Frequently Asked Questions

A self-directed IRA is a retirement account that puts you in control of your IRA investment. Unlike most retirement accounts whose investments are chosen by an account and/or fund manager, you choose what to invest in with a self-directed IRA. This allows you to diversify your retirement portfolio’s investment and potentially maximize returns.

The cash held in your STRATA custodial account is FDIC-insured up to $250,000, but any other investments held by your IRA are not FDIC-insured, are not guaranteed by STRATA and may lose value.

While self-directed IRAs can be a safe way to invest retirement funds, investors should be mindful of potential fraudulent schemes when considering a self-directed IRA. Investors should understand that the custodians and trustees of self-directed IRAs may have limited duties to investors and that the custodians and trustees for these accounts will generally not evaluate the quality or legitimacy of an investment and its promoters. As with every investment, investors should undertake their own evaluation of the merits of a proposal and should check with regulators about the background and history of an investment and its promoters before making a decision. Learn more about how to protect yourself from fraud.

Yes. As with any IRA custodian, STRATA is required to file Form 5498 with the IRS each year as well as Form 1099R (if applicable).

You can have a Traditional or Roth IRA whether or not you participate in another retirement plan through your employer or business. However, you might not be able to deduct all of your Traditional IRA contributions if you or your spouse participates in another retirement plan at work. Roth IRA contributions might be limited if your income exceeds a certain level.

As a directed IRA custodian, STRATA does not sell investment products or provide investment advice. Custodians do not provide investment, tax or legal advice, so clients needing these services are urged to contact their professional advisor.

Due to the diverse nature of investments, we offer several convenient investment checklists to help you gather the information necessary to direct your investment. Please visit our Investment Options Page to access the investment checklist that fits your needs.

STRATA allows you to diversify your self-directed IRA with investments such as real estate, precious metals, crowdfunding, trust deeds, brokerage accounts, private equity and much more.

Prohibited IRA investments include collectibles like artwork, coins (except for certain U.S. coins and bullion), stamps, rugs, antiques, beverages, S-corp stock, gemstones and metals (except for certain U.S. coins and bullion) and insurance contracts. If you have a question about a particular investment, please contact us.

Yes. STRATA will not process certain investments including, but not limited to, timeshares, foreign real estate or property purchased through an auction or tax sale.

No. The earnest money deposit must be funded by your STRATA account. You cannot use personal money for the deposit and then be reimbursed later. You will need to send a copy of the contract or purchase agreement to STRATA along with an Earnest Money Deposit Authorization to remit the earnest money from your IRA to the title company or closing attorney.

Neither you nor any other disqualified person can have any personal use or benefit of the property while it is held in your retirement account. The property must be purchased for investment purposes only.

Yes. If real estate is being acquired through an entity such as an LP or LLC and your IRA will hold an equity interest in the entity, please refer to and provide the items shown on STRATA’s Investment Checklist for Private Equity. If your IRA will be originating a loan that will be secured by a mortgage or deed of trust, please refer to and provide the items on STRATA’s Investment Checklist for Private Debt.

Yes, but only if the other owners are not disqualified persons. The deed must also specify the undivided interest owned by each party.

Yes, an IRA-owned property may be debt-financed, but only with a non-recourse note. The property must be the only collateral for the loan, and all payments must be made from your IRA. You cannot guarantee the loan personally or make payments on the loan out of pocket. In addition, debt-financed property in an IRA may be subject to unrelated business taxable income (UBTI). For more information, please consult your tax advisor.

If you choose to carry liability insurance on the property, the named insured must be STRATA Trust Company Custodian FBO (Account holder name) IRA (Account #), and the annual premium must be paid directly to the insurance company by your IRA. You cannot add the IRA property to your personal homeowner’s policy or list your IRA as an additional insured.

After the initial purchase you will be required to provide either an updated appraisal or our Real Estate Valuation Form completed by an appraiser, broker or realtor on an annual basis. In addition, a new appraisal will be required for any taxable event such as an in-kind distribution of the property or Roth IRA conversions.

Yes. All rental income must return to your IRA. STRATA requires you to appoint an unrelated third party to act as the property manager for income-producing property. The property management agreement will be provided by the property manager and will be signed by you and the property manager. Your third-party property manager may also pay expenses from rents received if STRATA is provided with a monthly or quarterly report of income received and expenses paid. The report should accompany the property manager’s deposit check (if any).

No. You must appoint a property manager to handle all property servicing functions, and you are responsible for monitoring the performance of the property manager. Please refer to STRATA’s Investment Checklist for Real Estate.

All earnest money deposits, insurance premiums, taxes, debt payments or other expenses of the property (including any improvements) must be paid by the IRA to an unrelated third party. A copy of the invoice or tax notice must be provided to STRATA along with a completed and signed Expense Payment Form. You may not pay for an expense out-of-pocket or on a credit card and remit the statement for payment. STRATA will not process payments to a credit card issuer.

An IRA-owned property may be rented or leased, as long as the rental income flows back to the IRA. Property that is rented or leased requires a third-party property manager which cannot be the IRA owner. Also, keep in mind that your IRA will need to retain enough uninvested cash to cover all expenses such as property taxes, improvements and even the earnest deposit.

The property must be held in the name of STRATA Trust Company Custodian FBO (Account holder Name) IRA (Account #). This is how the purchase contract, title commitment/insurance, deed and liability insurance must be titled.

You may withdraw the property from your account as an in-kind distribution (at the current market value) and pay any taxes and/or possible penalties if you are under age 59½. You will need to provide STRATA with a completed and signed Distribution Form and a deed prepared for STRATA’s signature that conveys the title of the property from your IRA to you individually. You will also need to provide either an updated appraisal or our Real Estate Valuation Form completed by an appraiser, broker or realtor.

