Retirement Plans

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Self-Directed Roth IRA

After discussing my options of planning for retirement with Todd, I was amazed at the potential retirement savings opportunities with the Roth IRA. Not only making an annual contribution but also converting my Traditional IRA to a Roth IRA to jump-start my tax-free retirement savings program.

Self-Directed Roth IRAs: Pay Taxes Now and Enjoy Tax-Free Earnings the Rest of Your Life

One of the best ways to save for retirement is with a Self-Directed Roth IRA. Why? Because the earnings on your investments are free from Federal income tax as long as certain conditions are met.

If your current Roth IRA does not allow self-direction, you may transfer funds to an Entrust Self-Directed Roth IRA so that you may choose your investments.

Currently, you may jump start a tax-free retirement account by converting your Traditional IRA to a Self-Directed Roth IRA. While this is a taxable event, your earnings will grow tax free.

Beginning in 2008, you may convert your current employer plan, such as a 401(k), into a Roth IRA. While this is a taxable event, it does provide you a means of funding your Roth IRA with more than the annual contribution of $4,000.

To be eligible to convert your Traditional IRA or employer plan to a Roth IRA or a Self-Directed Roth IRA, you must have a Modified Adjusted Gross Income (MAGI) of $100,000 or less. Another important item to note is that in 2010, the income limit for conversions is eliminated.

Another advantage of a Roth IRA or Self-Directed Roth IRA is that contributions may be made even after you are 70½, and you are not required to take distributions. In most cases, a Roth holder may withdraw the principal amounts invested without any tax liability.

How to Determine if a Roth IRA or a Self-Directed Roth IRA is the Right Retirement Plan for You:

• You want tax-free earnings and no taxation on withdrawals.
  
• You are already saving for retirement with an employer-sponsored plan.
• Your income does not exceed the income limits for contributing (see below).
• You want to invest for retirement but may need to access your savings.
• You expect your tax rate during retirement to remain the same or to be at a higher level than your current tax rate.
• You want to self-direct your IRA investments.

Are You Eligible for an Entrust Self-Directed Roth IRA?

You can contribute to an Entrust Self-Directed Roth IRA if you have taxable income and your modified adjusted gross income is less than:

Married individuals filing jointly:

• $169,000 for 2008
  

Single or head of household:

• $116,000 for 2008
  

Married filing separate returns:

• $10,000
  

What are the Roth IRA contribution limits?

• 2008 - $5,000 plus $1,000 catch-up if you are age 50 or over. (See Internal Revenue Service Publication 590 for more information.)

For more information on Roth IRAs, please visit the Entrust Learning Center.

Contact an Entrust professional in one of our local offices to establish a self-directed Roth IRA or open an account.

1) Entrust is not a tax advisor.