Frequently Asked Questions

Why do I need an administrator like iPlanGroup?

The Internal Revenue Service requires that all IRA assets are held by a custodian and that the custodian accurately reports all IRA transactions on the account. Many traditional retirement plan custodians do not accept Self-Directed IRA accounts due to the many nuances and the varied types of investments they involve. iPlan understands these requirements and performs them all efficiently.

What service does iPlanGroup provide?

At iPlanGroup, we are dedicated to making Self-Directed IRA investment as easy and effortless as possible for you. We don’t tell you where to invest your money, but rather accurately facilitate your purchase of assets in a timely manner, and keep up-to-date records of all your transactions and IRA purchases. We offer the same investment options as other retirement plan administrators – we just offer the extra help to make it easier for you

Why haven’t I heard about the option to self-direct my IRA?

Many investors are led to believe that the only types of investments allowed in their retirement plan are traditional stocks, bonds, and mutual funds. This is not the case with Self-Directed IRAs. Since their creation in 1975, they have given people the freedom to choose where their money is invested as well as a wide variety of alternative investment options. At iPlanGroup, we help facilitate your IRA investments to maximize your future wealth.

What kinds of investments can I make with a Self-Directed IRA with iPlanGroup?

You are allowed to purchase real estate, notes, precious metals, private placements, accounts receivable, tax lien certificates, and so much more – basically, anything that is not prohibited as defined by the Internal Revenue Code.

Is it legal to purchase non-traditional assets using my IRA?

Yes. The Employee Retirement Income Security Act (ERISA), established in 1974, moved the responsibility for retirement savings from the employer to the employee. They then created IRAs in 1975. This was to allow individuals the freedom to choose where their retirement funds were invested. The IRS code doesn’t explain which investments are permitted; instead, it outlines which investments are prohibited. There are only two types of investments excluded: life insurance contracts and collectibles (art, jewelry, china, etc.). Refer to Internal Revenue Code Section 401 (IRC § 408(a) (3)).

What is a prohibited transaction?

Any improper use of your IRA by you or a disqualified person (party related to your IRA) would be classed as a prohibited transaction. Internal Revenue Code Section 4975 states: An IRA cannot engage in any transaction (direct or indirect) with anybody or anything considered related to the IRA. Prohibited transactions, according to the tax code, are stated as life insurance contracts and collectibles, almost any other investment is allowed. Please reference the image below to identify which individuals are considered prohibited parties.

What are the consequences of a prohibited transaction?

If an IRA account holder is flagged for participating in a prohibited transaction under Internal Revenue Code Section 4975 or 408 with their IRA funds, it will result in a “deemed distribution” of the IRA. This will incur a severe penalty and taxes to all of the IRA’s assets from the first day of the year in which the prohibited transaction took place. The deemed distribution will also be subject to ordinary income tax, and if you were under 59 ½ years old when the deemed distribution took place, a 10% excise tax on premature distribution may also be incurred. In addition, if the “prohibited transaction” is not corrected within the taxable period, Internal Revenue Code Section 4975(b) imposes a tax equal to 100 percent of the amount involved.

What is a Self-Dealing?

Self-Dealing is a term given to any transaction which can financially benefit you personally or any disqualified person, instead of your IRA. As your IRA is intended to benefit you in retirement, you cannot benefit from it financially today.

How often do I receive a statement on my accounts?

We release statements on a quarterly basis. You can view your statement via our online portal at any time. You can also opt in to have a quarterly statement mailed to you during the account opening process.

What are required minimum distributions?

Required minimum distributions are the minimum amounts that must be distributed to you from your retirement account(s), except for the Roth IRAs. As of the 2023 tax year, RMD are required when the account holders have reached 73 years old.

Are transaction fees associated with taking a distribution from my IRA?

Yes, there will be a small fee. The fee is determined by the method you choose to have the funds delivered. Please see our fee schedule for applicable fees.

How can I pay for my fees when taking a distribution?