Only if the property has already been foreclosed upon and you can provide all the items on STRATA's Investment Checklist for Real Estate. However, STRATA will not process a foreclosure purchase directly through an auction or tax sale.

No. Property that you or a disqualified person has ever owned is not eligible to be purchased by your IRA since this would be a prohibited transaction.

In general, Internal Revenue Code Section 4975 defines a prohibited transaction as a transaction between a plan (your account) and a disqualified person. Generally, "disqualified persons" are defined to be the account holder, other fiduciaries, certain family members (lineal descendants and spouses of lineal descendants) and businesses under the account holder’s (or disqualified person’s) control. The prohibited transaction rules prohibit an IRA from acquiring a piece of property which will be purchased from or used personally by the account holder or other disqualified persons.

Please refer to our Real Estate Sales Checklist for complete information on selling property owned by your IRA.

You may purchase vacant lots, raw land and income-producing property such as rental houses, condominiums or commercial real estate.

Yes. Once the property is sold, you may carry the note and deed of trust/mortgage within your account. The principal and interest payments will be deposited into your STRATA account, and you can reinvest the cash however you choose. Please see STRATA’s Investment Checklist for Private Debt.

The contract or purchase agreement must list STRATA Trust Company Custodian FBO (Account holder name) IRA (Account #) as the buyer. You (or other disqualified persons) cannot be listed as the buyer and then later assign the contract to your IRA.

STRATA will not process investments including, but not limited to, single-member entities, family-owned entities (owned 50% or more by family members), foreign entities, joint ventures and/or oil and gas working interests. Please contact us prior to establishing your account to be sure your private equity investment is something STRATA can process.

If your IRA invests in an entity that you or certain family members own or control (whether controlled individually or as an officer of a corporate general partner), the transaction could be a prohibited transaction under Internal Revenue Code Section 4975. If you or another disqualified person is an officer or director of an entity (or an officer or director of a corporate general partner, managing member, etc.), and you will collectively own 10% or more of the entity, STRATA Trust Company will require you to obtain a legal opinion from a tax attorney addressed to you in which the transaction is discussed in detail prior to processing your investment instructions. If you or any family member or disqualified persons collectively will own 50% or more of the entity, STRATA will not process the investment even if you are able to obtain a legal opinion.

Internal Revenue Code Section 4975 defines a prohibited transaction as a transaction between a plan (your account) and a disqualified person. In general, "disqualified persons" are defined to be the account holder, other fiduciaries, certain family members (lineal descendants and spouses of lineal descendants) and businesses under the account holder’s (or disqualified person’s) control. Please review the Code for specific information and definitions. Other useful resources are Publications 560 and 590.

STRATA will not process an investment where 50% or more of the entity will be owned by your STRATA account and other disqualified persons (including family members).

Limited partnerships, limited liability companies and other entities that carry on an unrelated business or borrow funds to finance the acquisition of property may generate unrelated business taxable income (UBTI). UBTI is generally reported on Schedule K-1 issued by the entity. If the UBTI attributable to your account exceeds $1,000 for any taxable year, IRS Form 990-T must be filed along with the appropriate amount of tax, payable from your account. STRATA does not monitor UBTI and does not prepare Form 990-T. If the tax is applicable, you must prepare, or have prepared, Form 990-T and forward it to STRATA along with an Expense Payment Form to pay the tax from your account. If you are required to file Form 990-T, you must apply for and utilize an Employer Identification Number (“EIN”). You may not use STRATA’s EIN or your Social Security number. For more information on UBTI, please refer to IRS Publication 598 and/or consult with your tax advisor.

Types of private equity investments that STRATA will process include limited partnerships (LPs), limited liability companies (LLCs), C-corporation stock and real estate investment trusts (REITs).

STRATA does not process unsecured loans to individuals or loans secured by vehicle titles, foreign real estate and/or personal property. If you are uncertain whether STRATA can process the type of debt you have in mind, please contact us first.

If your IRA loans funds to certain family members (lineal descendants and spouses of lineal descendants) or an entity that you or certain family members own or control (whether controlled individually or as an officer of a corporate general partner, managing member, etc.), the transaction could possibly be a prohibited transaction under Internal Revenue Code Section 4975. STRATA’s policy on this issue is that if you or another disqualified person is an officer or director of the borrowing entity (or an officer or director of a corporate general partner, managing member, etc.), and you will collectively own 10% or more of the entity, then you will need to obtain a legal opinion from an ERISA or tax attorney addressed to you in which the loan transaction is discussed in detail prior to STRATA processing your investment instructions. If you, any family member or disqualified persons collectively will own 50% or more of the borrowing entity, STRATA will not process the investment even if you are able to obtain a legal opinion.

Yes. As a directed custodian, STRATA does not provide these services and requires the account holder to either enter into a Debt Servicer Agreement with a third party or to act as his/her own agent. Please review the debt checklist for complete details and requirements.

Payments from the borrower or servicing agent should be sent to STRATA along with a completed Deposit Certification. If a payoff is being wired to STRATA, the borrower or servicing agent should provide a copy of the Deposit Coupon via email or fax.

You will need to provide STRATA with a request for reconveyance, satisfaction of mortgage, assignment, transfer of lien, etc., along with a letter of instruction for STRATA to sign the instrument and send all original loan documents to the title company or agent handling the payoff or sale.

You may direct your servicing agent to initiate foreclosure proceedings. Please review STRATA’s Real Estate Processing Checklist for the items you will need to provide in order for your account to hold title to any property acquired through a foreclosure.

Types of private debt investments that STRATA will process include, but are not limited to, notes secured by deeds of trust/mortgages/security agreements, crowdfunding debt offerings and convertible notes.

Yes. You may direct your IRA to invest through crowdfunding portals to participate in a wide range of opportunities including real estate, private equity, venture capital and more.

