General Self-Directed Investing FAQs
The following frequently asked questions many investors have about self-directed IRAs
and investing with self-directed accounts
at Equity Trust.
What’s the difference between a self-directed IRA and a traditional IRA?
A self-directed IRA is technically no different than any other IRA – or 401(k), for that matter. A self-directed IRA is unique because of the investment options available. Most IRAs only allow approved stocks, bonds, mutual funds and CDs. A truly self-directed IRA allows those types of investments along with real estate, notes, private placements, tax lien certificates and much more.
What are the advantages of opening a self-directed IRA?
In addition to the benefits of an IRA (tax-free earnings, tax deductions and estate planning), a self-directed IRA allows you to significantly diversify your portfolio with additional investment instruments permitted by the IRS, such as oil and gas investments, commercial real estate, foreign currencies and much more.
What other types of investments are allowable with a self-directed IRA?
Here are investments which are permitted at Equity Trust and under the Internal Revenue Code:
• Residential real estate—including apartments, single family homes, and duplexes
• Commercial real estate
• Undeveloped or raw land
• Real estate notes (mortgages and deeds of trusts)
• Promissory notes
• Private limited partnerships, limited liability companies, and C corporations
• Tax lien certificates
• Foreign currencies
• Oil and gas investments
• Publicly traded stocks, bonds, mutual funds (see our Brokerage Information)
• Private stock offerings, private placements
• Judgments/structured settlements
• Gold bullion
• Automobile paper
• Factoring investments
• Equipment leasing
Are any investments off-limits in my self-directed IRA?
A prohibited transaction can jeopardize the tax-deferred status of your account, potentially resulting in the disqualification of your IRA and severe tax consequences. Examples of investments which are not permitted under the Internal Revenue Code:
• Works of art
• Rugs or antiques
• Stamps or coins
Here are useful links to IRS information
to review and discuss with your financial professional.
Can I rollover a 401(k) account into a self-directed IRA?
Yes. In addition to the tremendous IRA benefits (tax-free earnings, tax deductions and estate planning), a self-directed IRA gives you the ability to significantly diversify your portfolio with additional investment instruments that are permitted by the IRS.
Should I have a financial advisor help me make self-directed investments?
With a self-directed IRA, you can make your own investment decisions, or you can enlist the help of a financial advisor. It’s recommended that you have any investment decision you make reviewed by a trusted member of your financial team, such as your accountant, financial planner or lawyer before investing.
Does Equity Trust act as a financial advisor (i.e., give investment advice or endorse investments)?
Equity Trust is a passive, self-directed IRA custodian of your account, preparing account statements for you and reports for the IRS. Our role is to carry out an IRA owner’s directions (much like a bank carries out payment instructions when an account owner writes a check). We do not review, research or analyze your investment choices and do not opine on investment decisions. You should consult a trusted financial professional such as your accountant, financial planner or lawyer before making an investment.
Are my investments insured against loss by a governmental agency?
Outside of FDIC-insured investment products, ALL investments carry risk including loss of principal. It’s very important to understand that, other than FDIC-insured products, NO investment is guaranteed by governmental agencies. (Be cautious of anyone who implies that an investment is guaranteed by a governmental agency.)
Are my investments insured against loss by Equity Trust?
Outside of FDIC-insured investment products, ALL investments carry risk including loss of principal. It’s very important to understand that, other than FDIC-insured products, NO investment is guaranteed by governmental agencies nor are investments guaranteed by Equity Trust. (Be cautious of anyone who implies that an investment is guaranteed by a governmental agency.)
Are there educational resources to help me be a more aware investor and protect myself against investment fraud?
There are many investor education resources available to help you become a more informed investor. Equity Trust, in partnership with the Retirement Industry Trade Association, has compiled information from governmental and private agencies to help you become a more informed and aware investor. The Check Before You Invest
and Scam and Fraud Knowledge Center
offer training videos, webinars, checklists and much more.
What if I need to get my money right away? How easy is it to cash out of a self-directed IRA?
That depends on the investment. The liquidity of your investments—how quickly you can sell an asset—is an important point to discuss as you review your investment options with a trusted financial professional. Stocks or bonds, for example, are easier to cash out than real estate. Once you make a “buy” or “sell” decision, Equity Trust will help you complete your transaction.
What kind of reporting should I expect from Equity Trust on my self-directed IRA?
Equity Trust makes it easy for you to manage your self-directed IRA any hour of the day or night. You will have 24/7 secure online access to your account in addition to quarterly progress reports that Equity Trust will provide. Additionally, Equity Trust takes care of all required IRS documentation.
How is Equity Trust regulated?
The Internal Revenue Code sets high standards for being a qualified custodian of IRA accounts, which includes banks, trust companies and approved brokerage firms. Equity Trust Company and its affiliates have operated as a qualified IRA custodian since 1983.
Equity Trust Company operates as a trust company under authority granted by the state of South Dakota.
Equity Trust meets the state trust company capital requirements and complies with all applicable state statutes and regulations.
By law, our governing bodies are mandated to conduct regular audits of trust companies performed by state auditors.
The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) regulate Equity Trust’s brokerage affiliate, ETC Brokerage Services.
The Department of Labor (DOL) regulates qualified plans administered by Equity Trust.
Am I eligible to make a contribution? How much can I contribute?
Eligibility depends on your account type, age, tax filing status and income. View Contribution Limits
How can I send in a contribution?
