Can I Rollover Funds from a Previously Established Retirement Plan into an Equity Trust Self-Directed IRA?
Yes, there are several ways funds can be rolled over into an Equity Trust self-directed IRA.
What is a Rollover and how does it happen?
A Rollover occurs when an individual requests a distribution from an IRA or a Qualified Retirement Plan and then "rolls" the assets into an IRA. There are three types of rollovers: (a) an IRA rollover; (b) a Qualified Retirement Plan Rollover, and (c) a Qualified Retirement Plan Direct Rollover. Under federal tax law, each IRA owner is limited to one IRA Rollover in a 12-month period. On the other hand, Qualified Retirement Plan Direct Rollovers are not treated as rollovers subject to this 12-month rollover rule.
IRA Rollover - Occurs when an individual has taken a distribution personally from his/her IRA. The IRA owner has 60 days to rollover the distribution into another IRA. If the funds are not put into another IRA account, the individual shall be subject to an additional penalty tax of 10%.
Qualified Retirement Plan Rollover - Occurs when an individual takes personal possession of his/her distributions from a qualified retirement plan. The QRP rollover is a more complex procedure than the regular transfer. Once the funds have been removed, the plan administrator will withhold 20% of the distribution for tax purposes. The client receives the 80%, then has to make up the difference to his/her IRA out of his/her own pocket. The client will have to file a form with the IRS to receive the withheld funds. For these reasons, we recommend that individuals execute a Direct Rollover (see below) whenever possible to avoid possible tax liabilities and complications.
Qualified Retirement Plan Direct Rollover - The direct rollover is similar to an IRA transfer. The recipient of a qualified plan distribution chooses to have his/her distribution rolled over directly to another institution in order to open an IRA account with those funds. By choosing the direct rollover option, an individual lessens the possibility of complications and no tax is withheld from the distribution.
When I Rollover Funds from an Employer-Sponsored or Qualified Retirement Plan, do they Need to go Directly to a Traditional IRA?
No. Per IRS guidelines, Rollovers from a qualified plan can be rolled over into a Traditional or Roth IRA.
If the Rollover is made directly to the Roth IRA the transferred amount is subject to income taxation, but avoids the 10% early distribution penalty. You should consult with your plan administrator regarding the permissible withdrawal options allowed under the tax-qualified plan.
Can I Rollover Funds from a Qualified Retirement Plan if I am Still Employed and am a Member of that Plan?
Yes, as far as Equity Trust is concerned this is perfectly fine. But you will need to check with your plan administrator or HR department to see if this is permissible within the structure of your employer’s retirement plan.
It is a simple 3 step process!
How do I Rollover Funds to my Self Directed IRA?
How Long do Rollovers Take?
The portion of the account rollover process that Equity Trust is responsible for takes approximately 2-3 business days.
The amount of time expected for a direct rollover from a Qualified Plan is approximately 7-60 days. The actual time will vary depending on the speed with which your qualified plan administrator responds to the transfer request.
Is There any way I can Expedite the Process?
Yes, there are several ways you can expedite the transfer process:
Let your current custodian know ahead of time about the request.
If you plan on liquidating stocks or funds once they have been transferred to Equity Trust, you might want to consider enacting this sale with your current custodian. Re-registration of funds and stocks generally takes a longer amount of time than cash transfers or wires.
Stay on top of the process and be in regular communication with the transferring institution. Remember, these are your funds.