Frequently Asked Questions For New/Current Clients
Here are some general questions, rules, and regulations to follow and some ways to plan and protect your investments.
Resources
The IRS has an important message for tax payers with IRAs.
IRS Publication 3125
The IRS defines a prohibited transaction as follows:
“Generally a prohibited transaction is any improper use of your IRA account or annuity by you, your beneficiary or any disqualified person. Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendant, and any spouse of lineal descendant).”- Source IRS Publication 590-A and/or IRS Publication 590-BProhibited Asset Types, Disqualified Persons, and Prohibited Transactions:
A broad range of alternative investment options, which offer flexibility, are available to choose from for self-directed retirement accounts. There are rules that govern retirement accounts which self-directed investors must follow. The IRS rules which place some limitations on IRA investments relate to types of investments you can hold in a retirement account.Prohibited Asset Types
IRS rules allow you to invest in any type of investment other than the following:- Life insurance contracts
Collectables such as:
- Alcoholic beverages, artwork, or antiques
- Certain other tangible personal property considered to be collectible by the U.S. Treasury
- Coins (there are exceptions for certain U.S. Treasury minted coins)
- Gems
- Metals (there are exceptions for certain types of bullion)
- Rugs
- Stamps
- Stock of Sub-Chapter S-Corporations
Prohibited Transactions
The purpose of your retirement plan is to benefit you when you retire and not before. This is the reason that certain transactions are not allowed – if they are interpreted as providing immediate financial gain or current personal benefit to the account holder or other disqualified persons. Some prohibited transactions include:- Sale or exchange, or leasing, of any property between a plan and a disqualified person
- Lending of money or other extension of credit between a plan and a disqualified person
- Furnishing of goods, services, or facilities between a plan and a disqualified person
- Income or assets of a plan being transferred to, used by, or used for the benefit of a disqualified person of the income or assets of a plan
- Act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interests or for his own account
- Receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan
Disqualified Persons
- The IRA holder and his or her spouse
- The IRA holder’s lineal descendants (children, grandchildren, etc.) and their spouses
- The IRA holders lineal ascendants (parents, grandparents, etc.)
- Anyone providing services to the IRA
- Any corporation, partnership, trust, or estate in which a disqualified person(s) has a 50% or more combined ownership or is owned by multiple disqualified persons or disqualified entities
- Fiduciaries – the IRS defines a fiduciary as anyone who exercises any discretionary authority or control in the managing or administering of your retirement account, or in managing or disposing of its assets, or anyone who provides investment advice to your retirement account for a fee, or has the authority or responsibility to act in such a capacity
Self-Dealing
The intent of your retirement plan is to benefit you when you retire and not before; therefore, transactions that the IRS interprets as providing current personal or benefit financial gain to you, your direct family, your business, or other disqualified persons are not allowed. Below are examples of self-dealing which would be considered prohibited transactions:Real Estate
Your Retirement Account Cannot:- Hold real estate that you or other disqualified persons live in or use in any way while the property is held in your retirement account.
- Purchase real estate owned by a family member of lineal descent (i.e. your father or mother).
- Real estate in your retirement account must be for investment purposes only.
Private Equity
Your retirement account typically should not purchase equity shares in a business/entity in which you (as the account owner) or a disqualified person or entity owns a majority share; or in which you or a disqualified person or entity holds a role of or similar to a managing member, has signing authority or check writing authority.Extending Credit
Your retirement account cannot loan money to yourself or other disqualified persons.Stepped Transactions
One or more transactions conducted leading up to making a prohibited transaction, such your IRA lending money to a non-disqualified person, who then lends money to their spouse, who then loans it to you personally. Whether done intentionally or accidentally, it is prohibited.Consequences of Prohibited Transactions
There are possible severe consequences for you as the owner of the retirement account and for the other person(s) who participate in a prohibited transaction, including:- The investment treated as a distribution, which may trigger a taxable event
- An early distribution penalty of 10% if you are under the age of 59½
- You may incur a 15% excise tax on the amount involved in the prohibited transaction
- You may be subject to additional penalties which can accrue for under-reporting for the years before the IRS discovers the prohibited transaction
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 varied types of investments they involve. iPlan
understands these requirements and performs them all efficiently.
At iPlanGroup, we are dedicated to making the investment process
as easy and painless as possible. We are passive. 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.
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.
