F.A.Q.

How do I fund my account?

You can fund your account in three ways:

• You may make a contribution for each tax year, provided you are eligible to do so
• You may rollover funds from another qualified plan (i.e. 401(k), Profit Sharing Plan, IRA, etc)
• You may transfer funds from another custodian where you have a similar IRA

Whenever you make a deposit, you must complete a Deposit Form.

Bill Pay Information

If you are using Bill Pay to pay from your bank account, please use IRA Services Trust Company as the business name and PO Box 7080, San Carlos, CA 94070-7080 as the business address.

For more information, please refer to Delivery Information.

How do I open an account?

You can open an account by simply clicking here to complete an online application or go to Forms & Documents to print the application. Please also refer to our Fee Schedule in the Forms section.

How much may I contribute to an IRA?

You may contribute up to the lesser of $5,500 or your annual earnings. Your non-working spouse may also contribute up to $5,500, if your joint income equals or exceeds the amount you both contribute. If you are over 50 years of age, you may also make a “catch-up” contribution of $1,000.

How do I change my beneficiary?

For changes to beneficiaries, please submit a new Beneficiary Designation Form, which will supersede any previously submitted form.

How do I change the address or other contact information on my account?

Please use the Address Change Form.

For other contact information changes (e.g., telephone number and e-mail address changes), please submit the change in writing (mail or fax) with your signature.

How do I change the name on my account?

You will need to mail a copy of the legal document (e.g., marriage certificate, divorce decree, etc.) proving the name change, accompanied by a letter of instruction to do so. Please mail this information to: IRA Services, P.O. Box 7080, San Carlos, CA 94070-7080.

How do I convert my Traditional IRA to a Roth IRA?

There are five key steps involved when converting a traditional IRA to a Roth IRA:

1. You must first open a Roth IRA account, if you haven’t already done so, by completing an application, in addition to any other applicable forms.
2. You must submit a government-issued photo ID and include a check for the Establishment and Annual Account Maintenance Fees.
3. You must complete a Roth Conversion & Recharacterization Request form indicating whether you want to do a full or partial conversion of your Traditional account.
4. If you choose to do a partial conversion, we need to know the asset(s) and the amount you wish to convert.
5. If you are converting non-cash assets, we must have an up-to-date verifiable valuation of the asset(s) you are converting. If you are converting real property, we must have an appraisal from a certified appraiser.

We will process these requests in the order we receive them. We cannot start the conversion until all of the forms and documentation have been provided. You will be notified if we need additional information. For the conversion to be effective for a given tax year, the valuation and the request (Roth Conversion & Recharacterization Request) must be dated in that year.

What are prohibited transactions?

Prohibited transactions are those that occur between your retirement account and a “disqualified” person or entity. Disqualified people include your spouse and other direct family members; such as, parents, grandparents, children, grandchildren and their spouses.  If a disqualified person has more than a 50 percent ownership in a business or investment opportunity you would like to invest in, it is considered a prohibited transaction. The following are examples of prohibited transactions:

• Lending money or engaging in some other extension of credit between an IRA and a disqualified person. For example, you cannot lend your spouse money from your IRA or personally guarantee a bank loan to your IRA.
• The direct or indirect furnishing of goods, services or facilities between an IRA and a disqualified person. For example, you cannot personally make improvements to a rental property held by your retirement account.
• Using the income or assets of your retirement account to benefit a disqualified person.   For example, you may not stay in a vacation property that is owned through your retirement account.
• When  a disqualified person, who is a fiduciary on the retirement account, uses the income or assets of his IRA in his own interest and for his own account. For example, if the owner of the IRA is a real estate agent, she can’t use her IRA funds to buy a house and earn a commission from the sale.
• Receiving any consideration from a disqualified person, who is a fiduciary for his account, from any party dealing with the IRA in connection with a transaction involving the income or assets of the plan. For example, you cannot pay yourself income from profits generated from the rental property held by your retirement account.

For more information about prohibited transactions, please refer to IRS Publication 590.

In what types of assets may I invest?

You may invest in almost any type of asset including real estate, promissory notes, private placements, trust deeds, mutual funds, limited partnerships, and LLCs. Other assets may be acceptable; you may submit any asset to IRA Services for acceptance.

