Fund First, Invest Faster

How funding keeps your investments moving

One of the most common reasons alternative investments are delayed is that an IRA is not fully funded when an investment opportunity arises.

Unlike publicly traded investments that can often be purchased immediately, many self-directed IRA (SDIRA) investments require available cash before the custodian can process the transaction. If your IRA doesn't have sufficient funds, you may need to make a contribution, transfer assets, or complete a rollover before the investment can move forward. Depending on the funding method, that process can take days—or even weeks.

Maintaining available cash in your SDIRA can help you act more quickly when opportunities arise while ensuring your account has the funds needed to cover future investment-related expenses. Whether you're preparing to make your next investment or planning for ongoing costs, keeping your account properly funded is an important part of a successful long-term investment strategy.

Smart ways to keep your SDIRA funded 

Many investors identify an investment first and think about funding afterward. Unfortunately, funding is often the longest part of the investment process. Fortunately, there are several ways to fund your SDIRA before you need it. Understanding these options can help reduce delays and keep your retirement dollars ready when investment opportunities arise.

Make annual contributions

One of the simplest ways to fund an SDIRA is through annual contributions. These contributions are subject to IRS limits and can help steadily grow retirement assets over time. For 2026, eligible individuals can contribute up to $7,500 annually to their IRAs, with an additional $1,100 catch-up contribution available for those age 50 and older. The annual limit applies across all Traditional IRAs and Roth IRAs combined, and eligible investors generally have until the tax filing deadline, excluding extensions, to make contributions for the prior tax year. To make the most of this funding method, consider the following strategies:

• Contribute early whenever possible - Funding your account earlier in the year gives your capital more time to be available for investment opportunities. Rather than waiting until the contribution deadline, consider making your contribution as soon as your financial situation allows.
• Take advantage of spousal contributions - Married couples filing jointly may be able to contribute to an IRA for a spouse who has little or no earned income, provided the working spouse earns sufficient income to cover both contributions. This can significantly increase a household's retirement funding potential.
• Don't overlook catch-up contributions - Investors age 50 and older can contribute additional funds beyond the standard annual contribution limit. Over time, these extra contributions can meaningfully increase retirement savings.

• Consider nondeductible Traditional IRA contributions - Some individuals who participate in employer-sponsored retirement plans may not qualify for a tax deduction on their Traditional IRA contributions because of income limitations. Even when contributions are nondeductible, they can still help build retirement assets and expand future investment opportunities within an SDIRA.

   

Transfer existing IRA assets

A trustee-to-trustee transfer allows assets to move directly from one IRA custodian to another without you taking possession of the funds. Because transfers are not treated as distributions, they generally avoid the tax consequences and timing requirements associated with certain rollover transactions, and there is no annual dollar limit on the amount that can be transferred. For investors who already have Traditional IRA or Roth IRA assets held elsewhere, transferring those funds into an SDIRA may be one of the fastest ways to increase available investment capital. This strategy can be particularly valuable when pursuing investments that require larger minimum funding amounts, while also simplifying account management by consolidating retirement assets under one custodian.

Roll over employer retirement plans

For many investors, a former employer's retirement plan represents their largest retirement asset. Funds held in a 401(k), 403(b), governmental 457 plan, or other eligible employer-sponsored retirement plans may often be rolled into an SDIRA, creating an opportunity to significantly increase investable retirement capital.

When available, a direct rollover is generally the preferred method because assets move directly from the retirement plan to the SDIRA custodian, helping avoid mandatory withholding requirements and reducing the risk of missing important deadlines. Because employer-sponsored plans can accumulate substantial balances over many years, a rollover may provide the funding boost needed to expand investment opportunities within an SDIRA. Individuals who have changed employers, retired, or are considering their retirement income strategy may benefit from evaluating whether a rollover aligns with their long-term goals.

Consider a Roth conversion

A Roth SDIRA offers several appealing advantages, including tax-free qualified withdrawals in retirement and no required minimum distributions during the original owner's lifetime. However, some investors earn too much to make direct contributions to a Roth IRA. In these situations, a Roth conversion may provide another path for building Roth assets. A conversion allows eligible assets from a Traditional IRA or certain employer-sponsored retirement plans to be moved into a Roth SDIRA. While income taxes are generally due on the converted amount during the year of conversion, future qualified earnings and withdrawals may be tax-free.

Many investors choose to complete conversions gradually over several years to help manage potential tax impacts. Because every investor's situation is unique, consulting a qualified tax professional can help determine whether a Roth conversion strategy is appropriate.

Best practices for managing your SDIRA

Funding your account isn't just about making your next investment possible. It's also about ensuring your IRA has sufficient cash available to cover the ongoing expenses associated with the assets you already own. One of the most important rules of SDIRAs is that investment-related expenses generally must be paid from the IRA—not with personal funds.

For example:

• Property taxes
• Insurance premiums
• Repairs and maintenance
• HOA dues
• Professional services
• Asset management expenses
• Custodial fees associated with the investment

Maintaining available cash isn't simply a matter of convenience; it is also a best practice for managing a SDIRA. That's why most custodians, like STRATA Trust Company (STRATA),  encourage investors to maintain adequate liquidity within their accounts. Keeping some uninvested cash in your SDIRA doesn't mean your money isn't working for you. Instead, it helps ensure your account is prepared for future investment opportunities, ongoing investment-related expenses, and custodial fees.

STRATA's Uninvested Cash Policy explains how available cash is maintained within your account. If you are between investments or have excess cash that is not immediately needed, you may also have the option to invest those funds through an available brokerage account. While STRATA’s edge has always been our ability to custody unconventional and alternative assets, we also have solutions for leveraging idle cash in public markets through a brokerage account within a STRATA retirement account. 

Not all public investments allow third-party registration; it is important to check with your investment issuer/broker before instructing STRATA to direct your investment. TradeStation Securities Inc. offers STRATA accountholders and their advisors the convenience of trading public stocks, mutual funds, ETFs, and much more. Leveraging a brokerage account within your SDIRA allows your retirement dollars to remain invested while maintaining the flexibility to support your long-term investment strategy. Visit Investment Hub to learn more about brokerage accounts. 

A well-funded SDIRA keeps you ready

A well-funded SDIRA does more than increase purchasing power; it helps keep your retirement strategy moving forward. Having available cash can reduce funding delays, make it easier to respond when investment opportunities arise, and help ensure investment-related expenses can be paid directly from your IRA as required.

Whether you're making annual contributions, transferring existing IRA assets, rolling over funds from an employer-sponsored retirement plan, or considering a Roth conversion, planning can help keep your account ready for both new investments and ongoing account obligations.  To learn more about funding your account, visit STRATA's Fund Your Account resource page or connect with one of our experienced SDIRA specialists.