Self-directed IRA and Individual 401(k) Plans
What are Self-Directed IRAs and Individual 401(k) Plans
Individual Retirement Accounts (IRAs) and Individual 401(k) Plans (often referred to as Solo-Ks) are all self-directed retirement accounts because clients and their advisors choose the IRA Custodian they wish to work with.
However, clients and their advisors are often frustrated by the limited asset classes administered or allowed by most IRA Custodians. They want more investment options and more control over the retirement account.
What is a Self-Directed IRA or Individual 401(k) Plan Custodian?
Self-directed IRA or Individual 401(k) Plan Custodians (“Directed Custodians”) provide clients and their advisors with more control and flexibility in choosing investments. Directed Custodians allow clients (and, if so authorized by clients, their advisors) to select and invest in non-traditional, non-publicly traded investments, often referred to as alternative investments, that can potentially provide greater diversification and higher returns.
Get Started - Take Back Control
Choose a Self-Directed IRA and 401(k) Plan
Select the Self-Directed Individual Retirement Account and/or Self-Directed Individual 401(k) Plan (Self-Directed Solo-K) best suited for the client's goals and objectives (or that the client will transfer to Exeter Trust Company). Exeter Trust administers the following Self-Directed IRAs and Individual 401(k) Plans:
- Traditional IRA
- Traditional IRA for Kids
- Rollover IRA
- Inherited IRA
- Roth IRA
- Roth IRA for Kids
- Roth Conversion IRA
- SEP-IRA
- SIMPLE IRA
- Individual 401(k) Plan or Solo-K
Choose the Non-Traditional Investments or Alternative Investments
Choose the non-traditional investments the client wishes to purchase inside their retirement account. Click here to view the types of non-traditional investments or alternative investments administered by Exeter Trust Company as the Directed Custodian.
Non-Permissible Investments
The US Tax Code prohibits certain assets from retirement accounts, including sub-chapter “S” corporations, life insurance policies and collectibles.
Choose a Directed IRA Custodian
Clients and their advisors should select a Directed IRA Custodian that is best suited to administer and custody the retirement account based upon their expertise and experience in processing, holding and administering the non-traditional investments selected by the client. You must be careful to select a Directed IRA Custodian that can custody (hold) the specific type of non-traditional or alternative investments in which you intend to invest.
Funding a Self-Directed IRA or Individual 401(k) Plan
Clients can fund their account by making a contribution to the IRA or 401(k) Plan or by transferring an existing account to Exeter Trust Company.
Transfer a Self-Directed IRA or 401(k) Plan
Transfer an existing account from the current custodian to Exeter Trust. There are three ways to transfer accounts and the assets held in the accounts from the current custodian to Exeter Trust.
IRA-to-IRA Transfer
The most common method used in transferring IRAs and assets held in the IRAs is an IRA-to-IRA transfer. Assets held by the current custodian are transferred directly to Exeter Trust and not to the client. IRA-to-IRA transfers are non-reportable transfers. There are no limits on the number of IRA-to-IRA transfers that can be initiated by the client.
IRA Rollover
A less common method used in transferring IRAs and the assets held in the IRAs is an IRA Rollover. Assets held by the current custodian are distributed to the client. The client must rollover the assets to Exeter Trust within sixty calendar days to avoid a taxable distribution. IRA Rollovers are reported by the current custodian on IRS Form 1099-R. Exeter Trust will report IRA Rollovers received within the required sixty calendar day rollover period on IRS Form 5498. IRA Rollovers are limited to one rollover in any twelve-month period. IRA Rollovers are used when an IRA Transfer will take too long.
Direct Rollover
Transferring assets from a pension, 401(k) or other qualified retirement plan can be completed through a direct rollover (trustee to custodian) or a rollover (trustee to client to custodian). The most common method is the direct rollover.
Self-Directed Accounts
Self-Directed IRAs and Individual 401(k) Plans are client directed retirement accounts. Clients are solely responsible for the evaluation and selection of investments purchased in the retirement accounts. Clients are also free to delegate such decisions to their financial advisors. Exeter Trust Company does NOT provide, offer, sell, recommend, or endorse any investment products, services, sponsors, or financial advisors, and it does NOT provide any legal, tax, investment, or financial advice.
Investments Not Guaranteed or Insured
Investments evaluated, selected and purchased by clients in Self-Directed IRAs and Individual 401(k) Plans or Solo-Ks are NOT guaranteed or insured by the FDIC, by any government or regulatory agency, or by Exeter Trust. Clients assume all risks related to investments selected and purchased in Self-Directed IRAs, Individual 401(k) Plans, and custody accounts.
Investment Risks
Investments may result in loss of principal. It is crucial that clients and their advisors thoroughly research and understand the risks associated with each investment before making an investment decision. Clients must consult with their own legal, tax, investment, and financial advisors before proceeding with any transaction. Exeter Trust assumes NO responsibility or liability for any risks or losses resulting from investments selected and purchased in Self-Directed IRAs, Individual 401(k) Plans and custody accounts.
INVESTMENTS NOT FDIC INSURED | INVESTMENTS NOT GUARANTEED | INVESTMENTS MAY LOSE VALUE
THIS INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY
AND SHOULD NOT BE CONSTRUED AS PROVIDING LEGAL, TAX, OR INVESTMENT ADVICE