Self-Directed Roth IRA

What is a Roth IRA?

A Roth IRA is an individual retirement account that is funded with post-tax dollars.  While contributions are not tax-deductible, the tax benefit of a Roth IRA is that all earnings, including interest, capital gains, and dividend income, grow tax-free. You pay income taxes on initial contributions in the year they are made, but you can withdraw the earnings tax-free as long as certain requirements are met.

In addition, you can withdraw your direct contributions at any time without penalty, as these funds have already been taxed. You can begin withdrawing earnings at age 59½, but, unlike with other self-directed IRAs, you are not required to take distributions at any age. 

Roth IRA Eligibility Requirements

An individual can open and make contributions to a Roth IRA if both of the following requirements are met:                             

  1. Taxable compensation has been received during the year.                                                              
  2. Your modified adjusted gross income (AGI) does not exceed the Roth income limits.

If you and your spouse have received compensation during the year, you can both contribute to your own IRA. However, if you are filing a joint tax return, only one of you is required to have compensation, and you can contribute on behalf of your spouse.

The amount that you can contribute to a Roth IRA is based on your modified adjusted gross income (AGI). As of 2010, there is no income limit if you are converting a traditional IRA or an employer-sponsored plan to a Roth IRA.  Income limits only apply to annual contributions.  Explore more information about Roth IRA income limits.

Self-Directed Roth IRAs

A self-directed account is different than a standard account because it allows you to have more investment freedom.  Self-directed IRAs offer the unique opportunity to hold alternative assets, such as real estate, precious metals, and more.  

If your current Roth IRA does not allow self-direction, you can easily transfer funds to an Entrust self-directed Roth IRA and gain access to a wide range of alternative investments, from real estate and gold to private stock and small business. You may also convert a Traditional IRA or a 401(k) with a former employer to a self-directed Roth IRA. Contact us today to get started.

Considerations

How to determine if an Entrust self-directed Roth IRA is the right retirement plan for you:

  • Do you want tax-free earnings and no taxation on withdrawals?
  • Do you want the option to continue saving for your retirement beyond age 70½?
  • Do you do want to avoid required distributions?
  • Is your income within the income limits for contributing?
  • Do you expect your tax bracket during retirement to be equal to or higher than your current tax bracket?
  • Do you want to diversify your retirement portfolio with alternative investment options?

 

If you answered 'yes' to all or most of these questions, a self-directed Roth IRA may be a good choice for you.

2014 Roth IRA Contributions Limits

For 2014, the maximum contribution allowed to a Roth IRA is $5,500.  If you are over the age of 50, you may contribute an additional $1,000 for a total of $6,500.

Visit our Learning Center Resources for up-to-date information on Roth IRA contribution and income limits.