Frequently Asked Questions

The following frequently asked questions many investors have about self-directed IRAs and investing with self-directed accounts at Equity Trust.

The fees for self-directed IRAs depend on the custodian. Equity Trust offers our clients a straightforward fee schedule that’s based on the balance of your account. Learn more about Equity Trust’s fees.

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.

Equity Trust makes it easy for you to manage your self-directed IRA. You will have around-the-clock secure online access to your account in addition to quarterly statements.

With myEQUITY, account holders can easily filter, sort and export your account’s portfolio positions, cash ledger and transaction history. You can also stay informed of the process of your account activities with real-time transaction notifications and by reviewing each activity’s unique status page.

In addition to quarterly statements, Equity Trust provides 1099 and 5498 tax reporting related to any distributions or contributions made in a given tax year within your account.

Yes. Once your account has been opened and you have your own Client Access PIN (personal identification number) you can check the status of your transfer online or feel free to contact Equity Trust. Our intuitive and interactive account management site, myEQUITY, provides a responsive experience for computers, tablets and mobile devices offering around-the-clock account access at home or on-the-go.

Equity Trust Company is a directed custodian, preparing account statements for you, and reports for the IRS. Our role is to carry out an account owner’s direction, much like a bank carries out payment instructions when an account owner writes a check. We do not research or analyze your investment choices and do not offer opinion or advice on investment decisions. You should consult a trusted financial professional such as your accountant, financial planner or lawyer before making an investment.

Some of the investments Equity Trust clients make using their self-directed accounts include real estate, tax liens, digital currencies such as Bitcoin, private lending, purchasing notes, private placements, precious metals, forex and other investment options that are permissible under IRS guidelines.

Equity Trust holds a variety of IRAs, as well as other self-directed accounts, including:

  • Traditional IRA
  • Roth IRA
  • Simple IRA
  • SEP IRA
  • Solo 401(k)
  • Roth Solo 401(k)
  • Health Savings Account (HSA)
  • Coverdell Education Savings Account (CESA)

The fees for self-directed IRAs or other retirement accounts are dependent on the custodian. Equity Trust has a straightforward fee schedule.

There are several reasons to open your self-directed account at Equity Trust Company, even before you have selected an alternative investment.

  1. If you are transferring cash/assets to your account from another custodian, you should allow time for the resigning custodian to process your request and deliver the account holdings to Equity Trust.
  2. You have the ability to invest in traditional assets while you are researching other opportunities.
  3. Once you have selected an alternative investment, you will not have other actions in process that may delay the funding processing.

To set up a self-directed retirement account with Equity Trust visit myEQUITY and start the process today. You can also visit How to Get Started for more information. Or simply schedule a free, one-on-one consultation with an Equity Trust Senior Account Executive.

All investments carry risk, including loss of principal. It is very important to understand that 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.

Some advantages of self-directed IRAs include:

  • Tax-deferred or tax-free profits
  • Investment diversity (it is possible to invest in an array of assets in your retirement account)
  • Potentially building wealth for future beneficiaries

The following frequently asked questions many investors have about self-directed IRAs and investing with self-directed accounts at Equity Trust.

Cash funds can be transferred via check or wire. All other assets are transferred either ACATS or non-ACATS.

There is no tax reporting when transferring funds/assets from one IRA custodian to another IRA of the same type at a different custodian. The IRA owner does not personally receive or control the assets, such as in a distribution, which would trigger a taxable event to report.

No. It is your responsibility to monitor the 60-day period and 12-month period when you request a rollover.

You can complete one rollover per 12-month period. The 12-month period begins on the date you receive the funds/assets, not the date the funds/assets were sent to you from your IRA custodian.

If a second distribution is made during the 12-month period it will not be eligible for rollover. This means the distribution is a taxable event and is subject to the 10-percent penalty tax, if applicable. In addition, those funds cannot be validly deposited into your account as a rollover contribution. They will be treated as a regular contribution for the current year, which may result in an excess contribution.

