Self-Directed IRA Paperwork

Each self-directed IRA custodian that deals with private assets, such as real estate or small businesses, will require paperwork completion. This section aims to assist you in identifying the necessary paperwork and navigating the process effectively.

Before delving into the paperwork, it’s crucial to understand how the IRA operates. When you set up your self-directed IRA, regardless of its type, it will be assigned a vesting name. The most common format is: Custodian’s Name, FBO (For The Benefit Of) your First and Last Name, Type of Account (e.g., IRA, ROTH), followed by the account number. This designated vesting name will be used on all investment documents. Additionally, most custodians mandate the use of their address instead of your own for the IRA, a detail to bear in mind during investment considerations.

The paperwork required varies depending on what stage you are at with your self-directed custodian. The following forms should be completed in sequence for setting up an account, fund transfer, investment purchase, asset valuation, or sale:

Application: The initial step involves setting up an account. Select a custodian that aligns with your needs and complete their internal application, which is typically a straightforward process taking 10 minutes or less.

Movement of Funds: Depending on how you’ll fund your self-directed IRA (e.g., contribution, transfer, rollover), specific paperwork is required. Refer to the terms outlined in Basic IRA Verbiage to determine the appropriate form.

Buy Direction Letter: With the account established and funds transferred, complete your custodian’s internal form to purchase an asset. This form is commonly referred to as a Buy Direction Letter or Direction of Investment. Be sure to specify the type of investment to ensure that the proper form is completed.

Fair Market Value (FMV): Once you own an asset in your self-directed IRA, you must annually value the asset. This is crucial for tangible assets like mineral rights or small businesses. Failing to complete this form may result in additional custodial fees. The FMV form is simple and should only take approximately 10 minutes to fill out. Seek guidance from your custodian if needed.

Selling or Exiting an Investment: When selling or exiting an investment, complete an internal form for the custodian that is commonly known as a “Disposition of Asset” or “Direction to Sell.” This form will help you avoid unnecessary fees.

  • Roth Conversion Form: For converting a pre-taxed IRA to a Roth IRA.
  • Distribution Form: For withdrawing funds for personal use.
  • Power of Attorney: Granting someone access to your retirement account.
  • Change of Info: Updating personal details like your phone number or address.
  • Beneficiary Form: Modifying beneficiary percentages or adding/removing individuals.

Don’t be intimidated by these forms; a reliable custodian or investment partner should guide you through the process. Additionally, alternative or private investment opportunities often assist with form completion.

  • Each custodian has its own set of internal forms.
  • Complete forms promptly to avoid additional fees.
  • Seek assistance from the custodian when needed.
  • No form should take more than 10 minutes to complete.

Before proceeding, note that upcoming sections delve into complex aspects of Self-Directed IRAs, including tax implications, IRS publications, legal precedents, and governmental updates. Always seek advice from tax or legal professionals, as this content is intended for educational purposes only.

DISCLAIMER: The content of this website and any associated content is for informational purposes only, is not intended to and does not constitute an offer to sell or the solicitation of an offer to purchase to any person in any jurisdiction, and is not and shall not be construed as investment, legal, business, or tax advice.