Here are the most common Self Directed IRA questions. Have others? Give us a call 888-795-7950
- What is a Self Directed IRA?
A Self Directed Individual Retirement Account allows the IRA owner (you) to select the best investments for your future. Typically, IRA investments are limited to stocks, bonds, and mutual funds. The IRA Club does not place artificial restrictions on your investments, allowing you to have more control and flexibility when choosing investments.
- What are the benefits of a Self Directed IRA?
- Flexibility to invest in alternative assets
- Ability to diversify your portfolio
- No Federal Income Tax or Federal Tax filing on the growth of your investment
- Traditional, Roth, SEP, and SIMPLE can be Self Directed.
- Why haven’t I heard of Self Directed IRAs before?
Self Directed IRAs were passed by Congress back in 1974. Alternative IRA investments have always been allowed by the IRS; however, many IRA companies have placed artificial restrictions on IRA owners over the years. Self Directed IRAs are not well known because most banks and brokerage firms prefer traditional investments.
- What is the process?
- Open an account
- Fund the account
- Select the investment
- How do I fund a Self Directed IRA?
- Transfer funds from an existing IRA
- Transfer funds from a 401k, 403b, or TSP from a former employer
- Transfer funds from an Inherited IRA
- Fund with a personal contribution
- What are the allowable and prohibited transactions?
Your IRA may transact business with almost anyone; except a “Disqualified Person.” Your IRA account may not transact business with or supply goods or services to a disqualified person. A disqualified person may not transact business with or supply goods or services to your IRA. The good news is that there are very few “Disqualified Persons.” For example, your IRA cannot purchase a property for your children to reside in. However, your IRA can make a loan to your sister. The terms partnering and transacting are often misused. Remember that your IRA can partner with any person or any IRA. The IRA Club provides our members with a no-cost review to help you avoid making one of the few prohibited transactions.
The above is intended as a guide. For complete Prohibited Transaction information, you may contact the IRA Club.
- Can an IRA partner?
YES, it can! Partnering your IRA with another source of funds to invest is both an easy and powerful tool.
- What are the steps to buying an asset in an IRA?
It’s easy to make investments with a Self Directed IRA. Once you find your investment and provide money to the seller, you will receive proof that your Self Directed IRA is the new owner. It can be in the form of a Bill of Sale, Title, Deed, or simply a statement identifying your Self Directed IRA as the asset’s new owner. The main difference is that the name on the title (or other documents) is the name of your Self Directed IRA and not your name as an individual.
- What is the role of the IRA Club?
You must use a Self Directed IRA company, such as IRA Club if you choose to invest in alternative assets. The IRS requires this. The IRS requires extensive record-keeping; hence, the IRA Club is responsible for holding and administering your account’s assets. Investors are solely responsible for assessing the investment’s merits. As the term “Self Directed IRA” implies, you are in control of making all investment decisions.
- Can an IRA borrow money?
Yes. The most common way for an IRA to buy an asset is to pay cash. However, there may be times when an alternative method of payment is practical.
- Can a minor have an IRA?
Yes. There is no minimum age to contribute to an IRA.
- Should I name beneficiaries?
Naming a beneficiary is not a requirement; the decision is yours. However, it is strongly advised that you do name a beneficiary. Your beneficiary will inherit the asset in the form that you left to them; the assets inside the IRA, transfer intact. This information is not intended to replace the advice of your legal counsel.
- How do I take out cash of my IRA Club account?
- Submit the Distribution Request Form to email@example.com
- Remember that any withdrawal of cash or assets from an IRA account to the account holder or beneficiaries generates a 1099-R tax form.
- Early distributions taken before age 59½ are subject to a 10% early distribution penalty to the IRS.
- RMD is the minimum amount that must be distributed in any year upon attainment of the required beginning date, typically no later than the year the IRA owner reaches the age of 72 or after the IRA owner’s death. The IRS has established a simplified table to determine the required distribution based on the applicable age and life expectancy. If required payments are not timely made, the IRS may impose an excise (penalty) tax. A Roth IRA is not subject to required minimum distributions until after the Roth IRA owner dies.
- Click Here to learn more.
- What does it mean to become an IRA Club member?
When IRA Club became a company, we decided to treat everyone like a member, not a customer number in the system. That spirit remains today. Imagine having your very own personal contact on the “inside” always working on your behalf. Keeping your paperwork in order; someone who will move your requests to the head of the line. Just like you were a member of a private club.
- What does my membership include?
Although we are not an exclusive club, we have valuable and time saving “amenities.” When you become a member, you pay a low flat annual fee that includes concierge services such as:
- on-demand prohibited transaction analysis
- fast transaction processing
- IRS filings
- e-learning resources
- a dedicated rep you can call any time
Cash held in your IRA Club self-directed accounts is FDIC insured.
Click here to view the Custodial Fee Schedule
- How do you charge the IRA Club fees?
IRA Club fees auto-debit from the Self Directed account. If you wish to pay by credit/debit card, we can accommodate this as well.
Membership fees are billed annually on or near the date you became a member. Membership and other fees are not refundable.
It is our goal to keep fees low, so you have more funds available to invest. To view a copy of our fee schedule, click here.
- Is there a minimum balance requirement?
A Self Directed account at IRA Club has a minimum monthly balance requirement of $500.00. If the account dips below, additional fees may apply.
- What is the IRA transfer process?
To start an IRA transfer, complete the form linked here. Fill in all the information, including the IRA type, the firm name, the account number, and the amount to transfer. IRA Club will handle the rest. If your account is invested in stocks, bonds, or mutual funds, it is important to liquidate some or all your holdings to ensure the cash is available to transfer. When the money is liquid and available, let your IRA Club representative know we can proceed with your transfer request. Please keep in mind that many factors can disrupt and slow down the timing of these procedures. Some of which may include:
- Funding Method (Check or Wire)
- Current Holdings (Cash or Assets)
- Current Firm Policies
- Does IRA Club provide investment advice?
IRA Club does not offer investment, tax, financial, or legal advice, nor do we endorse any products, investments, or companies that provide such advice and investments. All parties are strongly encouraged to perform their due diligence and consult with the appropriate professional(s) licensed in that area before entering any investment. Performing due diligence helps protect against fraud. If you received this e-mail in error, please notify us immediately by sending an e-mail or by calling.
- How do I find an investment for my Self Directed IRA?
With control comes responsibility. Understanding what you are investing in is just as important as choosing the type of investment. A good rule of thumb is to invest in what you know, allowing you to ask the right questions and perform precise due diligence. Remember, IRA Club does not provide investment, tax, financial, or legal advice.
Self Directed IRAs open a world of investment opportunities beyond stocks, bonds, and mutual funds. A Self Directed IRA allows you to invest in real estate, promissory notes, raw land, wind turbines, life settlement policies, mobile homes, tax liens/deeds, etc. As long as the investment generates passive income back into the IRA, the options are endless.
- I am interested in working at IRA Club. How can I apply?
Thank you for your interest in IRA Club! We are located in Chicago, Illinois. Our diverse and passionate team focuses on collaboration and creating a work environment where people can succeed. To apply, email a link to your LinkedIn profile, a cover letter, and a resume to firstname.lastname@example.org. We care about addressing everyone properly. Please include your personal pronouns in your cover letter.
- How do I transfer my IRA Club funds to a different custodian?