Self-Directed Roth IRA FAQs - YouTube

Hi there, John Bowens again with Equity Trust Company. In this segment we're

going to be talking about seven of the most common frequently asked questions

pertaining to a self-directed Roth IRAs. Let's go to the whiteboard. So number

one is what is a self-directed Roth IRA? Well this is pretty simple. Self-directed

Roth IRAs are really no different than a Roth IRA with any other financial

institution. When we say self-directed, that's merely an industry term. It

indicates to you that you can self direct your own Roth IRA into really any

asset class that you see fit for your retirement plan. That could be stocks,

bonds, mutual funds. That could be in the case for many of our Equity Trust clients

real estate, buying rental properties, flipping houses, making loans secured by

real estate, investing in venture capital or small business startups, investing in

precious metals, cryptocurrencies or digital currencies if you will, and a wide

array of other alternative investments. So again self-directed Roth IRA means

you can self direct. You can take control of your own retirement plan. Number three

is who can set up a self-directed Roth IRA. Well this is one of the great things

that every American, assuming that they are eligible, can have a Roth IRA. That

could be folks that are in way past their retirement years could have a Roth

IRA. You have to meet the eligibility requirements. So what are the eligibility

requirements? Well the first thing to know is that with a Roth IRA, you have to

have earned income, so you have to have earned income in order to make

contributions to a Roth IRA, and then you have to make sure that you don't make

too much money. This is what's called modified adjusted gross income limits

and we're not going to get into the details in this short video. You can

check with your CPA or accountant to determine if you make too much money to

do a direct contribution to a Roth IRA. Again these are called modified adjusted

gross income limits. In other words if you make too much money you can't make a

direct contribution to a Roth IRA .There is a little known tactic used called a

backdoor Roth IRA check with your CPA or tax accountant or tax attorney to verify

that you can do this but you could potentially contribute to a traditional

IRA and then convert the funds over to Roth IRA if you make too much money and

are being told that you can't contribute directly to a Roth IRA so in other words

just about everyone in the United States can have a Roth IRA if you do it

properly. The next question is how much can be contributed to a Roth IRA well

this is gonna be dependent on your age. The contribution limits are as follows:

When under the age of 50, in the tax year 2019, you can contribute up to $6,000

when you're 50 and over you can contribute up to $7,000. They call that a

$1000 catch-up provision when you're 50 and over, and you can contribute all the

way up into your later later years providing that you have earned income

another great thing about the Roth IRA is there are no required minimum

distributions for the account holder so for those that have a traditional IRA

and you're familiar with the 70 1/2 required minimum

distributions with a Roth IRA there are no RMDs you're not forced to take money

out of the account. Keep in mind that with these contributions earnings within

the plan can be unlimited. So to give you an example, we have a client here at

Equity Trust Company that in one year's time they took their $500 Roth IRA

through investing in real estate and grew it's nearly fifty thousand dollars.

They didn't make excess contributions because again earnings within the Roth

IRA are pretty much unlimited. The next question is are Roth IRA contributions

tax-deductible?

They're not tax-deductible. Now you might

look at that and say well I'm not really sure that I would want a Roth IRA if I

don't get a tax deduction. I'm used to getting tax deductions when I make

contributions. I say the great thing about a Roth IRA is when you put money

in, it's after-tax you don't get a tax deduction, but it grows tax-free through

all of your earnings and then when you take the money out after 59 and a half

providing that you've seasoned the account for five years, it's all tax-free

earnings. It's all tax-free money coming out of the Roth IRA. In other words you

pay taxes on the seed so you don't have to pay taxes on the much larger crop

later on in your retirement years after the qualified retirement age of 59 and a

half so what are some advantages of a self-directed Roth IRA well of course

with a self-directed IRA, with just about any financial

institution, you can self-direct into into stocks and mutual funds but what's

great about the self-directed Roth IRA with Equity Trust is you have many many

different options. Although we don't sell investments or solicit investments or

show you where to invest or how to invest, you can leverage your own

knowledge and expertise so if you have an expertise with flipping real estate

or buying rentals or partnering with other investors through real estate

joint ventures or venture capital or small business startups, precious metals,

digital currency, whatever it is that you're good at or you want to get good

at, you can do this with a self-directed Roth IRA providing that you follow the

rules and all of the regulations. So that would be the first advantage with the

self-directed Roth IRA is that you can invest in just about anything and then

the second advantage would be what we already sort of talked about which is

the tax nature associated with the self-directed Roth IRA. It's seeded with

after-tax money. It grows tax-free and distributions are

tax-free and so when we talk about the tax-free nature of the Roth IRA let me

give you an example or representation.

I have two clients here at Equity Trust

Company. A husband and wife and they have 13 rental properties in their Roth IRAs

six rentals in one Roth IRA seven rentals in the other Roth IRA

husband and wife they're generating over a hundred and ten thousand dollars in

net tax-free income every single year in their Roth IRAs and because it's a Roth

IRA and they're over 59 and a half the great thing is that a

hundred and ten thousand dollars can be distributed and it never hits their 1040

as ordinary income taxes. It's tax-free cash flow. What's more powerful than that?

Last but not least, how do I open a self-directed Roth IRA. Well it's a very

straightforward process here at Equity Trust Company. You can simply log online

through our website you can start the application process or better yet you

can call in and speak to one of our representatives and they can help you

establish in fund this self-directed Roth IRA maybe you have a Roth IRA with

another financial institution you want to transfer over into the self-directed

Roth Equity Trust you can do that. Maybe you have funds from a Roth 401k you want

to roll over to the Roth IRA or maybe you just want

to make a one-time contribution. We talked about the contribution limits of

$6,000 when you're under 50 and $7,000 when 50 and over you could potentially set up

a brand-new Roth IRA providing you're eligible and make a direct contribution

To learn more you can go to our website and get more details on establishing an

account or you can give us a call directly. We'd encourage you as well to

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