Roth IRAs and What You Need to Know

Roth IRA

You may be asking what a Roth IRA is, and what the basic requirements are to have one. Eligibility for a Roth depends on two factors: you must have earned income, and your modified adjusted gross income (AGI) cannot exceed the limits set forth for Roth IRAs. A Roth can be self-directed, allowing account owners access to a number of alternative investments to build retirement income.

A few benefits of a Roth IRA include:

  • Contributions are made after-tax, allowing all earnings to grow tax-free
  • Tax is paid on contributions the year you make them, and in most cases, contributions can be withdrawn without taxation
  • Contributions can be made after the age of 70

As mentioned, there are some requirements of Roth IRAs. Some of these requirements include (but not limited to):

  • Your contributions must be made in cash unless you are making a qualified rollover or transfer contribution, and the Custodian accepts non-cash rollover or transfer contributions.
  • Your regular annual Roth IRA contributions may be deposited at any time during that taxable year and up to the due date for the filing of your Federal income tax return for that taxable year, no extensions. This generally means April 15th of the following year.

A full list of details and regulations can be found within the IRS publication on Roth IRA. Or visit our Roth IRA section to learn more about this type of retirement account that may help you benefit with tax savings!

 

Raising Capital Using Self-Directed IRA Funds

Raising Capital Using Self-Directed IRA Funds

If your firm is raising capital, you can employ strategies to include accepting investments from self-directed IRAs. This allows your clients to use not only personal funds but also retirement funds to participate in your offering. Your firm might be a great fit if you are a private fund manager, a crowdfunding platform, a privately held company issuing stock and/or debt, a hedge fund or venture capital firm.

“I didn’t even know that was allowed.”

That is the most common response we receive when speaking with new investment sponsors about permissible alternative investment types that can be held by a self-directed IRA. Since most investors are waiting until qualified retirement age to distribute funds from their IRAs, alternative assets – which can typically require longer holding periods – can be a great fit for self-directed IRA owners.

With the aging of the baby boomer generation, we anticipate several trillion dollars being rolled over from qualified retirement plans into IRAs. If you already have a pool of investors, it may be beneficial for you to educate your clients on the use of their self-directed IRAs to invest in offerings they understand – yours.

Midland Trust can help you on two fronts: we are a responsive partner who is available to answer questions you receive from your clients and our account set-up process is fast and easy.

We can help you with IRA specific questions your potential investors have about your investment and we never compete with you because we do not sell investments. We can also provide you with marketing materials to send to your investor pool about self-directed IRAs. A huge part of what we do at Midland day in and day out is educate people on the rules, the process and the roles of everyone in self-direction.

Once your client chooses to use IRA funds, Midland can get their account set up and request funds within two business days. You might also be able to use our OnePath platform for your documentation, making the process easy for you and your clients.

For more information about using IRA funds to raise capital, contact the Midland sales team at 239-333-1032.