Rental Property Investor · WY · Member since 2016 · 87 posts · 51 votes
I have a friend who would like to put some of his money to work in my real estate investments. He currently has an IRA with ~$55K in an UBS account with a number of market investments. The investments are marginally performing.
Because he wants to invest in what I'm doing, I'd like to make this process as smooth as possible. Here are my questions:
1. What does he need to do in order to convert the current UBS funds into a Self-Directed IRA? 2. Any recommendations on who to convert with? 3. What type of fees, tax implications, etc are associated with this conversion? 4. How long does this process normally take? 5. How soon after can he start using the funds to invest?
Kansas City, MO · Member since 2017 · 11 posts · 4 votes
7y
I just went through this process and for me, it took close to 3 months from conception to actually being able to invest the money. There always seems to be another step, another form, another fee. I went through a financial adviser and that added some layers of time and expense that aren't necessarily required but, if you aren't an expert, are probably a good idea. There are a lot of rules you need to be aware of to protect yourself from prohibited transactions. The consequences of which are your IRA being declared no longer an IRA so you get to pay taxes and early withdrawal penalties on the entire value of the account.
If there is a way for a novice to get this done in a day I'd sure like to see that in action.
1open an account it takes a day and you can do it online approx $50
2 I can’t answer -in the biz but call around and visit websites. Bp has a lot of info on this question
3 Transferring from UBS to the SDIRA has no tax consequences and is usually covered in the application fee
4 account is usually open in a day but transferring from Ubs May take 10 days +/- (check with ubs they control it.)
5 if the money is wired from UBS the money can be deployed the next day if a check is sent it usually takes 3-5 days to access the money presuming the documents are provided before or in that timeframe
Annual fees will differ slightly among different companies but it usually is inconsequential-pick a company you like and has good service and education.
I hope this helps if you need anything else PM please Good Luck !
Kansas City, MO · Member since 2017 · 11 posts · 4 votes
7y
I just went through this process and for me, it took close to 3 months from conception to actually being able to invest the money. There always seems to be another step, another form, another fee. I went through a financial adviser and that added some layers of time and expense that aren't necessarily required but, if you aren't an expert, are probably a good idea. There are a lot of rules you need to be aware of to protect yourself from prohibited transactions. The consequences of which are your IRA being declared no longer an IRA so you get to pay taxes and early withdrawal penalties on the entire value of the account.
If there is a way for a novice to get this done in a day I'd sure like to see that in action.
I'm sorry to hear that your account took so long to get set up. I typically see that the process of moving your funds into a new account can take a few days to a month depending on custodian requirements and plan rules (in the case of a rollover). I have seen many investors who have set up their account and made their first investment in 2 weeks or less. Also your new self-directed custodian/administrator will likely have processing time for each step. Some custodian/administrators have processing times of 2 weeks. When selecting a custodian/administrator I like to ask what the processing time is, I look for processing time of 48 hours or less.
On the bright side, now that the account has been set up, future purchases should be quicker going forward.
I fully agree with you about making sure you know the rules and regulations. You can always call your SDIRA custodian/administrator and ask if it is prohibited.
If your friend is self-employed or owns a small business he may want to consider truly self-directed Solo 401k. It has several major advantages to SD IRA but not everyone would qualify for it.
Another option can be Checkbook IRA, which is SD IRA on steroids. The main benefit of this vehicle is that it allows an account owner to bypass custodian when making investments and transaction while eliminating transaction fees.