What to Expect When You’re Self-Directing: Notes

We want your Note investment process to go as smoothly as possible.  Before you get started, call us so we can walk you through the process.  Self-Directed rules differ from the rules of investing with personal funds (non-qualified funds) and we are here to help.

Please review this list before submitting your paperwork to us. With a self-directed IRA certain parties are Qualified and some are Disqualified to your transaction:

Who’s Qualified

Your brothers and sisters

Your spouse’s brothers and sisters

Your spouse’s parents

Your spouse’s grandparents

Your spouse’s stepchildren

Your grandparent’s spouse, if not your natural grandparent

Your aunts, uncles, and cousins

Who’s Disqualified

You

Your spouse

Your parents and/or your adoptive parents

Your natural grandparents

Your natural children and/or your adopted children

Your stepchildren

The spouse of your natural children

Your grandchildren

Any fiduciary

Any people providing services to your IRA

We want to help you prevent a “Prohibited Transaction”

Neither you nor any disqualified people may benefit from IRA

  • Present Benefit
  • Indirect Benefit
  • Personal Benefit

Cannot buy, sell or exchange property between plan and Self or Disqualified people

A Disqualified person cannot provide goods, services or facilities to the IRA

When you submit your note documents to us we will review them for the following:

  • Can we see any sign of a prohibited transaction?
  • Is the name of the investor correct (the investor is the retirement account)
  • Are there enough funds in the account to cover the investment?
  • Is the Direction of Investment form fully completed?
  • Do the amounts on the DOI and the investment documents match?
  • Did the borrower sign the notes?

When investing in a note, please insure that the following items are supplied for Loan:

  • Loan Docs – Lender = “<client First Name Last Name>, legal owner via non-trust custodial IRA with AET”
  • Borrower is US Based – Loan Payments in US Currency
  • Check for disqualified parties – borrower cannot meet IRC 4975 definition of disqualified party
  • Check to insure borrower is not related or disqualified party
  • Check/wire instructions need to be presented
  • Check for funds being sent to third parties or disqualified parties
  • No offshore lending or payments or currency conversion

Your documentation will go through two reviews.  First there is a Compliance Review.  After the Compliance Review we may come back to you with items that need to be corrected or we may request additional documentation.  The second review is the Funding Review.  This is the last set of eyes to look at the transaction before account funds are disbursed.  Additional conditions may be requested at this time.

What You (The Investor) Does

◆ Does all the homework on the investment risk
◆ Chooses the investment
◆ Conducts all due diligence
◆ Negotiates the price of the asset
◆ Makes sure investments are not prohibited by IRS
◆ Makes all investments in the name of the IRA account
◆ Makes sure transactions don’t include disqualified persons
◆ Monitors their account
◆Completes documents or has them completed

Services uDirect IRA Services Provides:

◆ Administers the sales and purchases of assets, and processes invoices
◆ Administers account contributions and distributions
◆ Provides accurate and timely IRS reporting
◆ Provides IRA account record-keeping
◆ Provides an online statement available 24/7

What uDirect IRA Services Does Not Do:

◆ Endorse any particular product or company
◆ Offer products or recommend investments
◆ Provide tax or investment advice
◆ Provide legal or financial advice
◆ Supply investment templates
◆ Complete account-holder’s forms

You can find more helpful information on investing HERE

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