An Investor Bulletin published by the SEC provides specific details and investor education about crowdfunding.

You should first contact the crowdfunding portal to ensure they will accept investments from a self-directed IRA. If so, the crowdfunding portal will need to provide STRATA with certain investment documentation to be sure our systems and procedures are operationally compatible. Then, provide STRATA with the proper investment authorization documents to send funds from your IRA to the crowdfunding portal.

No. You should not receive any personal benefit as a result of an investment made by your IRA or it will be considered a prohibited transaction under IRC Section 4975.

Crowdfunding generally refers to a financing method in which money is raised through soliciting relatively small individual investments or contributions from a large number of people.

Yes. Your IRA can establish a trading account through a futures commission merchant (“FCM”) where you or your broker can place trades in commodities, futures, and forex. Please refer to our Futures Investment Checklist for more details.

You may either trade your own account, or you may designate a broker or other third-party to trade futures on behalf of your STRATA account.

No. If your futures account requires additional funding, the funds must be sent directly from your STRATA cash account. If your STRATA account does not have sufficient funds, then you will need to transfer funds from another IRA or Qualified plan to STRATA, or you may make your IRA contribution directly to STRATA (if eligible). Then you can direct STRATA to send funds directly to your futures account.

Yes. Please refer to our Private Equity Investment Checklist for more details of directing an investment into a commodity pool.

You may find helpful resources by visiting the websites of the US Commodity Futures Trading Commission (www.cftc.gov) and the National Futures Association (www.nfa.futures.org).

Step 1: Open an account. ● To open an IRA, visit our Open an Account page or download the IRA kit on our Forms page for the type of IRA you wish to open (Traditional, Roth, SEP or SIMPLE IRA). ● Complete the forms and submit them either electronically or by U.S. mail and include your payment of IRA Fees and the Precious Metals Storage Fee. You may pay by check or credit card. If by credit card, please complete our Credit Card Charge Form. If payment is not included, the fees will be deducted from the transfer, rollover or contribution funds prior to STRATA processing the purchase. Note: The depository storage fee is an annual fee due at the time the storage account is opened and annually in conjunction with your IRA renewal fee. Both fees will be billed by STRATA at the time the IRA is opened and each year afterward during the anniversary month of the IRA account opening. Fees will not be prorated. Step 2: Fund your IRA with a rollover, transfer or contribution. IRA Transfer ● The IRA can be funded through an IRA to IRA transfer. Simply complete the Transfer Request Form included in the IRA Kit. ● Mail the completed and signed IRA Transfer Request Form to STRATA Trust Company 7901 Woodway Drive, Suite 200 Waco, TX 76712. 401(k) Rollover ● A direct rollover from a 401(k) or other qualified retirement plan is another way to fund your self-directed IRA. Contact the plan administrator to obtain the form(s) needed to request or authorize a direct rollover. IRA Contribution ● If eligible, you can make an annual IRA contribution to fund your Precious Metals IRA. See our IRA Annual Limits chart.Learn more about rollovers, transfers and contributions. Step 3: Once funds are available in your IRA, choose a precious metals dealer and place your trade. ● You determine the precious metals dealer you wish to use, and you will negotiate the precious metals to be purchased and place your precious metals buy order directly with the dealer. Step 4: Authorize STRATA Trust Company to remit payment for your purchase. ● To authorize, simply sign and date the dealer's precious metals order ticket or complete and sign our Precious Metals Investment Direction Form and submit with the order ticket. The order ticket must be itemized to show the type, quantity and price of the precious metals purchased. ● Fax it to STRATA at 512-495-9554. ● Upon receipt, STRATA will remit payment to the precious metals dealer and provide the dealer with instructions for delivery of the precious metals to the depository.

To qualify as IRA allowable precious metals and be accepted by STRATA, the following minimum fineness requirements must be met:

• Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure.
• Bars, rounds and coins must be produced by a refiner, assayer or manufacturer that is accredited/certified by NYMEX, COMEX, NYSE/Liffe, LME, LBMA, LPPM, TOCOM, ISO 9000, or national government mint and meeting minimum fineness requirements.
• Proof coins must be encapsulated in complete, original mint packaging, in excellent condition, and include the certificate of authenticity.
• Small bullion bars (other than 400-ounce gold, 100-ounce gold, 1000-ounce silver; 50-ounce platinum and 100-ounce palladium bars) must be manufactured to exact weight specifications.
• Non-proof (bullion) coins must be in brilliant uncirculated condition and free from damage.

To see examples of IRA-allowable gold, silver, platinum and palladium coins and bullion, please visit our Gold & Precious Metals section (see the "Types" tab).

Precious metals which do not meet the following minimum fineness requirements do not qualify as IRA allowable precious metals and will not be accepted by STRATA:

• Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure.
• Bars, rounds and coins must be produced by a refiner, assayer or manufacturer that is accredited/certified by NYMEX, COMEX, NYSE/Liffe, LME, LBMA, LPPM, TOCOM, ISO 9000, or national government mint and meeting minimum fineness requirements.
• Proof coins must be encapsulated in complete, original mint packaging, in excellent condition, and include the certificate of authenticity.
• Small bullion bars (other than 400-ounce gold, 100-ounce gold, 1000-ounce silver; 50-ounce platinum and 100-ounce palladium bars) must be manufactured to exact weight specifications.
• Non-proof (bullion) coins must be in brilliant uncirculated condition and free from damage.

The following list contains examples of precious metals that cannot be held in an IRA.