You can invest in anything that is not prohibited as defined by
the Internal Revenue Code. Many of our clients purchase real
estate, notes, precious metals, private placements, accounts
receivable, tax lien certificates, and so much more.
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 are 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)).
Generally, a prohibited transaction in an IRA is any improper use
of an IRA account or annuity by the IRA owner, his or her
beneficiary or any disqualified person. Disqualified persons
include the IRA owner’s fiduciary and members of his or her family
(spouse, ancestor, lineal descendant, and any spouse of a lineal
descendant).
Generally, if an IRA owner or his or her beneficiaries engage in a
prohibited transaction in connection with an IRA account at any
time during the year, the account stops being an IRA as of the
first day of that year. The effect of this is the account is
treated as distributing all its assets to the IRA owner at their
fair market values on the first day of the year. If the total of
those values is more than the basis in the IRA, the IRA owner will
have a taxable gain that is includible in his or her income.
IRS guidelines highlight that you cannot personally benefit from the investments/transactions in your Self-Directed IRA.
This is because, in relation to your IRA, you are a disqualified person. Think of assets in your name and your IRA’s
name as two different parties.
Common self-dealing problem examples:
- Co-mingling funds from your personal account and your IRA.
- Transferring/selling assets to or from a disqualified person (you) and the IRA, so that you move a taxable investment into your IRA, or one of your IRA investments to your personal taxable accounts.
- Owning stock or a house in your name and then selling it to your IRA.
- Transacting with a company with your IRA in which you own 50%+ of or hold a key leadership position.
- Paying yourself from your IRA, whether in the form of salary, commissions, or discounting/increasing costs in other areas of a transaction because of your work.
- Utilizing your own IRA investment for benefit and pleasure, such as staying in your IRA’s investment real estate for vacation, buying raw land from your IRA, or building a cabin and hunting ground.
- Putting your personal name on the final paperwork of investments, instead of signing as your IRA LLC manager.
You can view your account at any time. In addition, we post
quarterly and annual statements. You can opt to have statements
mailed to you for a fee.
Required minimum distributions are the minimum amounts that must
be distributed to you from your retirement account(s), with the
exception of the Roth IRA. These requirements are age based and
change frequently. Please see our
INFO KIT for the
most up to date information.
Depending on the method that you choose to receive your funds, a
fee may be applied. See our
Fee Schedule for
details.
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. Alternatively, a link can be emailed to you
to pay online.
You can choose the amount of Federal taxes withheld. If no amount
is indicated on the
Distribution Request Form, 10% will be automatically
withheld. We do not withhold state taxes.
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 your distribution the following month.
It is very important that a prohibited party is not involved. You
will need to have the expense paid by a non-prohibited party and
then submit an Expense Payment Authorization Form including a copy
of the invoice for reimbursement.
You can elect to have taxes withheld on the
Roth Conversion Form if you would like. If you do
not elect to waive taxes, they will be withheld.
You would need to complete an
Expense Payment Authorization Form and include a
copy of the invoice that you would like to be paid. Submit the
completed form to [email protected].
Yes. It is possible to take possession of a physical asset. You
must submit the
Distribution Request Form and a Fair Market Valuation Form with supporting
documentation. You will be required to re-register the asset and
provide confirmation of same.
No, you do not need to contact us. You will indicate the payment
structure you prefer on the
Expense Payment Authorization Form.
Yes. We will send you an email confirming that your request has
been processed.
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 Expense Payment Authorization Form will need to be
resubmitted to [email protected] for processing within 48
business hours.
Yes. We require a copy of the invoice to ensure we have the
correct information to fulfill your request efficiently.
No. Each IRA plan needs to submit its own
Expense Payment Authorization Form with the relevant
percentage before we can process them.
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.
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. IRAs are never exempt from Federal or State Tax
Authorities.
Your self-directed IRA can partner funds to purchase a portion of
an investment and to join larger investment groups. You can
partner your IRA funds with your personal funds, with another IRA,
entity, or person (including a disqualified person or entity).
iPlanGroup is responsible for signing on behalf of your IRA.
“iPlanGroup Agent For Custodian FBO {Account Owner Name} ,
{Account Type} , {Account Number}”
- Expense related to your asset, please email [email protected].
- investment, please email [email protected]
- fees or maintenance, please email [email protected]
- New Account, please email [email protected]
No, please do not endorse the back of any checks regarding your
self-directed IRA.
Yes, each expense payment needs its own
Expense Authorization Form.
