A Self-Directed IRA, available in our Trust Department offers a wide range of investments for funding your IRA. This gives you more flexibility in risk and yield. You may choose from a variety of investments including, but not limited to, deposit instruments, stocks, bonds, government securities, mutual funds, money market funds, and private stock offerings. In all other aspects, Self-Directed IRAs are the same as any other IRAs.

Common Questions about Self-Directed IRAs

Am I Eligible for a Self-Directed IRA?

If you are under age 70 1/2 for the entire tax year and have compensation, you are eligible to establish a Self-Directed IRA, even if you already participate in any type of government plan, tax-sheltered annuity, Simplified Employee Pension plan, or qualified retirement plan (pension or profit sharing) established by an employer.

What Is Compensation?

Compensation is the salary or wages you receive as an employee. If you are self-employed, compensation is your net income for personal services performed for the business. All taxable alimony is considered compensation. Passive income such as interest, dividends, and rental income is not considered compensation for purposes of funding an IRA.

How Much Can I Deposit to My Self-Directed IRA?

You may deposit any amount up to 100 percent of your compensation or the amount listed below (whichever is less).

Do I Get a Tax Deduction for My Deposit?

IRA deductions are based on whether you are an active participant in an employer-maintained retirement plan and, if so, your adjusted gross income and income tax-filing status. You may be eligible for the maximum deduction, a partial deduction, or no deduction.

What if I'm Not Eligible for a Deductible IRA Contribution?

You can still make nondeductible contributions to your IRA.

If I Already Have an IRA, Can I Move It to Your Institution?

Yes. If you'd like the convenience and flexibility our Self-Directed IRA offers, you can transfer your account directly or roll over the balance to our institution, subject to the rules of your existing account.

Can I Have More Than One IRA?

You can have several IRAs. However, your total Regular IRA contributions for the tax year must not exceed your total contribution limit (as stated in the chart above), or 100 percent of your compensation (whichever figure is lower).

Can My Spouse Have a Self-Directed IRA?

If your spouse has compensation, he/she can have a Self-Directed IRA. If you have compensation and your spouse has no compensation or elects to be treated as having no compensation, you can establish a Spousal IRA arrangement and deposit up to 100 percent of your compensation or the following (whichever is less).

This deposit may be divided between the two accounts in any way you wish as long as no more than $5,000 (for 2009 IRAs) is deposited in either account.

How Do I Move Funds From One IRA to Another IRA?

There are two methods you can use to move funds from one IRA to another: rollover and transfer. Generally, a recipient has 60 calendar days from the date of receipt to roll over the distribution to another IRA. Rollovers between IRAs may not be made more frequently than once during a 12-month period. Transfer and rollover contributions are not deductible and will not be applied to the IRA contribution limit.

How Do I Move Funds From a Qualified Retirement Plan (QRP) or Tax-Sheltered Annuity (TSA) to an IRA?

An eligible QRP or TSA distribution may be directly rolled over (direct rollover) or rolled over (rollover) to an IRA. An eligible rollover distribution is any distribution except one that is (1) one of a series of substantially equal periodic payments over the single or joint life expectancy of the employee and beneficiary or for a specified period of ten years or more and (2) a required distribution for an employee aged 70 1/2 or older.

A rollover occurs when the funds are distributed from a QRP or TSA and paid directly to the individual.

A direct rollover is a QRP or TSA distribution that is sent directly from the plan administrator (employer) to an IRA.

QRP and TSA distributions are subject to a mandatory 20 percent federal income tax withholding at the time of distribution. Funds moved to an IRA via a direct rollover are not subject to withholding.

As with an IRA-to-IRA rollover, a QRP or TSA recipient has 60 calendar days from the date of receipt to roll over the taxable portion of the distribution to an IRA. The 12-month limitation does not aply to rollovers from a QRP or TSA into an IRA. Again, rollover and direct rollover contributions are not deductible and will not be applied to the IRA contribution limit.

When Can I Withdraw Funds From My Self-Directed IRA?

You can withdraw funds from your Self-Directed IRA without the 10 percent IRS premature-distribution penalty any time after you reach age 59 1/2, become disabled, or when the distributions are part of certain periodic payments. When you reach age 70 1/2, you must begin to take minimum required withdrawals or severe penalties will be imposed.

How Are the Funds Taxed at Distribution?

If you are over age 59 1/2, simply include the taxable portion of the amount withdrawn (generally deductible contributions and all earnings) as income. However, if you are under age 59 1/2 and do not meet one of the exceptions, you must also pay a 10 percent IRS penalty for premature distribution. The nondeductible portion of the distribution is not taxable when withdrawn nor is there a 10 percent IRS penalty for premature distribution.

What Happens to My Account in the Event of My Death?

Your named beneficiary(ies) will receive the entire proceeds of the account. The manner in which the account is paid can be left to the election of the beneficiary(ies).

When Can I Open a Self-Directed IRA?

IRAs for the taxable year can be opened any time between January 1 and the date your tax return is due for the year, excluding extensions. This due date is normally April 15 of the following year.

How Do I Open a Self-Directed IRA?

Simply see any of our Self-directed IRA representatives. We will explain the nature of these accounts in more detail and help you complete the simple forms necessary to establish your Self-Directed IRA.

It's your choice. If you're ready to become an independent IRA investor, ask about our Self-Directed IRA today!

Retirement/Education Plans | Traditional IRA | Roth IRA
Coverdell Education Savings Account | Self-Directed IRAs
Rollovers and Transfers

>Back to Personal Home