Any rare or collectible coin	Chilean Peso	Hungarian Korona
Austrian Corona and Ducat	Columbian Peso	Italian Lira
Belgian Franc	Dutch Guilder	Mexican Peso and Onza
British Brittania (pre-2013)	French Franc	South African Krugerrand
British Sovereign	German Mark	Swiss Franc

 

Your IRA-owned Precious Metals will remain in the custody of STRATA, and placed with your choice of one of the following third party depositories for storage and safekeeping:

• Brink’s Global Services (Salt Lake City) or
• Delaware Depository Service Company (Wilmington, Delaware)

More information about each depository can be found at www.delawaredepository.com and www.brinksglobal.com, respectively. The dealer you buy precious metals from may have a depository preference.  Please check with your dealer to determine which depository will be used.  You may not hold the Precious Metals yourself while owned in the IRA, nor can you select a different storage facility other than the depository options allowed by STRATA.

No. IRA-owned assets must remain in the custody of the IRA custodian (STRATA) until distributed or sold. This means that you can’t personally hold IRA-owned precious metals while in the IRA.  STRATA requires that your precious metals be stored with one of the third party depositories as outlined above. The IRS recently provided further guidance with regards to the "home storage" issue which you can review by visiting the link to the IRS website below: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-investments

We encourage you to do your own research and educate yourself before choosing a dealer and buying precious metals with your IRA funds. Few states have regulatory oversight of precious metal dealers. Therefore, it's important that you do your own due diligence to protect your retirement savings.

1. Use sites such as the Better Business Bureau (www.BBB.org) to find whether the dealer is accredited and rated, how long the dealer has been in business, and review the dealer's history of any consumer complaints or disputes. Be aware of any dealer that you can't find any information about.
2. Check to see if the dealer is a member of any industry trade groups such as American Numismatic Association (ANA), Professional Numismatics Guild (PNG), and Industry Council for Tangible Assets (ICTA). To be a member, dealers must agree to abide by a code of conduct and be willing to resolve customer disputes.
3. Be aware of dealers that use high pressure sales tactics in their sales calls to try to get you to do business with them - and don't reveal any personal information about your income, your age or your assets, including how much you may have in savings or retirement accounts.
4. Read the recent Precious Metal Fraud Advisory issued by the U.S. Commodity Futures Trading Association, and view the CFTC's consumer protection video on Precious Metals Fraud.
5. Be familiar with the different pricing terms (spot, bid and ask) and understand what they mean.

 

You will place your buy, sell or exchange order for Precious Metals with the dealer of your choice.  Once your transaction has been initiated with your dealer, you will need to complete and submit STRATA's Precious Metals Investment Direction and Disclosures form as directed.  This form is available in our Forms menu.

No, STRATA does not buy, sell or exchange precious metals. You will need to negotiate the purchase, sale or exchange of any precious metals through the broker of your choice.

As required by law, you may not take possession of or control your Precious Metals while held in your STRATA IRA. You may, however, take an “in-kind” distribution of precious metals from the IRA at any time. The distribution is a taxable event, which means it will be reported to the IRS and may also be subject to withdrawal penalties. As always, consult your tax professional regarding these matters prior to taking any action. To take an in-kind distribution of all or part of your Precious Metals, complete our IRA Distribution Request for Precious Metals form, available on our Forms menu.

The fair market value shown on your STRATA account statement and on our online Account Access portal is based on spot value, which is the current spot price multiplied by the ounces of fine metal contained in the coin or bar.  Spot values do not include any mark-ups, mark-downs, premiums or commissions. The actual precious metals type and quantity of a transaction may affect the price received for any given bullion item. Spot values should be used as an indication of value only and should not be construed as a firm bid price to buy by any broker or dealer. Please call your dealer for real-time pricing or information regarding their fees or commissions.

Yes. You may direct your IRA to purchase structured settlements or payment streams from secondary market annuities. Please refer to our Investment Checklist for Structured Settlements for more details.

Since your IRA purchased the structured settlement and is the registered owner, all payments must be deposited to your IRA to maintain its tax-deferred or tax-exempt status.

You will either need to contact the firm that sold the structured settlement to your IRA, or you may need to contact the insurance company directly.

A structured settlement is a tool utilized in the resolution of personal, physical injury claims. In certain circumstances the annuity owner may then sell all or a portion of his/her future income stream for a lump sum payment.

Yes. STRATA will process the purchase of publicly-offered investments such as public, non-traded REITs or BDCs, public LPs or public LLCs. Please refer to our Investment Checklist for Public Investments for more details.

Yes, but only if you direct the purchase through a trading account with a brokerage firm of your choice. Please contact us for more information on establishing a trading account since STRATA does not directly hold tradable securities.

You may choose any brokerage firm that will allow a third-party custodian to hold title to the account. Not all brokerage firms permit this, so please check with your broker prior to instructing STRATA to establish an account to trade securities.

You may request a recurring ACH contribution from your personal bank account by completing the ACH Contribution Authorization Agreement.

You may remit a wire, ACH or check directly to STRATA when making an IRA contribution. Please be sure to submit our Deposit Coupon at the time of deposit to ensure funds are deposited correctly. The deadline for making a prior year contribution is Tuesday, April 15, 2019.  (The deadline for residents of Massachusetts and Maine is Wednesday, April 17, 2019, due to the legal holiday.)

The most common methods of funding a self-directed IRA are by direct transfer, direct rollover or an IRA contribution. You may even use a combination of these options.

STRATA offers two account opening options: Option 1: Download and complete our IRA Account Kit for a Traditional, Roth or SEP IRA Option 2:  Submit your application through our secure online account opening portal

If you plan to fund your IRA via direct transfer or direct rollover, you will need to complete our IRA Transfer/Direct Rollover Request Form. Certain information regarding your current custodian is required to complete this form. If you plan to fund your IRA via an indirect rollover, please contact your current account custodian for instructions. Also, please be aware that rollovers are subject to certain IRS rules that limit your ability to roll over funds from an IRA over a 12-month period. Once the funds have been distributed to an individual, he or she must roll them into another qualified account within 60 days. Please be sure to submit your Deposit Certification at the time of deposit to ensure funds are deposited correctly.

