Can I Rollover Real Estate to Another IRA Custodian for “Checkbook Control”?
Some investors wonder how they can rollover real estate they have with another IRA custodian to a checkbook control self-directed IRA LLC. In general, moving real estate that a self-directed IRA or 401(k) plan owns may be rolled over to another self-directed IRA or 401(k) plan tax and penalty-free. Movement of an asset other than cash is known as an in-kind rollover.
In the case of real estate rollover currently owned in a self-directed IRA to a new self-directed IRA custodian, the process is quite simple and non-taxable. Since the real estate title is in the name of the IRA custodian, the real estate will need to be re-titled or re-registered in the name of the new IRA custodian.
You Need a Deed for Real Estate Rollovers
Typically, you can re-title or re-register in the name of the new custodian by filing a deed with the new IRA custodian information. It includes the deed with the transfer authorization form to be submitted to the current IRA custodian holding the real estate. The deed must typically be filed by the authorized representative of the IRA custodian currently holding title to the real estate. The signature essentially allows the real estate to be released to the new IRA custodian. The deed will have to be re-recorded in the appropriate county showing the new IRA custodian, as custodian for the IRA as new owner of the real estate.
In the case of a “checkbook control” self-directed IRA LLC, there is one more step in this process. The deed actually has to be re-titled and re-recorded a third time so that title to the real estate will ultimately be in the name of the self-directed IRA LLC.
During this step, IRA Financial Trust will be able to assist you in accomplishing this type of in-kind rollover.
An IRA holder is permitted to make an unlimited number of direct cash or in-kind rollovers in a year. The only limitation applies if you are electing to engage in an indirect rollover, which means that the cash or asset is being distributed to you prior to the rollover to another retirement account, such as a self-directed IRA. An indirect rollover can only be done once every 12 months from all your IRA accounts.
How can I rollover real estate I have with another IRA custodian to a “checkbook control self-directed IRA LLC
In general, moving real estate owned in a self-directed IRA or a 401(k) plan can be rolled over to another self-directed IRA or 401(k) plan tax-free and penalty-free. The movement of an asset, other than cash, is known as an in-kind rollover. When one send retirement funds from one account to another, this process is not treated as a taxable distribution. Generally, in the case of a rollover, one does not pay tax on it until the funds are withdraw from the new plan. By engaging in a rollover, the thought is that the individual is saving for their future and their money continues to grow tax-deferred.
3 Types of Rollovers
This occurs when you receive a payment of retirement funds directly from your qualified plan administrator. You can ask your plan administrator to make the payment directly to another retirement plan or directly to an IRA custodian. The direct rollover distribution may be in the form of a check made payable to your new account. No taxes will be withheld from your transfer amount.
This different from a direct rollover, which is from a non-IRA type retirement plan, such as a 401(k). The trustee-to-trustee- transfer occurs when IRA funds are moved between IRA custodians directly. In such a case, you can ask the financial institution holding your IRA to make the payment directly from your IRA to another IRA or to a retirement plan. No taxes will be withheld from your transfer amount.
Unlike a direct rollover of transfer which is between the retirement account custodians directly, if a distribution from an IRA or a retirement plan is paid directly to you (the IRA holder) and not the new IRA custodian, you can deposit all or a portion of it in an IRA or a retirement plan within 60 days. Taxes will be withheld from a distribution from a retirement plan, so you’ll have to use other funds to roll over the full amount of the distribution.
The 60-day rollover can only occur once every 12 months for all your individual retirement accounts in the aggregate.
In general, a direct rollover, indirect rollover, and IRA transfer can be done with cash or in-kind assets, such as real estate. The key is to make sure the custodian you are transferring the assets to will accept in-kind assets, because not all IRA custodians will accept an in-kind rollover of alternative assets, such as real estate. For example, IRA Financial will, but Fidelity or Vanguard will not.
It’s becoming more popular for investors roll over assets/funds from a 401(k) or IRA into a self-directed IRA. With IRA Financial Trust, our team can perform the rollover in a quick and efficient manner – and you won’t incur any taxes.
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Rolling over funds or assets from a 401(k) plan or IRA is the most popular way to fund a new self-directed IRA. The great news is it can be done quickly, efficiently, and without tax when working with IRA Financial Trust.