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IRA Financial Trust Company will assist you with making a Roth IRA conversion in connection with your Self-Directed Roth IRA. A conversion to a Roth IRA results in taxation of any untaxed amounts in the traditional IRA. However, the 10% early distribution penalty will not apply.

You can convert your traditional IRA to a Roth IRA by:

  • Rollover – You receive a distribution from a traditional IRA and contribute it to a Roth IRA with IRA Financial Trust within 60 days after the distribution (the distribution check is payable to you);
  • Trustee-to-Trustee transfer – You tell the financial institution holding your traditional IRA assets to transfer an amount directly to IRA Financial Trust, the new Trustee (IRA custodian) of your Roth IRA. The distributing Trustee may achieve this by issuing you a check payable to the new Trustee – IRA Financial Trust Company;
  • Same Trustee transfer – If your traditional and Roth IRAs are maintained at the same financial institution, you can tell the Trustee to transfer an amount from your traditional IRA to your Roth IRA.

Below are some important points to consider when deciding whether to convert your Traditional IRA to a Self-Directed Roth IRA.

  • Do you have the ability to pay income taxes on the money you convert from your Traditional IRA?
  • Based on your income tax bracket, does it make sense to pay the entire tax due in the current year? If you expect your rate to go up, converting may be for you. If you think it will go down, then the opposite holds true.
  • Do you anticipate withdrawing Roth IRA funds for personal use within five years of conversion? If so, you may face taxes and penalties if you withdraw within five years of a conversion.
  • How confident are you in the projected investment returns relating to your IRA? The more confident you are that the investment will go up significantly in the future, the more attractive a Roth IRA conversion will be.

Converting a Traditional IRA to a Roth Self-Directed Roth IRA has a number of tax advantages and can offer you multiple tax and investments benefits.

To learn more about converting your Traditional IRA to a Self-Directed Roth IRA, please contact one of our Self-Directed retirement experts at 1-800-472-1043.