Statements are uploaded to our client portal quarterly. After your
statement has been successfully uploaded you will receive an email
notification. If you would prefer to receive your quarterly
statements through the mail this option can be selected when
filling out your account application form. If your account is
already established, please feel free to call in to one of our
representatives to have the necessary changes made to your account
settings.
Yes, you can. Debt financing can be done via a non-recourse loan.
It is your responsibility as the account holder to source a lender
that best suits your needs.
Unfortunately no. iPlanGroup is a passive agency and we are not
legally allowed to give out investment advice. However, we are
allowed to clarify what actions are prohibited according to IRS
guidelines.
Most requests will be processed within 1-2 business days. Account
transfers into iPlanGroup are processed same day however the
completion time depends on the processing times of your current
custodian.
No you do not, however it is important to know that these are
taxable events.
No, when funds are being transferred internally, we only require
one transfer request form per transaction.
To begin a 401k conversion, please contact your plan administrator
for approval. Upon receipt of approval letter please forward it to
iPlanGroup along with a completed
iPlanGroup Conversion Form.
In order to initiate a rollover the account owner must reach out
to their current custodian in order to begin the process.
Our office hours are Monday through Friday 9am – 5pm. In order to
serve you as efficiently as possible please notify us that you’ll
be stopping by so that we can have your documents ready for you
when you arrive.
To authorize a third party to view and or make changes to your
account you must first fill out our
Authorized Agent Form
The main difference is speed. An ACH payment is processed within
3-5 days while a wire transfer is typically processed in 1-2
business days.
Investment documents can only be signed by designated signers at
iPlanGroup. You cannot sign on behalf of your IRA.
Yes, you can. The IRS does allow penalty-free withdrawals of up to
$10,000 of IRA funds for first-time homebuyers.
It is your responsibility as the account holder to obtain legal
advice as to the best course of action going forward. iPlanGroup
is a passive administrator therefore we are not permitted to offer
legal advice pertaining to investments.
If you are concerned about potentially illegal practices within an
investment you should reach out to an attorney or legal
representative as soon as possible.
Yes you can! In order to begin this process we suggest you reach
out to your 401k administrator.
The most up to date contribution limits for each account type can
be found in our
Info Kit
In order to initiate a rollover the account owner must reach out
to their current custodian in order to begin the process.
Yes you can. However, it is very important that you maintain clear
records documenting the separation of IRA and personal funds
within your investment. This is for your own protection in the
event of an IRS audit.
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 varied types of investments they involve. iPlan
understands these requirements and performs them all efficiently.
At iPlanGroup, we are dedicated to making the investment process
as easy and painless as possible. We are passive. 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.
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.
Most requests will be processed within 1-2 business days. Account
transfers into iPlanGroup are processed same day however the
completion time depends on the processing times of your current
custodian.
You can invest in anything that is not prohibited as defined by
the Internal Revenue Code. Many of our clients purchase real
estate, notes, precious metals, private placements, accounts
receivable, tax lien certificates, and so much more.
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 are 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)).
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.
Your self-directed IRA can partner funds to purchase a portion of
an investment and to join larger investment groups. You can
partner your IRA funds with your personal funds, with another IRA,
entity, or person (including a disqualified person or entity).
Yes, you can. Debt financing can be done via a non-recourse loan.
It is your responsibility as the account holder to source a lender
that best suits your needs.
Unfortunately no. iPlanGroup is a passive agency and we are not
legally allowed to give out investment advice. However, we are
allowed to clarify what actions are prohibited according to IRS
guidelines.
Yes you can. However, it is very important that you maintain clear
records documenting the separation of IRA and personal funds
within your investment. This is for your own protection in the
event of an IRS audit.
Investment documents can only be signed by employees listed on
iPlanGroup’s corporate resolution.
Yes, you can. The IRS does allow penalty-free withdrawals of up to
$10,000 of IRA funds for first-time homebuyers.
It is your responsibility as the account holder to obtain legal
advice as to the best course of action going forward. iPlanGroup
is a passive administrator therefore we are not permitted to offer
legal advice pertaining to investments.
If you are concerned about potentially illegal practices within an
investment you should reach out to an attorney or legal
representative as soon as possible.
The most up to date contribution limits for each account type can
be found in our
Info Kit
You can elect to have taxes withheld on the
Roth Conversion Form if you would like. If you do
not elect to waive taxes, they will be withheld.
