Entrust Learning Center > Keyword: commodities investing > Investing In Futures and Commodities with a Self Directed IRA

Investing In Futures and Commodities with a Self Directed IRA

Futures and Commodities

The Entrust IRA gives you the control you need to select and direct your own IRA investments. If you decide to invest your IRA assets in futures or foreign exchange transactions, you will select and work with a Futures Commission Merchant (FCM) and perhaps an introducing broker to complete the paperwork they require. Once completed, Entrust, as administrator of the IRA, will work with you to establish the futures trading account in the name of your IRA at your chosen FCM.

Upon your direction, the Administrator will send the IRA funds to your IRA’s futures trading account at your FCM.  You will have complete trading authority over your IRA’s futures trading account at your FCM.  

Entrust is not a Futures Commission Merchant or an Introducing Brokerage Firm, and does not hold futures positions or the associated funds to margin, guarantee, secure or settle such positions in any IRA.  Entrust does not take or place futures trade orders.

Investing in Futures and Commodities with Retirement Funds

Complete FCM's required paperwork
Contact your introducing broker or FCM to obtain the documents required to open a new trading account.  When completing those documents, be sure that the person named to give directions to the FCM or IB about specific investments is you (or your designated investment manager, if you have one). 

Establish your Entrust Self-Directed IRA
Complete the account opening forms by either using the online application or downloading the forms and completing by hand. Both options require that you physically sign the adoption agreements and send in paperwork by fax, mail or email, together with your FCM new account application to Entrust for processing. 

For transfers you must submit a copy of your most recent statement from the current custodian reflecting the asset.

We establish the IRA and help initiate the transfer or rollover of assets to your Entrust IRA. We then work with your FCM to setup and fund the IRA’s futures or foreign exchange account.  The whole process takes from 2 to 4 weeks to complete.

Entrust does not warrant the suitability of any investment.  We encourage you to consult with your tax and investment advisors as to whether futures are suitable for your investment objectives. The information provided here is to assist the individual with a general understanding of the Entrust self-directed IRA, and how it may be used to invest in futures if you decide upon that investment choice. For complete disclosure of all conditions and fees applicable to the Entrust self-directed IRA, please read both the Trust and Adoption agreements, and all related forms supplied with them.

Futures and Commodities Investing Timeline

The timeline below provides an overview of the timing related to investing in futures or foreign exchange transactions in your self-directed IRA:

Consult with Your Advisers – 2 – 4 weeks:

• Schedule time to meet with advisors to understand any suitability, tax, legal or investment issues related to investing in futures or forex.
• Select FCM and if FCM does not have an agreement in place with Entrust, have FCM contact Entrust at 800-392-9653.
  

Broker/Client Initial Set-Up – 2 weeks:

• Introducing broker or FCM supplies client with necessary FCM documents to open an account trading in futures or foreign currency.
• Client completes and returns documents to the introducing broker or FCM for review.
• FCM pre-assigns an account number confirming FCM approval of the account.
• Introducing broker or FCM forwards original documents to Entrust along with any other applicable documentation.
  

Establish Your Entrust Self-Directed IRA – 3 days:

• If you don’t already have an Entrust self-directed IRA, complete the online application or download and print the forms and fill them out manually.  
• Send the application and additional items referred to in the application to Entrust.
• Entrust will notify you if additional information is required.
• When the self-directed IRA is established, there will be a 7-day revocation period, as described in the IRA Disclosure Statement that is part of the new account packet.  Investments will not be processed until the expiration of this period.
  

Fund Your Entrust Self-Directed IRA – 1 – 8 days:

• If the assets for your Entrust self-directed IRA are being transferred directly from a previous custodian, Entrust will initiate contact with that previous custodian to transfer assets.  
• If you are depositing funds, either as a rollover or as a new contribution to an IRA, you may pay by check, money order or wire transfer.
• Funds received without identifying paperwork can cause delays.
• Checks and money orders will held for 5 business days before funds are available for investment.  This includes cashier’s checks and certified checks.
• Wire transfers are available for investment 1 business day after receipt.  
• Investments will not be processed until assets have been received and the applicable holding period, if any, has passed.
  

Futures and Foreign Exchange Investment Direction – 2 – 7 days:

• Entrust processes the FCM new account application and documentation, then forwards to the FCM by fax, email, mail or overnight delivery.
• The FCM opens the trading account and/or faxes/emails confirmation to Entrust.  
  
• Entrust transfers funds, in the amount directed by you in a Buy Direction Letter, to the new trading account.
• FCM notifies you or your introducing broker that funds are available for trading.
  

Entrust, as agent, performs the duties of a custodian and, as such, does not provide investment advice or sell investments, nor offer any tax or legal advice.  By providing custody, Entrust is not making any judgment as to the quality or suitability of any investment.

Moving the IRA's Investments out of FCM Trading Account 

It is important to remember that any movement of funds from your IRA’s current FCM trading account to a new FCM should flow through Entrust as agent of the IRA custodian in order to avoid a possible taxable event within your self-directed IRA.

If you would like to redeem your FCM trading account and return cash funds back to your Entrust self-directed IRA, you must first contact your broker to liquidate any open positions in your IRA’s trading account.  

Then request the redemption of funds back to your self-directed IRA, by executing a Sell Direction Letter and sending it to Entrust.  Upon receipt of your funds, Entrust will hold the cash in your IRA in an FDIC-insured demand deposit account until you submit new investment directions.   For important details on the investment of idle cash, please refer to the Cash Investment Program section of your IRA Custodial Agreement.

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