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Access the largest knowledge base for Self-Directed IRAs. Expand your investor knowledge with articles, whitepapers, practical guides and tons of other educational resources.

About Entrust

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For 40 years, The Entrust Group has provided account administration services for self-directed retirement and tax-advantaged plans. Entrust can assist you in purchasing alternative investments with your retirement funds, and administer the buying and selling of assets that are typically unavailable through banks and brokerage firms.

At Entrust, we offer several different types of accounts. Each one has different eligibility requirements and features. What makes them different from accounts held at other institutions is that every single account at Entrust can be self-directed. Choose the one that fits your needs best.
Traditional IRA
Roth IRA
Roth IRA Vs. Traditional IRA

A Traditional IRA allows you to make pre-tax contributions toward your retirement. The funds grow tax-deferred. Any interest, capital gains, or dividend income from the original funds will grow tax-deferred until withdrawal.

With an Entrust self-directed Traditional IRA, you have the freedom to invest your retirement funds in alternative assets and investments that inspire you.

Traditional IRA Features

  • Potential tax-deductible contributions
  • Tax-deferred earnings
  • Pay taxes when you take distributions on taxable amounts
  • Required minimum distributions begin at age 72

Eligibility requirements

You’re eligible for a Traditional IRA if you’ve received taxable compensation during the year. If you and your spouse have both received compensation during the year, you can each establish an IRA. However, if filing a joint tax return, only one spouse is required to receive compensation and they can contribute on behalf of the other spouse.

Contribution Limits

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

A Roth IRA is an individual retirement account that is funded with post-tax dollars. The tax benefit of a Roth IRA is that all earnings, including interest, capital gains, etc., grow tax-free. You pay income taxes on your initial contributions.

There are several exceptions that allow you to make a penalty and tax-free withdrawal from a Roth IRA. You can distribute your account earnings tax-free and penalty-free if you satisfy the 5-year period and meet one of the following reasons:

  • Attainment of age 59 ½
  • Disability
  • First-time home buyer (maximum $10,000)
  • Death

The 5-year period means its been 5 years since you have contributed to your first Roth IRA. The clock for the 5-year period begins as of January 1st of the year for which a contribution was made. As an example if you make a contribution on July of a calendar year, the clock started as of January 1st of that year.

Roth IRA Features

  • If you expect your tax rate to be higher in the future, this might be a good option for you
  • Pay income taxes now in return for tax-free growth on your investment earnings
  • Provide tax-free income in retirement
  • No required minimum distributions
  • Withdraw your direct contributions at any time without penalty

Eligibility requirements

An individual can open and contribute to a Roth IRA if the following requirements are met:

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.

Contribution Limits

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

Here are the key differences between Roth and Traditional IRAs:

Traditional IRA Features

  • Contributions are tax-deductible
  • Required minimum distributions begin to occur annually at age 72
  • Funds withdrawn before age 59 ½ are subject to 10% penalty
  • Taxes on earnings aren’t due until withdrawn from the IRA

Roth IRA

  • Contributions aren’t tax deductible
  • No required minimum distributions
  • Principal contributions can be withdrawn penalty-free
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Earnings can be withdrawn tax-free after certain requirements are met. The difference between Traditional IRAs and Roth IRAs lies in their tax advantages.
When evaluating which account is best for you, ask yourself if you want to pay taxes now or later and if you think your current income and tax bracket will be lower or higher in retirement. In any case, it is best to consult your tax or financial advisor to make sure you make the best decision based on your current and future situation.

SEP IRA
SIMPLE IRA
SEP IRA vs SIMPLE IRA

A Simplified Employee Pension (SEP) IRA is an easy, flexible, low-cost retirement option if you’re self-employed or a partner/owner of a corporation. A SEP retirement plan is basically a Traditional IRA that allows you to make contributions for yourself and your employees.

You can make tax-deductible contributions of up to 25% of each employee’s compensation (you’re considered an employee if self-employed).

SEP IRA Features

  • Businesses of any size or a self-employed person can use a SEP IRA
  • Doesn’t have the startup and operating costs of a conventional employer-sponsored plan
  • Employer contributions are discretionary and tax deductible
  • Required minimum distributions begin at age 72
  • Employer contributions are vested immediately

Eligibility requirements

Employer eligibility: any business owner (i.e., sole proprietor, partnership, corporation, self-employed) Employee eligibility: an individual can open and make contributions to a SEP IRA if these requirements are met:

  • Aged 21 years or older
  • Worked for employer for at least 3 of the last 5 years
  • Received the minimum compensation required by the IRS

An employer can exclude employees from coverage based on the following:

  • Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employee’s union and the employer.
  • Nonresident alien employees who have received no U.S. source of wages, salaries, or other personal services compensation by the employer.