No. There is no limit to the number of custodian-to-custodian transfers you can do in a year.

There is no age restriction on rollovers. However, if you hold a traditional IRA and are age 70½ or older you cannot roll over your required minimum distribution (RMD). The first assets or funds distributed in a year are considered to be the RMD. After satisfying the required minimum distribution, any additional distributions are eligible for rollover provided you follow the 12-month period rule.

Yes. Remember, you must still take your Required Minimum Distribution (RMD) by the due date if you have a Traditional IRA. If you have a Roth IRA, your age does not have any impact on Roth IRA to Roth IRA transfers.

Yes. A self-directed IRA gives you the ability to diversify your portfolio with additional investments that are permitted by the IRS, in a tax-free or tax-deferred environment.

Yes. For instance, if you wish to transfer funds from a traditional IRA to an Equity Trust self-directed IRA, the funds must be transferred to a traditional IRA.

Although transfer of cash is a much faster process, clients may choose to transfer assets in kind. This allows clients to maintain their current investment positions, the only difference being the registration of the asset. However, the ability to transfer assets in-kind from a tax-qualified plan will be subject to the provisions of the arrangement; therefore, you should consult with your plan administrator regarding the permissible options allowed under the tax-qualified plan.

No. You can move all of your assets or only part of your account’s holdings as you see fit to your new account at Equity Trust. Since there are no limits to the number of transfers you can do in a year, you can move your cash and/or other assets when it works best for your goals.

After you open your account with Equity Trust, the first step of transferring your funds involves contacting your current custodian regarding the transfer. If you don’t have that information, an Equity Trust specialist can contact your current custodian while you are on the line.

If the current custodian requires Equity Trust to initiate the transfer process, you must complete and submit an Equity Trust Transfer From along with a recent statement from your current custodian. The Transfer Form can be submitted when opening your account at Equity Trust, or any time thereafter. You must include a Medallion Signature Guarantee Stamp. Once the Transfer Form has been received, Equity Trust will sign and submit the form to the transferring custodian.

It is possible to transfer funds from an IRA you hold at another custodian or a retirement plan from a prior employer, provided the tax environments are the same. A traditional IRA held by another custodian needs to have its funds transferred to a traditional IRA. A Roth IRA needs to have its funds moved to a Roth IRA. Our retirement account specialists can help you determine what type of account you need to open at Equity Trust to move your funds in an approved manner.

Yes, there are several ways you can expedite the transfer process.

  • Let your current custodian know about the transfer ahead of time.
  • Stay on top of the process and keep communicating with the transferring institution.
  • If you plan on liquidating stocks or funds once they have been transferred to Equity Trust, you might want to consider making this sale with your current custodian. Re-registration of funds and stocks generally takes a longer amount of time than cash transfers or wires.

The portion of the account transfer process that Equity Trust is responsible for takes approximately two to three business days. Once the transfer form has been mailed, the speed of process is up to the transferring custodian. The entire process can range from a few days to upwards of two months. Generally speaking, transfers take the following amount of time:

  • Cash Transfers- No matter where funds are being transferred from, cash transfers take the shortest period of time, approximately one to four business days.
  • Transfer from a Brokerage Account- The amount of time expected for a brokerage account transfer is approximately 10 to 15 business days from the date paperwork is completed. The actual time will vary depending on the speed with which the brokerage firm responds to our request.
  • Transfer from a Mutual Fund- The amount of time expected for a mutual fund transfer is approximately 14 to 21 days after the paperwork is received. The actual time will vary, depending on the speed with which the mutual fund responds to the transfer request.

There are a few ways you can expedite the transfer process.

  • You can let your current custodian know ahead of time about your request.
  • If you plan on liquidating stocks or funds once they have transferred to Equity Trust, you might want to consider making this sale with your current custodian. Re-registration of funds and stocks generally take a longer amount of time than cash transfers or wires.
  • Stay on top of the process and consistently communicate with the transferring institution. Remember, these are your funds.