Contributions may be made in the form of a check, cashier’s check, money order, wire, ACH or via credit card
If you would like to send your contribution via Wire, please follow this link
for our Wire Instructions. Download our Wire Instruction
Credit card contributions can be made over the phone with a member of your First Class Service Team, up to the amount of $500 per year.
ACH is an electronic automatic contribution from a checking or savings account that’s sent monthly, bi-monthly or quarterly. An ACH can only be set up for a recurring contribution. Download our ACH form
Any contributions sent in the form of a check, cashier’s check or money order should be accompanied by a contribution coupon. Download our Contribution Coupon
Once I send my funds, is my cash available immediately?
Wires, cashier’s checks and money orders are guaranteed funds and are given immediate availability.
Personal and business checks are available on the fifth business day.
Transfer and rollover checks are available on the fifth business day.
Credit card contributions typically take up to two business days to become available for use in the account.
Do I need to send anything with my contribution?
Deposit coupons must be sent in with a contribution. Download coupon
If your contribution is being sent via Wire, please make sure to fax or email a deposit coupon prior to the wire arriving in your account.
Indicate the account number, account type, dollar amount and tax year in which the contribution should be applied.
What are your ongoing fees? What services should I expect for those fees?
Equity Trust offers an all-inclusive fee schedule, with no hidden fees or surprise charges. It’s very simple and easy to understand: There are no transaction fees when you buy and sell assets. (It is important to note, however, that you may incur online brokerage fees through our registered brokerage affiliate.) Equity Trust charges a flat annual fee, based on the size of your investment portfolio.
If you have questions, you can always call us at 1-888-ETC-IRAS (382-4727), send us an e-mail, or click on the live chat box on our web site. We have experts who will answer your questions Monday through Friday, 9 a.m.- 6 p.m. EST. Here is a link for more information about Equity Trust’s all-inclusive fee schedule
When are annual maintenance fees due?
Equity Trust Company sends out the annual maintenance fee bill by separate mailing in early January. Annual maintenance fees are due by the date noted on the invoice.
There are three ways you can pay annual maintenance fees.
If you have elected to pay by auto debit from your cash holdings, your fees will be deducted on or about the invoice date and no further action is required by you. If there is insufficient cash in the account, the available cash will be deducted and you will be billed for the remaining balance which is payable by the invoice due date.
Log into your myEQUITY account to pay fees via cash, credit card, ACH or Bank Account debit via Present and Pay.* With its enhanced functionality you can:
Pay your outstanding annual maintenance fee from the available cash in your account; or
Pay your outstanding annual maintenance fee by credit card. Customers with a valid credit card on file with Equity Trust who previously elected to have their credit card charged, will be charged on or about the invoice due date, 1/7/19, and no further action is required. Only valid credit card information is on file in myEQUITY. If your credit card information is not available please use the Manage Credit Card option to re-enter information on an expired card or add a new one.
You can pay the annual maintenance fees by submitting a check by the invoice due date.
*Please note that myEQUITY currently does not offer the functionality to allow clients to split payment of fees between cash and credit cards. You must choose one payment method for each invoice.
My child has an account and we paid fees last year, do we have to pay again?
Special maintenance fees apply to Equity Trust accounts opened on behalf of individuals under the age of 18. When a minor opens an Equity Trust account valued at $10,000 or less, a $50 one-time setup fee is assessed along with a $70 yearly maintenance fee. Once the child reaches age 18 or the account exceeds $10,000, the account converts to the regular maintenance fee schedule and is billed annually.
Can you help me better understand your fee structure?
Annual maintenance fees are assessed based on the market value of your account as of December 31 or last business day of the previous year. Fees are based on a graduated fee schedule. View the fee schedule
for the current year.
My investment/asset(s) reflects an incorrect value, how can this be corrected?
The asset value listed on your statement and in your myEQUITY account is based on the most recent value as provided to Equity Trust by the client or a disinterested third party.
Typically, an asset value can be updated by submitting a Fair Market Valuation Form along with supporting documentation, or receipt of a third-party servicer statement from the company in which you invested your funds.
If you hold a promissory note, the statement will reflect the value reported on the investment payment coupon received with the most recent payment. If the value of your promissory note is inaccurate, simply send us a letter stating the current value.
How do I sign up for e-Statements? When can I view my e-Statement?
If you have not elected to sign up for e-Statements on your account application you may do so via myEQUITY.
If you need assistance signing up for myEQUITY or e-Statements, please click here
Once enrolled in e-Statements, you’ll receive a notification via email when your next quarterly statement is available for viewing. You must then log into your myEQUITY account and choose “Electronic Statements” to view your statement.
If you enroll for e-Statements after the most recent quarterly paper statement has been mailed, you won’t be able to view your e-Statement until the next quarterly statement is available.
Once enrolled and your first quarterly statement is available online, you’ll have access to all quarterly statements going forward. All past quarterly statements previously viewed through myEQUITY are accessible as long as you hold an myEQUITY account.
to view more frequently asked questions (FAQs) about e-Statements.
How do I title my investment?
One of the most common mistakes in self-directed IRA investing is improper titling of the investment documents. Refer to “How to Correctly Title Your Investment” to ensure the proper titling of your investment.
What supporting documents do I need to send with my investment request?
Please refer to our Supporting Documents Reference List to see the minimum required supporting documents for many common investments. Equity Trust Company Direction of Investment forms as well as other forms to manage your account are available here