What is a Self-Directed Traditional IRA?

A Traditional IRA is an Individual Retirement Arrangement, more commonly known as an Individual Retirement Account, which allows individuals to put aside tax-deferred money for retirement. Eligible contributions are made from pretax dollars and may be tax-deductible. Any interest, capital gains, or dividend income from the original funds will grow tax-deferred upon withdrawal.

With an Entrust self-directed Traditional IRA, an individual may have the ability to direct their retirement funds towards a wide variety of investments, including alternative investments such as real estate and precious metals. The Entrust platform does not offer investments, but instead makes it available for IRA holders to choose and hold the investment in their IRA. A self-directed account is different than other financial institutions' IRA offerings because it allows you to have more investment freedom.

Important features of a Traditional IRA

  • Potential tax-deductible contributions
  • Tax-deferred earnings
  • Pay taxes when you take distributions on taxable amounts
  • Required minimum distributions begin at age 70 ½ (Update from the SECURE Act of 2019: the age at which individuals need to start taking required minimum distributions has been extended to the year the IRA holder turns 72. However, individuals who turned age 70 ½ in 2019, will still need to take their first RMD by April 1, 2020.)

 

What are the eligibility requirements for a Traditional IRA?

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

  1. Taxable compensation has been received during the yea
  2. 70 1/2 years of age has not been reached by the end of the year (Update from the SECURE Act of 2019: starting tax year 2020, there will be no age limit to prevent account holders from making contributions to their Traditional IRAs. Individuals who continue to work during retirement can save for future retirement years in their Traditional IRAs.)

If an individual and their spouse have received compensation during the year, an IRA may be established for each.  However, if filing a joint tax return, only one spouse is required to receive compensation and is allowed to contribute on behalf of the other spouse.


Is a self-directed Traditional IRA the right plan for me?

  • Do you want to make tax-deductible contributions to a retirement account?
  • Do you want to supplement the retirement saving options offered by your employer?
  • Is your income within the income limits for contributing?
  • Do you want the freedom to invest in what you know, whether it's stocks and bonds or real estate?
  • Do you want to diversify your retirement portfolio with alternative investments?

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

 

Transfer or Rollover your funds to Entrust to get started

If your current Traditional IRA does not allow self-direction, you can easily transfer funds to an Entrust self-directed Traditional 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 401(k) with a former employer to a self-directed Traditional IRA. Contact us today to get started.


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Before making contributions to a Traditional IRA, learn the contribution limits that apply:

Click here to view the 2018-2019 Traditional IRA Contribution Limits