The portion of the account rollover process that Equity Trust is responsible for takes approximately two to three business days. The amount of time expected for a direct rollover from a qualified plan is approximately seven to 60 days. The actual time will vary depending on the speed with which your qualified plan administrator responds to the transfer request.

After you open your account with Equity Trust, you will contact your previous employer regarding the required paperwork to roll over an IRA. In most cases this will include account numbers and balances. If you do not have that information, an Equity Trust specialist can contact your previous employer or plan administrator while you are on the line. Then you will complete all paperwork received from the plan administrator and ask the plan administrator to transfer your retirement assets to your new Equity Trust IRA account number.

If the plan administrator for your previous employer’s plan requires Equity Trust to complete a portion of the distribution form, please mail it to Equity Trust Company along with the most current plan statement. Equity Trust will complete the required sections and mail the paperwork to the plan administrator.

Yes, it is allowed, but you will need to check with your plan administrator or human resources department to determine if it is permissible within the structure of your employer’s retirement plan.

A 1099 tax form is issued for the distribution and the receiving institution reports the rollover on the 5498 tax form. If the rollover is less than the original distribution amount, you must report the difference as part of your federal tax return. Funds that are not deposited into an IRA as a contribution are considered income. Taxes and penalties may occur if you do not meet the distribution requirements for the type of IRA you hold.

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-percent early distribution penalty. You should consult with your plan administrator regarding the permissible withdrawal options allowed under the tax-qualified plan.

A transfer is when the same type of retirement plan is moved from one firm or custodian to another. Moving funds from one firm or custodian to another using a rollover involves a request of a distribution of your retirement plan assets. You have 60 days after the distribution to roll over funds to the new firm or custodian to keep them tax-deferred. A direct rollover is moving assets from one type of plan to a different type of plan. For example, from an employer-sponsored 401(k) to an IRA.

A transfer occurs when IRA assets and/or funds are moved directly from one financial organization to the same type of IRA at another financial organization.

A rollover occurs when you request a distribution from an IRA or a Qualified Retirement Plan and then “roll” the assets into an IRA. There are three types of rollovers: an IRA rollover, a Qualified Retirement Plan rollover, and a Qualified Retirement Plan Direct rollover.

The following frequently asked questions many investors have about self-directed IRAs and investing with self-directed accounts at Equity Trust.

Equity Trust makes it easy for you to manage your self-directed IRA. You will have around-the-clock secure online access to your account in addition to quarterly statements.

With myEQUITY, account holders can easily filter, sort and export your account’s portfolio positions, cash ledger and transaction history. You can also stay informed of the process of your account activities with real-time transaction notifications and by reviewing each activity’s unique status page.

In addition to quarterly statements, Equity Trust provides 1099 and 5498 tax reporting related to any distributions or contributions made in a given tax year within your account.

Equity Trust holds a variety of IRAs, as well as other self-directed accounts, including:

  • Traditional IRA
  • Roth IRA
  • Simple IRA
  • SEP IRA
  • Solo 401(k)
  • Roth Solo 401(k)
  • Health Savings Account (HSA)
  • Coverdell Education Savings Account (CESA)

If your IRA owns an asset or interest that produces unrelated business taxable income (UBTI), your IRA may be subject to an unrelated business income tax (UBIT) pursuant to Section 511 of the Internal Revenue Code.

The IRS publishes maximum IRA contribution limits and catch up provisions each year. Summaries for each type of contribution can be found on Contribution Limits.

In conjunction with the Retirement Industry Trust Association, we have compiled governmental and industry resources to help you, the self-directed investor, in making your investment decisions. As a reminder, all investments carry risk including loss of principal. No governmental agency or IRA custodian approves or guarantees investments.