To begin a 401k conversion, please contact your plan administrator
for approval. Upon receipt of approval letter please forward it to
iPlanGroup along with a completed
iPlanGroup Conversion Form.
Yes you can! In order to begin this process we suggest you reach
out to your 401k administrator.
In order to initiate a rollover the account owner must reach out
to their current custodian in order to begin the process.
Statements are uploaded to our client portal quarterly. After your
statement has been successfully uploaded you will receive an email
notification. If you would prefer to receive your quarterly
statements through the mail this option can be selected when
filling out your account application form. If your account is
already established, please feel free to call in to one of our
representatives to have the necessary changes made to your account
settings.
Required minimum distributions are the minimum amounts that must
be distributed to you from your retirement account(s), with the
exception of the Roth IRA. These requirements are age based and
change frequently. Please see our
INFO KIT for the
most up to date information.
Depending on the method that you choose to receive your funds, a
fee may be applied. See our
Fee Schedule for
details.
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. Alternatively, a link can be emailed to you
to pay online.
You can choose the amount of Federal taxes withheld. If no amount
is indicated on the
Distribution Request Form, 10% will be automatically
withheld. We do not withhold state taxes.
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 your distribution the following month.
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 Expense Payment Authorization Form will need to be
resubmitted to [email protected] for processing within 48
business hours.
iPlanGroup is responsible for signing on behalf of your IRA.
“iPlanGroup Agent For Custodian FBO {Account Owner Name} ,
{Account Type} , {Account Number}”
- Expense related to your asset, please email [email protected].
- investment, please email [email protected]
- fees or maintenance, please email [email protected]
- New Account, please email [email protected]
Statements are uploaded to our client portal quarterly. After
your statement has been successfully uploaded you will receive
an email notification. If you would prefer to receive your
quarterly statements through the mail this option can be
selected when filling out your account application form. If
your account is already established please feel free to call
in to one of our representatives to have the necessary changes
made to your account settings.
No you do not, however it is important to know that these are
taxable events.
No, when funds are being transferred internally we only
require one transfer request form per transaction.
Our office hours are Monday through Friday 9am – 5pm. In order
to serve you as efficiently as possible please notify us that
you’ll be stopping by so that we can have your documents ready
for you when you arrive.
In order to authorize a third party to view and or make
changes to your account you must first fill out our
Authorized Agent Form
The main difference is speed. An ACH payment is processed within
3-5 days while a wire transfer is typically processed in 1-2
business days.
Generally, a prohibited transaction in an IRA is any improper use
of an IRA account or annuity by the IRA owner, his or her
beneficiary or any disqualified person. Disqualified persons
include the IRA owner’s fiduciary and members of his or her family
(spouse, ancestor, lineal descendant, and any spouse of a lineal
descendant).
Generally, if an IRA owner or his or her beneficiaries engage in a
prohibited transaction in connection with an IRA account at any
time during the year, the account stops being an IRA as of the
first day of that year. The effect of this is the account is
treated as distributing all its assets to the IRA owner at their
fair market values on the first day of the year. If the total of
those values is more than the basis in the IRA, the IRA owner will
have a taxable gain that is includible in his or her income.
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.
It is very important that a prohibited party is not involved. You
will need to have the expense paid by a non-prohibited party and
then submit an Expense Payment Authorization Form including a copy
of the invoice for reimbursement.
You would need to complete an
Expense Payment Authorization Form and include a
copy of the invoice that you would like to be paid. Submit the
completed form to [email protected].
Yes. It is possible to take possession of a physical asset. You
must submit the
Distribution Request Form and a
Fair Market Valuation Form with supporting
documentation. You will be required to re-register the asset and
provide confirmation of same.
No, you do not need to contact us. You will indicate the payment
structure you prefer on the
Expense Payment Authorization Form.
Yes. We will send you an email confirming that your request has
been processed.
Yes. We require a copy of the invoice to ensure we have the
correct information to fulfill your request efficiently.
No. Each IRA plan needs to submit its own
Expense Payment Authorization Form with the relevant
percentage before we can process them.
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. IRAs are never exempt from Federal or State Tax
Authorities.
iPlanGroup is responsible for signing on behalf of your IRA.
“iPlanGroup Agent For Custodian FBO {Account Owner Name} ,
{Account Type} , {Account Number}”
No, please do not endorse the back of any checks regarding your
self-directed IRA.
Yes, each expense payment needs its own
Expense Authorization Form.