IRA Services offers investments in the following asset classes and more:

Real Estate IRA
Promissory Notes & Trust Deeds
Private Equity IRA
Managed Futures IRA
Precious Metals IRA
Equity Crowdfunding IRA

Please visit our Alternative Assets page for more information.

What is the tax consequence of taking a distribution?

Distributions from a Traditional IRA, SEP or SIMPLE are treated as income to you. You will receive an IRS form 1099R each January summarizing the amount distributed and the taxes withheld, if any. In a Roth IRA, if you take a distribution after the account has been open five years, the distribution will not be included in your income. If taken within the five-year period, it will be taxable, like a Traditional IRA distribution.

What are the tax consequences of an “early” withdrawal?

An “early” withdrawal is generally one taken before age 59 1/2 in a Traditional IRA or within the first five years of a Roth IRA. In addition to the amount added to your income, the IRS may assess an additional 10% penalty. You should consult with your tax advisor regarding the tax consequences.

What is an IRA?

This is a program for an individual to develop his or her own retirement account. The earnings of the account grow tax-deferred until withdrawn or may be completely tax-free.

What kinds of IRAs does IRA Services offer?

We offer Traditional IRAs, Roth IRAs, SIMPLEs, SEPs and Coverdell Educational Savings Accounts.

• Contributions to a Traditional IRA may be deductible. Earnings are tax deferred and withdrawals are taxable
• The Roth IRA does not allow deductible contributions. Earnings are tax deferred and if held for five years or more, the withdrawals at retirement are tax-free
• Employers use SIMPLE and SEP accounts to provide retirement accounts for their employees, these allow for employer contributions
• Coverdell ESAs are setup for the elementary, secondary and post-secondary educational expenses of students. Contributions are not deductible and are limited to $2000 per year until the student turns 18.

In what types of assets may I invest?

You may invest in almost any type of asset including real estate, promissory notes, private placements, trust deeds, mutual funds, limited partnerships, and LLCs. Other assets may be acceptable; you may submit any asset to IRA Services for acceptance.

What type of IRA is best for me?

We recommend that you talk to your advisor to determine whether a Traditional, Roth or other IRA is best for you. If you have a pension plan where you work, your contributions will generally not be deductible, making the Roth IRA more advantageous, since the distributions are tax-free.

If you do not have a pension plan, you may find the deductibility of contributions in the Traditional IRA more advantageous.

Why do you have a minimum balance requirement?

At all times, a minimum cash balance of $500 must be maintained in the custodial cash account. This cash balance is part of your account and must originate from a contribution, rollover or transfer from another qualified plan or earnings or liquidations from within your account. Failure to maintain this balance may result in the distribution of the account to the participant.

How often will I receive a statement?

Statements are prepared quarterly as of March 31, June 30, September 30 and December 31. Statements are mailed during the month following the statement period end date. Beginning March 2015, quarterly paper statements will incur a $5.00 charge. Online statements will be available free of charge.

What fees are charged to set up and maintain a self-directed account?

IRA Services Trust Company’s fees are subject to change, with or without notice, and are grouped as follows:

Account Opening Fees:

• Establishment Fee
• Quarterly Account Fee
• Maintenance Fees

Quarterly Account Fee – Charged quarterly on the 1st day of each quarter
Quarterly Asset Fee – The amount is determined by the Asset Type on the first day of each calendar quarter (Jan. 1, Apr. 1, Sep. 1, Oct. 1)
Transaction Fees-Charged at the time the corresponding service is provided

Disbursement Fee for cash disbursements from your account:

• Asset Purchase Fee (based on Asset Type)
• Re-Registration Fee (based on Asset Type)
• Roth Conversion, Re-Characterization Fee
• Invoice Fee – Applied when there is insufficient cash in the account to collect outstanding fees
• Paper Statement Fee $5.00 per statement (effective January 1st, 2015, charge with 1st quarter 2015 statement)

Asset Types are generally defined as follows:

Type 1 = Mutual funds, public stocks and other publicly traded securities
Type 2 = Partnerships, Public Limited Liability Companies, promissory notes, trust deeds, precious metals
Type 3 = Real estate, including land and income-producing property
Type 4 = IRA LLCs (Private, Single-Member or Family IRA LLCs) – Effective January 1st, 2015

Where are my funds held when not invested, and are they insured?