STRATA will initiate your transfer request within two business days of receiving your instructions. Please be aware that the processing time frames vary from custodian to custodian. Cash-only transfer requests are usually processed within 3-5 business days. However, in-kind asset transfer requests may require additional processing time. The asset(s) must go through an administrative review process by STRATA, and additional documentation from you and/or the investment sponsor may be required.

A direct transfer is the movement of IRA funds or assets directly from one IRA custodian to another. Through a direct transfer, the IRA owner never takes possession of their retirement funds or assets. The main advantage of a direct transfer is that there is no tax liability or IRS reporting with the distribution. This is because funds are transferred from one institution to another. In most cases a direct transfer is a simpler option as it avoids having to comply with the 60 day rule and the possibility of incurring taxes and penalties.

It’s easy to request a direct transfer for your IRA funds or assets.

• If you don't already have an account with us, you’ll need to open an account and set up an IRA. Go to our Get Started section to open an IRA using our Online Account Opening feature or download the IRA account forms.
• If you’re an existing account holder, simply download our IRA Transfer Request Form.

 

A direct transfer usually takes about 10-14 days. This time frame may be reduced if you request overnight delivery, wire transfer of cash or make arrangements with your resigning IRA custodian to process via fax.

It’s important to remember when transferring assets in-kind (other than cash), the assets must be something that STRATA Trust Company will accept and hold. If the asset(s) to be transferred is property (directly-owned) or a private equity or private debt investment, please refer to the appropriate Investment Checklist and Form for that investment type. Direct transfers of publicly traded stocks, bonds and mutual funds require a brokerage account with any clearing firm or discount brokerage.

An IRA rollover is the movement of funds between two qualified retirement plans, such as from a 401(k) plan to an IRA, or from one IRA to another IRA. Rollovers may be subject to federal income tax unless all requirements are met (completed within 60 days and the same property is rolled over). Rollovers typically occur when you change jobs or retire and can take 2-6 weeks to complete. Rollover rules, which became effective in 2015, now limit each taxpayer to one IRA rollover during a 12-month period. Rollovers usually take place by one of these two methods: Indirect Rollover An indirect rollover is one method of transferring assets from a tax-deferred 401(k) plan to a Traditional IRA. With this method, the funds are actually given to you via check to be deposited into your own personal account. With an indirect rollover, it is then up to you to redeposit the funds into the new IRA within the allowed 60-day period to avoid penalty. If you choose to receive a direct payment of your funds, 20% of the funds may be withheld for taxes. You can recover the withheld amount if you deposit your assets into an IRA within 60 days — but you have to come up with the 20% withheld out of pocket. The deposit must be equal to the amount of your distribution, plus the 20% that was withheld. When you fund your Rollover IRA with 100% of your distribution, you will receive a refund for the withheld amount in the form of a tax credit when you file your tax return. If you do not make up the difference of the withheld amount, the IRS will consider it a distribution and will tax it as income. The amount may also be subject to an additional premature penalty tax if you are under age 59½. Direct Rollover By choosing a direct rollover, you can easily avoid the 20% withholding for taxes. With this method, the funds are actually made payable to your IRA custodian and may be mailed either to you or to your custodian. This allows for the funds to be rolled over directly from your employer’s qualified retirement plan into your IRA. Rollovers from retirement plans can be complicated. Consult your tax professional or contact us for assistance to make sure you understand and follow the rules.

The IRS limits you to only one 60-day rollover during a 12-month period when rolling from one IRA account to another IRA. In addition, the same property rule applies, which means that you must rollover the same property (cash or in-kind assets) that was distributed to you from the other IRA.

A direct rollover from an employer’s retirement plan generally takes 2-6 weeks, depending on how long it takes the plan administrator to process it.

You can request a distribution from another IRA and complete the rollover of the same cash or assets, generally in less time than it takes to complete a direct transfer. However, it is a reportable event which means the resigning IRA custodian will report the distribution on an IRS Form 1099. A distribution from your IRA is usually done either in the form of a check (if you've requested a liquidation) or as an in-kind distribution (if you requested re-registration of the assets). You then have up to 60 days to reinvest the funds or re-register the assets to your Rollover IRA. If the funds or assets are not rolled over within 60 days, taxes and possible penalties would be incurred. Important Note: A 2014 court ruling has changed the IRS's position regarding how often IRA rollovers may be completed. Since 2015, only one IRA-to-IRA rollover can be completed. Please review the One-Rollover-Per-Year Rule for more on this limit.

Whether you are retiring, changing jobs or separating from employment for any other reason, leaving a job can be the perfect opportunity to reevaluate your retirement plan needs. Moving your retirement funds to a Rollover IRA can seem like a daunting task, but it is really quite simple if you follow these easy IRA rollover rules: Step 1: Contact your plan administrator to get the distribution packet and complete the paperwork by selecting a direct rollover to STRATA. Step 2: If you’re not already an account holder, you’ll need to open an IRA. Just follow the easy steps outlined in the IRA Account Kit.   Step 3: Return the completed forms in the distribution packet to your plan administrator and provide a copy to STRATA.

Visit the IRS website to learn more about IRA Rollovers of employer retirement plans and IRA distributions.

A direct rollover is when you roll over from a qualified retirement plan and your plan administrator makes the rollover check payable to your IRA custodian, in which case it may be mailed either to you or to your custodian. By choosing a direct rollover, you can avoid the normal 20% federal withholding requirement for taxes. An indirect rollover is when your plan administrator makes the rollover check payable to you for deposit into your own personal account. With an indirect rollover, it is then up to you to redeposit the funds into the new IRA within the allowed 60-day period to avoid penalty. Also, an indirect rollover requires that your plan administrator withhold 20% for federal withholding taxes — and you must rollover the additional 20% withholding out of pocket. If you do not make up the difference of the withheld amount, the IRS will consider it a distribution and will tax it as income. The amount may also be subject to an additional premature penalty tax if you are under age 59½.

