Transfer Retirement Funds
The Self-Directed IRA structure is a solution that allows one to use their retirement funds to make real estate and other investments. A popular way to fund a Self-Directed IRA is through a contribution, transfer or rollover.
Typically, you can transfer retirement funds and assets (money or property) tax-free from other retirement programs to a Self-Directed IRA. This includes traditional individual retirement accounts.
You can make the following kinds of transfers to a Self-Directed IRA:
- Transfers from one trustee to another
Transfer Retirement Funds to a Self-Directed IRA
Transferring retirement funds from one trustee directly to another, either at your request or at the trustee’s request, is not a rollover. Because there is no distribution to you, the IRA transfer is tax free.
Because it is not a rollover, it is not affected by the 1-year waiting period for rollovers. Therefore, you can transfer retirement funds from one custodian to a custodian that allows for Self-Directed IRA investments tax-free.
Rollover to a Self-Directed IRA
Generally, a rollover is a tax-free distribution of cash or other assets to the IRA holder. This is from one retirement plan to another. A rollover often occurs when funds from a 401(k) retirement plan rollover to an IRA. Rollovers can be direct or indirect.
You can do a direct rollover anytime, anywhere. Whereas an indirect rollover can only occur once every 12 months. In the case of an indirect rollover, you then have 60 days to contribute the rolled IRA funds to a new IRA custodian. Contributions to the second retirement plan are “rollover contributions.”
Plans That Allow You to Rollover to a Self-Directed IRA
You can generally rollover amounts from the following plans into a Self-Directed IRA:
- Traditional, Roth IRA, SEP IRA, SIMPLE IRA
- Employer’s qualified retirement plan
- A deferred compensation plan of a state or local government (section 457 plan)
- Tax-sheltered annuity plan (section 403 plan)
- Transfers Incident to Divorce: If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. The transfer is tax free.
In sum, there are many ways you can move your retirement funds tax-free to a Self-Directed IRA. The advantages of using a Self-Directed IRA structure include the ability to make traditional and nontraditional investments.
Contact the Self-Directed IRA specialists at IRA Financial Group. They will assist you in transferring retirement funds tax-free to the new IRA custodian. Then, they will transfer retirement funds to your new Self-Directed IRA with checkbook control. Again, it will be completely tax-free.