FAQs

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 investments that are best 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 it comes to choosing investments.

What are the benefits of a Self Directed IRA?
  1. Flexibility to invest in alternative assets
  2. Ability to diversify your portfolio
  3. No Federal Income Tax or Federal Tax filing on the growth of your investment
  4. Traditional, Roth, SEP and SIMPLE can be Self Directed
Why haven’t I heard of Self Directed IRAs before?

Self Directed IRAs were created by Congress back in 1974. Alternative IRA investments have always been allowed by the IRS, however, over the years many IRA companies have placed artificial restrictions on IRA owners. Self Directed IRAs are not well known because most banks and brokerage firms prefer traditional investments.

What is the process?

Our Process

  1. Open an account
  2. Fund the account
  3. Select the investment
How do I fund a Self Directed IRA?
  1. Transfer funds from an existing IRA
  2. Transfer funds from a 401k, 403b or TSP from a former employer
  3. Transfer funds from an Inherited IRA
  4. Fund with a personal contribution

Read More on How to Fund a Self Directed IRA

What are the allowable and prohibited transactions?

Your IRA may transact business with almost anyone; except a “Disqualified Person”. Simply stated, your IRA account may not transact business with or supply goods or services 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

Diagram of Disqualified Persons

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 make an investment is both an easy and powerful tool.

Learn More about Partnering with Your IRA

 

What are the steps to buying an asset in an IRA?

It’s easy to make investments with a Self Directed IRA. If you have purchased an asset such as a house or made a loan, you already know the steps for buying an asset with your Self Directed IRA. 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.

Steps to buying an asset in an IRA

What is the role of the IRA Club?

You must use a Self Directed IRA custodian, such as IRA Club, if you choose to invest in alternative assets. This is required by the IRS. The IRS requires extensive recordkeeping, hence a Self Directed IRA custodian is responsible for holding and administering the assets of your account. Investors and not the IRA custodian, 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 an IRA Borrow Money

What happens to my IRA when I divorce?

If you own an IRA and are in the process of divorcing your spouse, you may find that you will be required “split” your IRA with your spouse.

IRA in Divorce

Can a minor have an IRA?

Yes. There is no minimum age to contribute to an IRA.

IRA for Minors

How to Pay a Minor

Should I name beneficiaries?

The decision is yours. This information is not intended to replace the advice of your legal counsel.

Naming a Beneficiary

What are the IRA Club Fees?

It is our goal to keep fees low so you have more funds to invest!

Fee Schedule

How do I transfer cash out of my IRA Club account?
  1. Submit the Distribution Request form to distributions@iraclub.org
  2. Remember that any withdrawal of cash or assets from an IRA account to accountholder or beneficiaries generates a 1099-R tax form.
  3. Early distributions taken before age 59½ are subject to a 10% early distribution penalty.
  4. RMD is the minimum amount which must be distributed in any year upon attainment of required beginning date, typically no later than the year the IRA owner reaches the age of 70½, 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.