• When you retire, change jobs or separate from employment for any reason, you are entitled to receive a distribution of your 401(k), 403(b), 457 or Thrift Savings Plan retirement funds and rollover to an IRA.
• When you receive a distribution of cash and/or assets from an existing IRA, you have 60 days to complete the rollover of the same property in order to avoid taxes and possible penalties.

By rolling over an ex-employer’s retirement plan into a Rollover IRA, you maintain the tax-deferred status of your retirement account. Also, a Rollover IRA will allow you to consolidate all of your ex-employer’s retirement accounts into one IRA, making it easier to manage your retirement investments. A significant advantage of using a Rollover IRA versus leaving your retirement assets with an ex-employer is increased investment flexibility.   Other advantages:

• More Control

When the rollover process is complete, you’ll no longer be restricted by the rules and policies of your former employer's retirement plan. In addition, you can avoid potential problems seen with some retirement plans such as untimely statements, lack of account information, limited investment options and any risk of the plan getting tangled in a bankruptcy matter should the former employer encounter financial troubles.

• Avoid Withholding and the Tax Risk

If you request a check from your employer-sponsored retirement plan, your employer will have to withhold 20% for federal income taxes. Unless you initiate a direct rollover to an IRA or transfer into a new employer’s plan, you will need to come up with the 20% from your own pocket in order to avoid taxes and early withdrawal penalties. By requesting a direct rollover to an IRA, you can avoid the withholding and the risk of missing the 60-day deadline.

• Keep Your Money

By rolling over funds or assets, you will maintain the tax-deferred status of your retirement money and, best of all, you won’t have to pay taxes on your earnings until you withdraw the money. If you request a check from your employer-sponsored retirement plan, your employer will have to withhold 20% for federal income taxes.   

• Greater Investment Diversification

Your previous employer’s plan probably had between 10-15 mutual funds from which to choose. By completing an IRA rollover, you will increase your investment options and improve your investment flexibility. You will also maintain the tax-deferred status of your retirement money and, best of all, you won’t have to pay taxes on your earnings until you withdraw the money.

• Accessibility

Because you cannot take a loan out against your IRA as permitted by some 401(k) plans, penalty-free withdrawal options are available with IRAs for events such as a first-time home purchase or for certain education expenses.

• Estate Planning

By naming a beneficiary on your IRA, that beneficiary would be able to take payouts from the inherited IRA over his or her life expectancy, thus stretching the life of the IRA account. Many employer-sponsored retirement plans require non-spouse beneficiaries to take a one-time lump distribution.

• An Opportunity for Roth Conversion

The income limitation that had once prevented many individuals from converting to a Roth IRA no longer applies. Now all individuals are eligible to convert regardless of your Modified Adjusted Gross Income (MAGI). Although a Roth conversion is a taxable event, a tax professional can help you determine if the potential long-term tax advantages of converting outweigh the short-term tax consequences.

To contribute to your IRA with STRATA, simply follow these easy steps:

1. Make your contribution check payable to: STRATA Trust Company
2. Write your account number and reference the year of the IRA contribution on your check
3. Complete and include a Deposit Certification with your check. Mail your check and Deposit Coupon to:  STRATA Trust Company, PO Box 849, Austin, TX 78767         

The process can take as few as 1-2 days.

If you are eligible to make an annual IRA contribution, you may contribute up to the maximum of $5,500 if under age 50 or up to $6,500 if age 50 or over. You may contribute as often as you wish during the year (monthly, quarterly, etc.) as long as you do not exceed your eligible limit, which cannot exceed the maximum of $5,500 if under age 50 or $6,500 if age 50 or over. With a Simplified Employee Pension (SEP), the annual contribution limit increases to $54,000 for 2018, enabling a quick source of funding for a self-directed SEP IRA. Plus, if you also consider making an additional annual IRA contribution of $5,500 (or $6,500 if age 50+), you can quickly amass a sufficient balance to start self-directing an IRA.

If you are eligible to make an annual IRA contribution, you may contribute up to the maximum of $6,000 if under age 50 or up to $7,000 if age 50 or over. You may contribute as often as you wish during the year (monthly, quarterly, etc.) as long as you do not exceed your eligible limit, which cannot exceed the maximum of $6,000 if under age 50 or $7,000 if age 50 or over. With a Simplified Employee Pension (SEP), the annual contribution limit increases to $56,000 for 2019, enabling a quick source of funding for a self-directed SEP IRA. Plus, if you also consider making an additional annual IRA contribution of $6,000 (or $7,000 if age 50+), you can quickly amass a sufficient balance to start self-directing an IRA.

The envelope must be postmarked to STRATA (not to your dealer) by April 15 (excluding extensions). If contributing for the current tax year, your contribution can be made as early as January 1.

Yes. You may add an account representative or interested party to your account by completing either the Account Representative Designation Request Form or Interested Party Designation Request Form.

Please download the Power of Attorney Designation Form. Once you complete and sign the form, please it via email (Operations@StrataTrust.com), fax (512-495-9554) or mail (PO Box 23149, Waco, TX 76702).

Please download the IRA Beneficiary Designation Request Form. Once you complete and sign the form, please return it via email (Operations@StrataTrust.com), fax (512-495-9554) or mail (PO Box 23149, Waco, TX 76702).

Please download the Address Change Request Form. Once you complete and sign the form, please return it via email (Operations@StrataTrust.com), fax (512-495-9554) or mail (PO Box 23149, Waco, TX 76702).

You may view and download copies of your quarterly account statements and tax forms when you log in to your account.