Your funds are held in an FDIC-insured, interest-bearing savings account at a depository institution (bank), until your funds are invested. The interest rate you receive is set by the Board of Directors based on the rates for similar accounts at money center banks.

You may contact IRA Services Trust Company for the current interest rate.

Is IRA Services Trust Company regulated?

Yes. We are a non-depository trust company regulated by the State of South Dakota’s Division of Banking. To see our credentials, go to South Dakota’s Department of Labor and Regulation (dlr.sd.gov) and click on “Banking Regulation”, then “Trust Companies” then click on the Listing of Trust Companies Licensed to Do Business in South Dakota.

What if I have reached 70½, but I have don’t have enough cash in my account to take the RMD?

In this event, you have three options:

• Request a liquidation of assets in time for the custodian to issue a check representing the RMD. Since the amount of time that it takes to liquidate an asset can be anywhere from a few days to a few months, you must contact IRA Services Trust Company in time to complete the liquidation.
• Take the distribution from another retirement account, of the same type, from another custodian.
• Take distribution of all, or a fraction, of an asset held in your account. Since this requires a re-registration of the asset into your name, you must contact IRA Services in time to complete the re-registration.

How is my RMD calculated?

IRA Services Trust Company, as custodian, will calculate and notify you of your RMD. We use the formula provided by the IRS to make this calculation. The formula is based on the Fair Market Value (FMV) of your account at the end of the prior year, plus any distributions in the last 60 days of that year, divided by your Life Expectancy Factor, found in the Uniform Life Table in IRS Publication 590.

What is a Required Minimum Distribution, and when must I take it?

To understand RMDs, it is helpful to know that withdrawals from a retirement account are called “distributions.” The IRS requires account holders to withdraw a certain amount from their retirement accounts (except for qualifying distributions from a Roth IRA), beginning in the calendar year in which they turn 70½ and continuing every year, thereafter. This amount is referred to as a required minimum distribution. The RMD must be received by December 31, except for the year in which the account holder turns 70½, when it may be taken as late as April 1 of the following year. If an account holder does not take their RMD in time, the IRS will impose a significant penalty. For questions regarding exact penalty amounts, please check with your tax advisor.

Are there any early distribution exceptions?

Yes. Generally, you may be able to take early withdrawals without penalty in the following circumstances:

Unreimbursed Medical Expenses– If your medical expenses are more than 7.5 percent of adjusted gross income for the current year.

Medical Insurance- If you lost your job, received unemployment compensation and paid medical insurance for yourself, your wife or your dependents, you might be able to withdraw the amount paid for the insurance provided you did not receive the distribution more than 60 days after finding a job.

Disability- If a physician determines you cannot participate in any substantial activity due to physical or mental conditions.

Beneficiary Status- Your account can be distributed to your designated beneficiaries without penalty, before the age of 59 1/2.

Higher Education Expenses- If you paid expenses for higher education during the year, part (or all) of any distribution may not be subjet to the 10 percent tax penalty.

First Time Homeowner– You can make an early withdrawal from a self-directed retirement account if you use the money to purchase, rebuild or build your first home. The distributions are limited to $10,000 and must be withdrawn no more than 120 days after making the purchase.

Rollover Into Another Qualified Plan– If the withdrawal is rolled over into another qualifying retirement plan within 60 days, it is not subject to the 10 percent early withdrawal penalty.

Annuity Distributions– Withdrawals can be made from a traditional IRA that are part of a series of substantially equal withdrawals that will occur over your lifetime. You must use an IRS-approved method to calculate these withdrawals. These equal payments must continue for at least five years, or until age 59½, whichever is later. That means if you start these withdrawals at age 57, for example, they must stay the same until age 62. There is a one-time change you can make to the amount withdrawn.

Distribution exceptions are subject to change. Please seek assistance from an advisor.

How do I take a distribution?

You can take a distribution by logging into your account to complete an online Distribution Request form or by submitting the printed form, which you’ll find here.

How often are distributions allowed?

Distributions are generally made monthly. However, you may take a distribution more or less frequently.