investment you purchase with borrowed funds exceeds whatever you pay to borrow those funds. Types of Leverage. As you might imagine, there are different types of leverage that individuals use in the hopes of boosting their investment returns. For example, if you have been approved for this type of investing activity, your taxable investment account (such as one you might have at a discount broker) will permit you a certain amount of leverage (borrowing) based on the existing holdings within your account. Exchange traded stock options are another example of leveraged investing. A stock option gives the holder the right to buy (or sell) a particular number of shares at a predetermined price within a specified time frame. Each stock option contract trades at a ...

  • Should You Use Your Self-Directed IRA to Buy Investment Properties While Interest Rates are Low?

    The ability to invest in real estate is one of the most common reasons why retirement savers first start becoming interested in the self-directed IRA. An individual retirement account with a self-directed IRA custodian such as Quest Trust Company individuals to out their retirement funds to work in investments that traditional IRA custodians simply wouldn’t allow. Adding to the desirability of investment real estate for retirement savers is that interest rates on mortgages and other types of borrowing continue to be quite low. UBTI Even if interest rates are low, you may not be able to derive the benefit you hope from borrowing money to buy real estate with your self directed IRA. This is because the tax laws that authorize individual retirement accounts put some limitations on how those accounts may be used. In particular, the activities of IRAs must be related to the fundamental purpose of the account, and that means to make investments. Borrowing money to make investments, however, is called out as an activity that’s at odds with the fundamental investment purpose. As a result, when an IRA borrows money, the investment gains that result from that borrowing are considered to be unrelated business taxable income (or “UBTI”), which means ...

  • The Biggest Secret to Retirement Saving Success With a Self-Directed IRA

    There are certainly a lot of different retirement strategies out there. Regardless of your age, income level, or current level of savings, you’re likely to have access to multiple strategies to try to help you reach your goals. And there’s no shortage of investment advice on what types of investments are best for you. Just pick up a copy of virtually any personal finance magazine and you’ll read about a wide range of options, some of which may even appear to be in direct conflict with one another. But perhaps the biggest factor that will contribute to you reaching your retirement goals is common across all of these options. And it remains something of a secret even though it’s so easy to do. The secret? Be consistent with your retirement savings. By that we mean that if you save as much as you can each year, and you do so year in and year out, then you stand a very good chance of reaching your goals. When you are more consistent with your retirement savings, your choice of investments becomes less important. You won’t have to chase high yielding investments in an effort to boost the value of your nest egg because your account ...

  • Setting up Your Future with an Inherited IRA

    Whether you have just inherited an IRA from your spouse, parent, or grandparent, an IRA beneficiary can potentially stand to earn thousands, if not millions, on these investments. Inherited IRAs have a few more rules than an IRA you set up yourself, so you can’t just accept the money and forget about it until your own retirement. Depending on the type of IRA you inherit and what you decide to do with it, you may owe taxes on the money or be required to take a yearly required minimum distribution (RMD). Find out more about Inherited IRA rules and how to use them to grow your own retirement below. What is an Inherited IRA? When a family member dies and leaves an IRA to a beneficiary, one option for the money is to transfer it to an Inherited IRA. Inherited IRAs have the advantage of allowing immediate penalty-free access to money. However, any distributions on a traditional IRA are subject to taxation and may bump you up to a higher tax bracket since it counts as income. Distributions from an Inherited Roth IRA are not subject to tax as long as the original account holder had the account for at least five ...

  • Difference between a Self-Directed and Traditional IRA

    Setting up an IRA is a great way to make sure you have enough money saved for retirement. IRAs allow you to invest your savings and build your wealth over time. However, when choosing what type of IRA you want, you might find yourself overwhelmed with options. In particular, you may be wondering what the difference between a self-directed IRA and a traditional IRA is. What is a traditional IRA? With a traditional IRA, you will have a custodian, typically an investment brokerage, that manages your money for you. They make decisions about how your money will be invested to help you obtain the best possible outcome. You may be asked some general questions about the type of investments and strategy you would like your custodians to use, but generally, they will have financial control over the account until you start withdrawing from it. What is a self-directed IRA? A self-directed IRA, on the other hand, gives you control over how your money is invested. You can use a self-directed IRA to invest in alternative commodities, like real estate, that you can’t access with a traditional IRA. You’ll also be responsible for making the financial decisions yourself. Fees for self-directed IRAs are typically lower ...

  • Should I convert to Roth in 2013? Roth conversion 2013 facts to help you make a decision

    When you first set up an individual retirement account, you’ll be faced with a number of different choices to make, long before you ever have to be concerned with whether you should convert to Roth. First you’ll need to decide whether to open your new account with a traditional IRA custodian, or a self-directed IRA custodian such as Quest Trust Company. Choosing a self-directed IRA will give you the greatest investment flexibility. You’ll also need to decide on the type of account – a traditional IRA form or a Roth IRA. While many of the basics features for each account are similar, there are some important differences between the two. Traditional IRAs have the advantage that contributions are sometimes tax deductible in the year they’re made. On the other hand, withdrawals from Roth IRAs are completely tax free (unlike traditional IRAs), and Roth accounts are not subject to the rules on required minimum distributions. For many retirement savers, a Roth IRA is a better long term solution to their needs. Unfortunately, some people only come to this conclusion after they’ve already opened and grown one or more traditional IRAs. Fortunately, it’s possible to convert to Roth from a traditional IRA. The process ...

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