How to Fund Your Investment



How to Fund your Investment?


Funding your investment is a non-complicated process. All you need to do is contribute, transfer, roll-over or convert any existing accounts to begin your self- directed investing.


If you are looking to start a new account from the ground up; or if you do not currently have any money that qualifies for a transfer, you will start with a contribution.
A contribution is defined as either out-of-pocket money that an individual puts into his/her retirement account or any money that is deposited straight from an individual's paycheck. Payroll deductions are also known as salary deferrals.
The amount of money which can be contributed each year per individual depends upon the plan that is selected. There are yearly limits to how much you can place into each account. However, individuals can also have more than one account, and more than one type of account that they can contribute to each year.


The most common method for moving an existing IRA is a transfer. Transfers, whether cash or assets, are usually sent from one custodian to another custodian. Transfers are NOT a taxable event.

In the instance of a retirement plan which you already have setup, be it self-directed or not, you are able to transfer into your new self directed account.

Examples of Transfers:

  • Traditional IRA to Traditional IRA
  • Roth IRA to Roth IRA
  • CESA to CESA
  • HSA to HSA
  • SEP to SEP
  • Simple to Simple
  • SEP to Traditional IRA
  • Simple to Traditional IRA


A rollover is the movement of funds from a qualified plan (such as a 401(k) or 403(b), and have their own set of rules. There are three types of rollover movements: Direct Rollovers, Distribution Rollovers, & Taxable Rollovers. The best move for a rollover is typically the Direct Rollover.

Roth Conversions

A conversion consists of moving monies from a tax-deferred retirement plan (or QRP component) to a tax-free Roth IRA account. You must be aware of a stipulation on the Roth Conversion, due to the fact the original account is tax-deferred, the amount “converted” to the Roth is subject to taxes based on an individual’s tax rate.

Roth Conversion movements are as follows:

Traditional IRA to Roth IRA
SEP to Roth IRA
Simple to Roth IRA
Qualified Retirement Plan to Roth IRA (Taxable Rollover)

An important note to make is that you do NOT have to have current earned income to convert an existing account. The money was deposited into the account when you had earned income, as earned income. If you are unemployed today, that does not change the fact that when the contributions were made to the account, you were earning money.