Maximize Your Investment with a Depository IRA

  • A self-directed IRA, also known as a self-directed retirement plan, is a tax-advantaged retirement savings account that permits individuals (and families) to take responsibility for investment decisions.
  • A self-directed IRA is funded with funds from a traditional IRA, other retirement account, or a third-party custodian-with the latter option being the most common.
  • A third-party custodian acts as the administrator of the IRA.
  • There are several reasons why an investor may choose to self direct his or her IRA, including the ability to invest in alternative investments.

A self-directed Individual Retirement Account (IRA) allows investors to set aside funds for retirement investments outside of the traditional corporate structure. A traditional IRA consists of stocks, mutual funds, and bonds held within a corporation. A self-directed IRA, on the other hand, allows the account to be invested in assets that the investor chooses.
A self-directed IRA, also known as a self-directed retirement plan, is a tax-advantaged retirement savings account that permits individuals (and families) to take responsibility for investment decisions.
A self-directed IRA is funded with funds from a traditional IRA, other retirement account, or a third-party custodian-with the latter option being the most common. A third-party custodian acts as the administrator of the IRA.
There are several reasons why an investor may choose to self direct his or her IRA, including the ability to invest in alternative investments.

Types of Accounts

There are three types of Individual Retirement Accounts (IRAs).
Traditional IRA. This type of IRA is the most popular. Contributions are tax-deductible in the year they are made. Withdrawals prior to age 59 1/2 are taxed as ordinary income and subject to a 10% penalty.
Roth IRA. Contributions are made with after-tax dollars. Distributions after age 59 1/2 are free of tax.

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SEP IRA. SEP IRAs are for employees only. Contributions are made by the employer. The employer sets aside 25% of the employee's salary and contributes it to a qualified retirement account.

Traditional

A traditional IRA account is a retirement account funded with pre-tax dollars. You pay taxes on your contributions and any investment growth when you withdraw.

Roth IRA
A Roth IRA account is funded with after-tax dollars. This means you don't pay taxes on contributions or investment growth. However, you do pay taxes when you withdraw.

SEP-IRA
If you're self-employed, a SEP-IRA account is an alternative to a 401(k). You contribute up to 25% of your annual income, and your employer matches up to 6%.



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Roth

The Roth version of the IRA is funded with after-tax dollars. The benefit of a Roth is that all growth earned within the account is tax-exempt, and you will eventually be entitled to tax-free withdrawals. The drawback to a Roth is that you must pay taxes on your contributions.

The Roth IRA has income limits, and the eligibility phaseout begins once your adjusted gross income (AGI) reaches $120,000 for married couples filing jointly ($189,000 for married couples filing separately), $160,000 for heads of household ($199,000 for heads of household filing separately), and $120,000 for single individuals ($189,000 for single individuals filing separately).

Rollovers

If you decide to roll over your old 401(k) into a new IRA, you must choose a new account custodian.
You can roll your 401(k) into a traditional or Roth IRA.

You can roll over your 401(k) into a traditional or Roth IRA.

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You can roll over your 401(k) into a traditional or Roth IRA.

You can roll over your 401(k) into a traditional or Roth IRA.

Funds

A traditional IRA allows you to invest in many types of mutual funds, including index funds, ETFs, and actively managed funds.
Bonds
A traditional IRA allows you to invest in bonds.
Certificates of deposit (CDs)
A traditional IRA allows you to invest in CDs.

Rollover IRA Rules

A qualified rollover from one IRA or retirement plan to another IRA or retirement plan (traditional or Roth) is generally exempt from tax. However, the IRS imposes strict conditions for rollovers:
The funds must be transferred directly from the old plan to the new one

The transfer must be completed within 60 days after the funds have been received by the old plan

The trustee of the old plan must issue a distribution check