You can find your account number by logging in to your STRATA account. Your account number can also be found on your quarterly statement.

You may contact our Client Service Team at 866-928-9394 with any questions.

STRATA assesses an annual fee as the acting custodian on the account. Our custodial duties include the accounting for your investment(s), quarterly statements, required IRS and state filings, facilitation of your investment, distribution requests and compliance.

You may access a complete list of the fees associated with your IRA here. Please be aware that fees vary based on the account type, asset holdings and services requested by the account holder.

The annual account fees are generally based on the account type and asset holdings. Please be aware that your cash balance is considered an account asset and is included in the account value total.

You may remit payment by mailing a check to us or by completing our credit card charge request form. Alternatively, our Client Services team can accept your credit card payment over the phone.

Log in to your account. If you have not registered for online account access, please complete the registration process as follows: Access our online account portal. On the Login page, click the New User link. Enter your Account Number, SSN and Date of Birth in the appropriate fields. Hit the "Next" button. Enter your Security Information in the fields provided. Hit the "Next" button. Please note a valid, unique email address is required for all users. If you share an email address with another account holder, you will need to provide separate email addresses for each user access requested. You will receive an email which then requires you to complete the required email verification and login. Go to your email inbox, open the email message from "Info@StrataTrust.com" and click on the link provided to complete the verification step. It is important that you do not proceed until you have completed this step. The link will bring you back to a confirmation page. The page will display the message, "Log On is confirmed." To continue, click on the "Log On" button in the top right hand corner. On the Login page, select "Private computer" and re-enter your username and password. You will be prompted to enter a new password. The password must be between 8-20 characters and must include at least one letter, number and symbol (e.g., dallas1$). You will be notified that your password has been successfully changed.

Log in to your account. Choose “My Account” on the top-right corner of the welcome screen. Choose “Change Password.” Follow the instructions to enter your current password and new password. After setup is complete you should receive a confirmation of your new password to a specified email.

Log in to your account. Choose whether you are using a Private/Trusted or Public/Shared Computer. Choose the “Click here if you’ve forgotten your password” option underneath the password text box. Enter the username and email address you used to set up your account. If you do not remember your username or email address, you may contact one of our Client Services Representatives at 866-928-9394.

You may request a recurring distribution from your IRA by completing the IRA Distribution Request Form.

Please complete the IRA Distribution Request Form to close the account via distribution. You should consult with your tax professional regarding any possible tax consequences of your distribution request. The completed form may be submitted to us via fax, email or mail. Please see our IRA Fee Page to determine the fees associated with this request.

Please download the Roth Conversion Request Form. Once you complete and sign the form, please return it via email (Operations@StrataTrust.com), fax (512-495-9554) or mail (PO Box 23149, Waco, TX 76702). Please consult with your tax professional regarding any possible tax consequences. Beginning in tax year 2018, partial or full conversions can no longer be recharacterized. Roth conversions are permanent, so please contact your tax professional with any questions regarding possible tax consequences of your Conversion.

Please complete our IRA Distribution Request Form to take distribution of any asset in your IRA. (Assets include cash and all other holdings which contribute to the overall account value.) You must provide instructions for the assets you are requesting. You should consult with your tax professional regarding any possible tax consequences of your distribution request. The completed form may be submitted to us via fax, email or mail. Please see our IRA Fee Page to determine the fees associated with this request.

The delivery time for a cash distribution is generally 2-5 business days. This time frame is based upon the delivery method you select when completing the form. Please be aware that sufficient cash must be available to process this request. If the distribution is dependent upon liquidations, then you will need to liquidate those holdings in order for us to process your request.

The delivery time for an in-kind distribution request is generally 3-10 business days. This time frame may vary based upon the delivery method you selected and the asset type that is being distributed.

In most cases you are required to take your first RMD by April 1 of the year following the year you turn 70½. After that, each yearly RMD must be taken by December 31. For example, if you turn 70½ in 2018, you’ll need to take your first RMD by April 1, 2019 and your next RMD by December 31, 2019.

A required minimum distribution (RMD) is the minimum amount that the IRS requires you to withdraw from your IRA each year, usually after you turn 70½. The exact amount will vary from year to year based on certain factors.

RMDs apply to Traditional, SEP and SIMPLE IRAs, whether they are self-directed or not. Roth IRAs (self-directed or otherwise) do not require RMDs until the death of the owner.

In most cases you are required to take your first RMD by April 1 of the year following the year you turn 70½. After that, each yearly RMD must be taken by December 31. For example, if you turn 70½ in 2018, you’ll need to take your first RMD by April 1, 2019 and your next RMD by December 31, 2019.

Your RMD is based on your account balance as of December 31 of the year that precedes the year you are taking the distribution. That number is then divided by the amount indicated in the IRS’s Uniform Lifetime Table.  Our handy RMD Calculator can help you determine your RMD.    

Yes. STRATA provides an estimated RMD calculation for the accounts you hold with us by January 31 each year. As a courtesy, we provide RMD reminders throughout the year as well. We strongly encourage our account holders to act early.

Unfortunately we are unable to process any distributions without express written consent from the account holder. However, satisfying your RMD requirement can be accomplished by simply completing our IRA Distribution Request Form. Fees may be associated with your request. You may refer to our IRA Fees Page for more information.

If you don’t have enough cash to cover the RMD in one IRA, then your options are as follows: 1. Take the total RMD amount from a different IRA account and leave your STRATA IRA intact. 2. Liquidate assets in order to make the distribution. 3. Take the distribution in-kind.

You must calculate the RMD for each IRA account that you own. However, you may withdraw the total amount from one account or more than one account. Please keep in mind that you must take the total amount.

For most IRA accounts, distributions are treated as taxable income. For Roth IRAs, distributions are generally tax-free. You should consult with your tax professional regarding any possible tax consequences.

