Roth IRAs offer several unique benefits that traditional IRAs do not. Contributions are made after tax, can be made after you reach 70 1/2 years of age, and distributions are not required by that age, either. Additionally, all earnings grow tax-free—and can be withdrawn at the age of 59 1/2 years with no tax implications, provided the account has been funded for five years.
Why consider self-directing a Roth IRA?
When you choose to self-direct retirement plans such as a Roth account, you take control of your own retirement funds and investing decisions. Doing so gives you the freedom to choose many diverse alternative assets to build retirement income, based on what you know and understand. These reasons and more are why individuals choose to convert existing funds and assets in traditional IRAs into self-directed Roth IRAs.
In a recent blog, we discussed the preliminary steps and documentation, such as current valuations of assets, needed to convert investments into a self-directed Roth IRA. This article addresses how Advanta IRA works with you to ensure the process is seamless and remains in compliance with IRS rules and regulations.
Why Choose Advanta IRA?
When you choose to work with Advanta IRA, you are paired with your own client services representative who helps you complete this step-by-step process and continues to work closely with you throughout your relationship with us. You receive unsurpassed, personal service in the administration of your accounts. This is critical in that it gives you more time to research potential investments instead of worrying with the administrative details.
Submitting Documentation for Conversions
First, you must obtain current valuations of the assets in your account that you wish to convert. After you have obtained the proper valuation of the assets in your existing IRA, the next step is to submit the necessary forms and documentation for the conversion to an Advanta IRA self-directed Roth account. There are four main items we need to convert the assets.
Roth Application: Unless you already have a Roth account established with Advanta IRA, you must fill out an application to open this self-directed account. You can find that document here by choosing either our Atlanta or Tampa location. After you submit the original, signed application and fee disclosure form, we provide you the new account number, and you can begin the process of converting the assets.
Traditional to Roth Conversion Form: This form identifies the assets to be converted. You can obtain the form from by contacting us or download it here and choose our Atlanta or Tampa location.
Valuation Documentation: When submitting the Traditional to Roth Conversion Form, you must also submit the necessary documentation that reflects the current fair market value (FMV) of the asset(s). If you’re converting publicly traded cash or securities, the administrator or custodian can provide FMVs by looking at the markets to determine the value on the day of the conversion. However, assigning FMVs to other alternative investments in self-directed accounts can be somewhat complicated and require a qualified independent, third party to assign FMVs.
Transfer Documents: The type of investment determines which documents are needed to transfer the ownership and title of the asset from the traditional IRA to the self-directed Roth account. For instance, when converting real estate, you must have a deed prepared that transfers property from the traditional account to the Roth. With mortgages, promissory notes, and private placements, it might be necessary to have an assignment drafted that transfers the interest in the asset from the traditional to the Roth account.
When converting any asset, first consult with Advanta IRA to determine what documentation is needed and to make sure that the document (whether a deed, an assignment, or otherwise) is properly worded. One of our representatives needs to execute any transfer document.
The Advanta IRA Advantage
This is where you experience the advantage of working with Advanta IRA. Those familiar with self-direction probably have a clear grasp on the transaction process outlined above. Beginners may feel a bit intimidated—but that’s where your personal client services representative comes in. They are here to help guide you through the entire process to pave the way for you to take control of your retirement future. Regardless of your level of experience in self-directed investing, leave the administrative details to us. Your focus is to find what you know best and invest.
If you have questions about this article or wish to learn more about self-directed IRAs and other plans, please contact Scott Maurer, director of business development of Advanta IRA. He may be reached by calling (800) 425-0653, ext. 1123.