If you want to transfer assets into a self-directed IRA, it’s important to understand how to do so. There are many reasons why someone might choose to rollover funds into a self-directed account. For example, some people prefer to invest in a way that suits their needs better. Others like the flexibility of managing their own investment portfolio. Still others may want to take advantage of certain tax benefits. Whatever the reason, rolling over funds into a self-direct IRA is relatively simple. Here’s what you need to know about transferring assets into a self-direction IRA.
Overview
The Simple IRA is a tax-advantaged savings plan offered by many companies. It enables employees to contribute pretax dollars into an individual account. Employers are able to match employee contributions up to a certain amount. This is called employer matching contribution. If you work for a company that offers a Simple IRA, it could be a great option for saving for retirement.
Simple IRAs are one of the simplest ways to save for retirement. They are easy to understand and manage. However, there are some important things to consider before opening a Simple IRA.
What Is a Simple IRA?
A Simple IRA is a type of Individual Retirement Account (IRA). An IRA is a tax-deferred savings plan where individuals can make contributions and receive tax breaks. You can open a Simple IRA with either a bank or brokerage firm.
An IRA is different from a 401(k), because a 401(k) is a defined benefit plan. In contrast, an IRA is a defined contribution plan. Defined contribution plans allow employees to decide how much to put away each month. Employees do not know what they will end up with when they retire.
With a Simple IRA, you choose how much you want to invest. Your investment choices include stocks, bonds, mutual funds, ETFs and cash.
You can use your Simple IRA to pay for college tuition, buy a home, start a family, fund a vacation, or just about anything else. When you reach age 59½, you can withdraw your money without paying taxes. But remember, you must begin taking distributions within five years of contributing.
Account Pricing
There is no fee to open a brokerage account. However, there are trade commissions associated with each online listed equity traded. We charge a flat fee of 0.01% of the value of each equity traded. This fee covers our costs, including the processing of your transactions, the maintenance of your account, and the provision of customer support. If you choose to use paper trading, we charge a commission of $1.00 per round lot. For example, if you place 10 lots in one transaction, you will pay us $10.00.
Find out more about our fees and how they work here.
Which Method of Funding a Self-Directed SIMPLE IRA is the Most Popular?
Transfers and Rollovers allow you to transfer assets from one IRA to another without incurring a tax penalty. This allows you to move money from an old IRA to a newer IRA, or even to a self-directed SIMPLE IRA.
You can fund a self directed Simple IRA through transfers and rollovers. You must wait two years from the date of the transfer or rollover before you can use those funds to invest Self-Directed in a different IRA. If you don’t follow this rule, you could incur a 10% early 60-Day withdrawal penalty.
SIMPLE IRA to Self-Directed IRA Transfer Works?
The Self Directed SIMPLE IRAs allow individuals to invest in stocks, bonds, mutual funds, ETFs, real estate investment trusts (REITs), etc. You don’t need to hire an accountant or financial planner because it’s easy to set up and manage.
If you’re looking to save money on taxes, consider opening a SIMPLE IRA account. This type of retirement plan offers some unique benefits over traditional IRA plans. For example, you won’t pay income taxes on contributions during the first $2,500 you contribute to a SIMPLE IRA. Additionally, there are no mandatory distributions required. However, you’ll still need to make regular withdrawals when you retire.
60-Day Rollover Rule
The IRS recently announced a new rule that requires people to roll over distributions from retirement accounts within 60 days of receiving them. This could affect millions of Americans who are about to retire.
If you haven’t received a distribution from a qualified plan during 2017, you’ll want to know how to handle it.
How the Self-Directed SIMPLE IRA 60-Day Rollover Operates
A self-directed Simple IRA lets you put money into stocks, bonds, mutual funds, ETFs, REITs, and even cryptocurrencies like Bitcoin. You can do it online, over the phone, or via paper form. This type of IRA offers many advantages over a traditional IRA, such as no required minimum contributions, tax deferral, and flexibility.
One thing to keep in mind about a self-directed SIMPLE IRA is that you cannot roll over money from another retirement plan, such as a 401(k), 403(b), 457, or profit-sharing plan. If you want to make use of those accounts, you’ll need to open up a traditional IRA.
However, there are some exceptions to this rule, depending on how you set up your SIMPLE IRA. For example, if you’re rolling over money from a Traditional IRA, you can still transfer the same amount to a SIMPLE IRA. Also, if you’re transferring money from a Roth IRA, you can’t roll over that money directly into a SIMPLE IRA; however, you can convert the entire balance to a Traditional IRA.
The best way to learn how the 60-day rollover works with a self-directed SIMPLE IRA is to contact a financial advisor. They can help you determine whether opening a SIMPLE IRA makes sense for you and what types of investments might work well within your portfolio.
Frequently Asked Questions
Can I maintain my SIMPLE IRA plan on a fiscal-year basis?
You may only maintain a SIMPLER IRA plan on a calendar year basis. If you want to continue your SIMPLE IRA plan beyond the end of the tax year, you must do one of three things:
1. Transfer assets into a traditional IRA within 60 days of the close of the tax year;
2. Roll over a portion of your account balance into a Roth IRA; or
3. Move money out of the SIMPLE IRA and roll it into another type of IRA.
Is there a deadline to set up a SIMPLE IRA plan?
The IRS recently announced it would allow employers to offer Simple Individual Retirement Accounts (SIMPLE IRAs). These plans are similar to traditional 401(k) plans, except they do not require employees to contribute pre-tax dollars toward retirement accounts. Instead, contributions come out of paychecks post-tax. In addition, SIMPLE IRAs don’t count against workers’ income limits, meaning they can save even more money.
If you’re thinking about setting up a SIMPLE IRA, here’s what you need to know. First, you’ll want to find out whether your previous employer offered a SIMPLE IRA plan and, if so, how long it lasted. Then, you’ll need to determine whether you still qualify for a SIMPLE IRA plan under current tax law. Finally, you’ll need to decide whether you’d like to keep your existing account or open a new one.
You can set up a SIMPLER IRA plan effective on any date from January 1 to October 1, provided you haven’t already maintained a SIMPLE IRA plan during the prior calendar year. If you’re a new employee coming into existence after October 1, you can start establishing the SIMPLE IRA plan immediately.
Can I contribute to a SIMPLE IRA of a participant over age 72?
Yes, you must. You can’t exclude someone from a SIMPLE IRA just because he or she is older than 70½. However, employers must continue to make matching contributions to employees’ SIMPLES IRAs even after an individual reaches age 72 (70½ if the person reached age 70½ before January 1, 2020). This rule applies regardless of whether the employer makes contributions to the SIMPLE IRA plan on behalf of the employee.
Employees may not be excluded from participation in a SIMPLE IRA simply because they are older than 70½. If an employee does not participate in a SIMPLE IRA, his or her employer cannot deduct contributions made to the plan on behalf of the worker.
