Rollover into a Self-Directed IRA or Solo 401(k)

Most investors discover the benefits of alternative assets and Checkbook Control after having already invested their retirement funds in a standard IRA or 401(k). Fortunately, almost any existing retirement plan can be rolled or invested into any other—including self-directed accounts.

The specific details of the transfer will differ depending on the nature of the original plan and your personal situation, but the process is never complicated. Here is a rundown of some of the most common scenarios.

How to roll an IRA with a third-party custodian (e.g. Charles Schwab) into a self-directed IRA:

1. Open a new account with an experienced self-directed IRA custodian. (Broad Financial uses Madison Trust Company for its self-directed custodian.)
2. Fill out a Transfer Authorization Form, and send an original copy to your new custodian.
3. Your new custodian will then send this form to your previous custodian to request transfer of your assets. Your assets will then be transferred via check, wire, or DTC.
4. Your new custodian will send you these funds in the form of a capitalization check. You can then use this check to open a dedicated checking account at the bank of your choosing.

How to rollover your company-sponsored 401(k) into a self-directed IRA:

1. Open a new account with a custodian that can handle self-directed IRAs.
2. Request a rollover form from the plan administrator for your current 401(k).
3. Fill out the form, give it to the plan administrator, and he/she will transfer the funds to the new self-directed custodian.

Important note: Many company-sponsored 401(k) plans will not allow a rollover of funds if the employee is still working for the company. In these cases, a rollover is only allowed when the employee leaves the company.

How to roll a self-directed IRA without Checkbook Control into a self-directed IRA with Checkbook Control:

1. Open a new account with a custodian who has experience in self-directed IRAs with Checkbook Control.
2. Fill out a Transfer Authorization Form and send an original copy to your new custodian.
3. Your new custodian will then send this form to your previous custodian to request transfer of your assets. Your assets will then be transferred via check, wire, or DTC.
4. Your new custodian will send you these funds in the form of a capitalization check. Use this check to open a dedicated checking account at the bank of your choosing.

If you are transferring assets-in-kind (such as real estate), you will need to redeed the property to your new custodian who will in turn redeed it to your designated LLC. This is a fairly easy process, which is typically handled by a local attorney.

How to transfer funds from an IRA with a third-party custodian (e.g. Charles Schwab) into a self-directed Solo 401(k):

1. Open a new Solo 401(k) plan. (This is done with a few simple forms provided by Broad.)
2. Fill out Form DR-37, which is the Direct IRA Rollover Form. (This form is also provided by Broad.)
3. Send the form to your former IRA custodian.
4. Your former custodian will send you a check in the name of your new Solo 401(k) plan.

How to transfer funds from a company-sponsored 401(k) into a self-directed Solo 401(k):

1. Open a new Solo 401(k) plan.
2. Fill out Form TR-36, which is a Plan-to-Plan Rollover Form. (This can be provided to you by either Broad or your previous administrator.)
3. Your previous administrator will send you a check in the name of your new Solo 401(k) plan.

How to do an Indirect Rollover into a Self Directed IRA

An indirect rollover occurs when one retirement account is closed, and the distributed funds are subsequently placed into another retirement account. The self-directed Custodian will indicate on the first tax form 5498 that a rollover occurred, and this will notify the IRS that the funds are still not subject to any tax liability.

How to Start a Rollover

The easiest way to get started is to talk to somebody with experience in the procedure, and let him or her guide you step-by-step. Here at Broad Financial, our specialists have guided clients through thousands of rollovers, and they can answer any questions you may have.

Call today and you’ll find out how easy the rollover process can be.