Contribution Limits

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

Savings Incentive Match for Employees (SIMPLE) IRAs give employers an easy way to make contributions toward their own retirement, as well as the retirement of their employees.

SIMPLE IRA Features

  • Designed for businesses with 100 or fewer employees who have earned the minimum compensation required by the IRS
  • Once a business exceeds 100 employees, it can stay on the plan for up to 2 years
  • Employer can choose to match the employee’s contribution up to 3% of compensation or choose to contribute 2% of compensation across the board without matching
  • Contributions are tax-deferred
  • Required minimum distributions begin at age 72
  • Funds are taxed when withdrawn upon retirement
  • Employers get a tax-deduction for contributions they make to employees

Eligibility requirements

Employer eligibility: an individual can open and make contributions to a SIMPLE IRA if these requirements are met:

  • You are self-employed, or own a business with less than 100 employees
  • You do not sponsor any other retirement plan
  • Employee eligibility: All employees who received at least $5,000 in compensation during any 2 preceding calendar years (whether or not consecutive) and who are reasonably expected to receive at least $5,000 in compensation during the calendar year, are eligible to participate in the SIMPLE IRA plan for the calendar year.

Contribution Limits

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

Here are the key differences between SEP and SIMPLE IRAs:

SEP IRA

  • Best for businesses with no employees or small family-owned businesses
  • Contributions are tax-deductible
  • Higher contributions limits
  • Accounts can be opened by any type of business adding flexibility
  • Employers can choose whether or not to contribute to the plan in years where profits are lower than anticipated

SIMPLE IRA

  • Best for businesses with 100 employees or less
  • Contributions are tax-deductible
  • Lower contribution limits
  • Accounts can only be opened by certain types of businesses
  • Employers have less flexibility in the amount and timing of their contributions
Individual 401(k)
HSA
ESA

An Individual 401(k), also known as a Solo 401(k), is a retirement account for sole proprietors who employ only themselves, their spouse, or other owners. This plan allows maximum deductions and contributions for retirement.

Individual 401(k) Plan Features

  • Designed for small businesses whose only eligible participants in the plan are the business owners (and their spouses, if they are also employed by the business)
  • Has the same benefits as a 401(k)
  • High contribution limits

An Individual 401(k) plan has two components based on your role as both employer and employee:

  • Employee elective-deferral contribution limits: salary deferral up to 100% of your compensation, up to the allowed limit
  • Employer Profit-sharing contribution: maximum 25% of compensation, up to the allowed limit
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With Entrust, you can establish either a Roth or Traditional plan. The Traditional Individual 401(k) is a tax-deferred plan, which reduces your taxes now and offers tax-deferred savings. With the Roth, you make after-tax contributions to the account, and future withdrawals are tax-free.

Eligibility requirements

You’re eligible for an Individual 401(k) if these requirements are met:

  • You are a sole proprietor, or you own a business without employees apart from a spouse or partners
  • You’ve received taxable compensation during the year

Contribution Limits

Before making contributions to an Individual 401(k) Plan, learn the contribution limits that apply:

A Health Savings Account (HSA), is a tax-advantaged savings plan you can use to pay for medical expenses, such as prescriptions, eye care, dental, and some over-the-counter medications.

HSA Features

  • Contributions can be used any year — funds continue to accumulate
  • Contributed funds are tax-deductible
  • Earnings grow tax-deferred
  • Withdrawals used for qualified medical expenses are tax-free
  • You do not lose the funds if you change health plans
  • At age 65, funds can be withdrawn penalty-free for any purposes

HSA Eligibility Requirements

To qualify for an HSA, you must meet these requirements:

  • Be enrolled in a high-deductible health plan (HDHP)
  • Have no other health coverage
  • Not enrolled in Medicare
  • Not claimed as a dependent on someone else’s tax return

Contribution Limits

Before making contributions to an HSA Plan, learn the contribution limits that apply:

An Education Savings Account (ESA), also known as a Coverdell Education Savings Account, is a tax-free way to save for a child’s education. By opening a Self-Directed ESA, you have the ability to grow the account faster than through traditional investments.

ESA Features

  • Funds can pay for any educational institution including higher education, or expenses (tuition, books, fees)
  • Any adult can contribute to an ESA for any child, you do not have to be related to the child
  • Contributions are not tax-deductible
  • No requirement to contribute annually
  • Funds must be used before the account owner reaches the age of 30
  • Funds can be transferred to any eligible family member below the age of 30

ESA Eligibility Requirements

To establish an ESA, these requirements must be met:

  • Account beneficiary must be under age 18 or a special needs individual
  • Contributions must be made in cash
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Want to take this information with you? Download the Account Guide for easy reference.

Once you’ve identified the best account for you, check out our Funding webpage to learn the different funding methods.

Next Step: Learn how to fund your account

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