If you fail to take your RMD or if you take less than the minimum amount, you may be subject to a 50% excise tax on the amount not distributed. For example, if your RMD is $3,000 and you only take out $1,500, you may be required to pay excise tax in the amount of $750 — or half of the amount that was not distributed.

No. Custodians are not required to send RMD notifications on inherited IRAs. For more information, please see Section 3 of IRS Notice 2002-27.

Please download the IRA Recharacterization Request Form. Once you complete and sign the form, please return it via email (Operations@StrataTrust.com), fax (512-495-9554) or mail (PO Box 23149, Waco, TX 76702). Please consult with your tax professional regarding any possible tax consequences.  Please keep in mind that any Roth Conversions processed after January 1, 2019 are permanent and cannot be recharacterized.

Form 5498 is for informational purposes only. You are not required to file it with your tax return; however, you may want to provide a copy to your tax preparer.

You may view and download your STRATA account tax forms online. Go to www.StrataTrust.com, click the Account Access button, then follow the steps to login. Tax forms can be accessed in the Reports tab. You may also contact our Client Services team at Service@StrataTrust.com, or call 866-928-9394 during business hours (Monday – Friday, 8:00am – 5:30pm Central Time).

We are required to report the original contribution on Form 5498, even though it was later removed as an excess contribution. The excess removal will be reported to you and the IRS on Form 1099-R for the year it was removed.

We are required to report the original IRA contribution on Form 5498, even though it was recharacterized to your Roth IRA. Form 1099-R reports the amount being removed from your traditional IRA, and Form 5498 reports the amount recharacterized into your Roth IRA.

Contact our Client Service team at Service@StrataTrust.com, or call 866-928-9394 during business hours (Monday – Friday, 8:00am – 5:30pm Central Time).

• IRS Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)
• IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)
• IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)

Look for Form 1099-R from your 401(k) or 403(b) plan provider. This is the form the IRS requires employer-sponsored retirement plans to use to report direct rollovers. Just because you receive a 1099-R form, however, does not mean that you owe tax on the amount. In the case of a direct rollover, you will also receive a Form 5498 from STRATA. It notifies the IRS that you rolled over that amount into an IRA, which means your money will remain untaxed until you withdraw it.

If you did a Direct Transfer between trustees (the formal name for financial providers), as STRATA recommends, you shouldn’t receive a 1099-R from the previous trustee. To put it simply, if you didn’t get a check, then you won’t get a tax form. If you did a Rollover, in which you received a check from the previous trustee and sent the money to STRATA within 60 days, you should receive a 1099-R from the previous trustee, and you should receive a 5498 from STRATA. If you waited longer than 60 days, you will need to contact your tax advisor to determine if you qualify for the 60 day waiver or to discuss other options.

STRATA only mails Form 5498 if you made an IRA contribution, rollover, conversion or recharacterization for the 2018 tax year.

STRATA will file and send you a copy of your Form 5498 on or before May 31, 2019.

This allows STRATA time to record any 2018 contributions, rollovers, conversions or recharacterizations made to your IRA up to the April 15, 2019 tax-filing deadline.

Unfortunately, STRATA cannot accept tax appraisal values since they are not always indicative of the actual value of a property. Tax values can vary widely from the market value, so the values from an appraisal or a broker’s price opinion provide more accurate values for our required reporting to the IRS each year. While other unregulated third-party administrators might accept tax appraisal values, STRATA is a regulated trust company and does not accept them.

STRATA will need supporting documentation to change a value to zero. Examples of this include:

• A third-party appraisal
• A written explanation from the entity signed by an officer or managing member
• Documentation from a court-appointed receiver regarding the value
• Bankruptcy paperwork (Chapter 7 only)
• Articles of dissolution filed with the state

Transfers are initiated by the receiving custodian. Please complete the successor custodian’s transfer request form. The completed form must include clear asset delivery instructions, the account holder’s signature and a letter of acceptance signed by an authorized signer of the successor custodian firm. The form may be submitted to us via fax, email or mail. Please see our IRA Fee Schedule to determine the fees associated with this request.

Transfers are initiated by the receiving custodian. STRATA requires a copy of the successor custodian’s transfer request form. The completed form must include clear asset delivery instructions, the account holder’s signature and a letter of acceptance signed by an authorized signer of the successor custodian firm. The form may be submitted to us via fax, email or mail. Please see our IRA Fee Schedule to determine the fees associated with this request.

There are two options to close your account: 1. You may elect to transfer your account to a successor custodian. 2. You may take a complete distribution of your IRA account. Contact us for more information regarding account termination.

We maintain a comprehensive data recovery plan, including business continuity services and daily backup of data at a secure offsite facility. Strict policies are maintained to ensure the security of our clients’ records.

As a regulated financial institution, it is our policy not to disclose, either directly or indirectly, any personal information about our clients to third parties without the prior written consent of the client, except for our legitimate business purposes and in compliance with all applicable laws and regulations. In addition, we do not provide account or personal information to outside companies that conduct independent telemarketing or direct mail marketing.

Through Horizon Bank, we maintain a comprehensive insurance package, including financial institution bond policy, banker’s professional liability insurance and directors and officers’ liability insurance through underwriters rated A+ (excellent) by A.M. Best.

As a subsidiary of Horizon Bank, we are regulated by the Texas Department of Banking, which conducts regular examinations of our operation. In addition, we are audited regularly by independent auditing firms such as RSM and Ascensus for IRA compliance.

Funds received into an account are deposited into an interest-bearing account with our parent company, Horizon Bank, or other financial institutions selected by us where balances are FDIC-insured up to $250,000 per account holder. Aside from this FDIC coverage on uninvested funds, there is no protection provided for investments held in our IRA accounts unless specifically provided by the investment.