Yes. Some IRA custodians only allow investing in stocks, bonds and mutual funds; however a self-directed IRA custodian, such as Equity Trust, allows those types of investments in addition to real estate, notes, private placements, tax lien certificates and more.

According to the IRS, a prohibited transaction is improper use of an IRA account or annuity by the IRA owner, his or her beneficiary or any disqualified person. Examples of prohibited transactions with an IRA are borrowing money from it, selling property to it, using it as security for a loan and buying property for personal use (present or future) with IRA funds.

Yes, partnering your self-directed IRA or other retirement account with another funding source is possible. You can partner your IRA with your non-IRA money, your other retirement accounts, your spouse’s IRA, other people’s IRAs, another investor’s non-IRA money and your children/grandchildren’s CESAs, to name a few options.

All IRAs or other self-directed retirement accounts must be held by a custodial entity such as a bank, credit union, trust company or an entity that is licensed and regulated by the IRS as a “non-bank custodian.” A self-directed IRA custodian, such as Equity Trust Company, specializes in being the custodial entity for self-directed accounts.

With a self-directed IRA, your investments are up to you, within the bounds of the IRS rules and guidelines. The IRS does note provide guidance on what investment types are permitted, but dictates only what is NOT permitted. Examples of prohibited IRA investments include collectible (such as artwork, stamps, rugs, antiques and gems), certain coins and life insurance. See IRA Publication 590 for more information about prohibited investments.

A self-directed IRA is a retirement account that allows for investments in alternative assets such as real estate, promissory notes, and precious metals, in addition to stocks and mutual funds. The account owner determines how they would like to manage their account and directs the custodian to process the transactions within the account. In addition to Traditional and Roth IRAs, other accounts such as SEPs, SIMPLEs, Solo 401(k)s, health savings accounts, and Coverdell education savings accounts can be self-directed as well.

A self-directed IRA is technically no different than any other IRA or 401(k). A self-directed IRA is unique because of the investment options available. Most IRAs are used for stocks, bonds, mutual funds and CDs. A self-directed IRA allows those types of investments along with real estate, notes, private placements, and other investment options.

The following frequently asked questions many investors have about self-directed IRAs and investing with self-directed accounts at Equity Trust.

No. All income generated from the sale of a property owned by your IRA must be deposited directly into your IRA.

When you’re ready to sell a property that’s owned by your IRA, you need to request the original documents from Equity Trust. This is done by completing an investment form, which can be found on myEQUITY. Once the property has been sold, all funds from the sale must be deposited into your IRA. These funds must be sent to Equity Trust with a payment coupon.

Yes. However, your IRA must pay all expenses associated with a property that it owns, including renovations. Further, all proceeds from the sale of the renovated property must be deposited into your IRA.

No. IRAs are not qualified as investors in subchapter S corporations.

Yes. Investments in newly formed private entities, such as limited partnerships, limited liability companies, C corporations or land trusts, are permissible under the Internal Revenue Code, with the exceptions of subchapter S corporations.

Rental payments are sent to Equity Trust for the benefit of (FBO) your IRA. The checks or money order should be made payable to: “Equity Trust Company Custodian FBO [Your Name] IRA.”

Once received, the checks or money orders are deposited into your IRA. All checks must be sent to Equity Trust with a payment coupon.

Yes, all income generated by an IRA-owned property must return to your IRA. This ensures that you retain the tax-deferred or tax-free status of the investment.

You must instruct Equity Trust where to send the funds from your account. You can do this online through myEQUITY’s Bill Pay system, or you can submit a form with the instructions. Typically, funding to purchase real estate is sent to a title company, attorney or escrow agent.

No. This is considered a prohibited transaction (see IRC 4975).

No. This is considered a prohibited transaction (see IRC 4975). You may not purchase a property, or interest in a property, that’s currently owned by a disqualified person, which includes yourself.

You are not limited to residential real estate. Your IRA can hold various investment properties such as commercial buildings, vacant land, condominiums, mobile homes and apartment buildings, in addition to residential property.

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