There are several methods available to you. Fees can be deducted from your iPlanGroup account if you have available funds, prior to a check being issued. You can also request a link be sent to pay online by credit card.

Can I choose to have taxes withheld from my distribution?

Federal taxes can be withheld at a minimum of 10% but state taxes can only be withheld if you live in the state of Arizona.

What if I don’t have enough money in my account when doing a monthly distribution?

If your account is short on funds and unable to complete your distribution, you will be notified by us. You will need to deposit the sufficient amount of funds into your account to ensure you receive the distribution the following month.

How can I get reimbursed so that I don’t create a prohibited transaction when I’ve had an emergency expense that I paid from my personal credit card?

You will need to submit a Payment Authorization Letter requesting the payment to your personal account, and also submitting an invoice, showing the expense you have paid.

If I convert $100K from Traditional to Roth, will $100K be transferred or will the taxes be pulled from that $100K?

You have the option to have federal taxes withheld from the conversion or you can pay the taxes due when you file your yearly taxes.

If I need to request a payment from my IRA to pay for expenses on an asset I own within my IRA, how do I do that?

Email a completed Expense Authorization Form along with a copy of the invoice to [email protected]. The expense will process with in 48 hours of receipt.

If I have a physical asset that I do not wish to liquidate but want to take as a distribution from my IRA, is that possible?

Yes. It is possible to take possession of a physical asset. We require a Distribution Request Form and a Fair Market Valuation or appraisal from a third party. You will be required to re-register the asset and provide confirmation of same. Additional transaction fees may apply.

If I choose to have payments automatically paid monthly or quarterly, is it then unnecessary to contact iPlanGroup each month before the bill is due?

No. You will only need to contact us unless the parameters you indicated on the Expense Payment Authorization Form changes. A new Expense Authorization form will need to be completed with the updates.

Will I be notified that the Payment Request has been processed?

Yes. We will send you an email confirming that your request has been processed and when the funds will be sent or be available for pick up.

What if I don’t have enough funds in my account to pay my bill?

If you have insufficient funds in your account, we will contact you to inform you. Once you have added more funds to your account, your Expenses Pay Form will need to be resubmitted to [email protected] for processing within 48 business hours.

Do I need to send a bill with the Expense Pay Form?

Yes. We require a bill to ensure we have the correct information to fulfill your request efficiently.

My husband and I share a property 40/60. Can we use one Expense Pay Form?

No. Each separate IRA plan has a different account name; therefore, we would need two separate Expense Pay Forms with the relevant percentage on each before we can process them.

What is Unrelated Business Income Tax?

Referred to in two different forms: Unrelated Business Income Tax (UBIT) and Unrelated Debt Financed Income Tax (UDFI) apply to IRA funds which are invested in assets that do not require you to pay taxes (such as LLCs) and are an operating entity of a business. UDFI relates to an IRA that is debt financed and refers to the profits made from the sale of a debt-financed property. UBIT is generally reported on Schedule K-1 issued by the entity. If the UBIT attributable to your account exceeds $1,000.00 for any taxable year, IRS Form 990-T must be filed along with the appropriate amount of tax, payable from your IRA account. If the tax is applicable, you must prepare or have prepared IRS Form 990-T and forward it to iPlanGroup along with written authorization to pay the tax from your account. If you are required to file IRS Form 990-T, you must apply for and utilize an Employer Identification Number (“EIN”). You may not use iPlan’s EIN or your own Social Security Number. iPlan does not monitor UBIT and does not prepare IRS Form 990-T for you. For more information on UBIT, please refer to IRS Publication 598 and/or consult your tax advisor.

Can my IRA be sued?

Yes. An IRA can be subject to legal action. Although some states do not permit creditors to collect from IRAs, this is not true of all states. Plus, IRAs are never exempt from Federal or State Tax Authorities.

My 401(k) is small. Can I personally co-invest with my Self-Directed 401(k)?

It would be a prohibited transaction to co-invest your personal funds with funds of the plan.