If I convert my regular IRA to a self-directed IRA do I have to pay the taxes?

Question: I have found your website to be particularly helpful, and am considering making the jump to Quest and self-directed. Here’s my concern:

If I convert the IRA to self-directed, I must pay the taxes. Do the taxes need to be paid out of the account or can I pay them independently? Also, when do I need to pay them? Do I pay them when I file my regular taxes?

Answer: On the contrary, you will not have to pay taxes if you move your IRA into a self-directed IRA here unless you convert the funds from a traditional, pre-tax IRA into a Roth IRA.  We are able to hold traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, Individual 401(k)s, Coverdell Education Savings Accounts (ESAs), and Health Savings Accounts (HSAs).  Every one of these accounts can be self-directed and can buy real estate, notes, private company shares, and a whole lot more!

If you do a Roth conversion, then the obligation to pay the taxes is yours personally.  Some people pull money out of their IRAs to pay taxes, of course, but depending on your age this may cause you to owe taxes and penalties on the amount withdrawn.  My suggestion is that you call one of our offices to discuss your individual situation.

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