What is the 50% rule?

This is where 50% or more of the entity will be owned by the Digital Trust IRA and other disqualified persons or family members.

What is a non-recourse loan?

Non-recourse loans are the only types of loans that are permitted to be utilized within a qualified account. Traditional mortgages use personal assets and accreditation as security for the loan.  Since personal assets cannot stand as security for the loan within a qualified account, the only recourse the bank has is to go after the property itself. Therefore, they typically will require a higher percentage of the cost of the property to be used as the down payment. Please consult your tax adviser about any Unrelated Debt Financed Income Tax (UDFI) that could arise due to obtaining a non-recourse loan.

What is Un-related Business Taxable Income (UBTI)?

Limited partnerships, limited liability companies and other entities that carry on an unrelated business or borrow funds to finance the acquisition of property may generate Unrelated Business Taxable Income (“UBTI”). UBTI is generally reported on Schedule K-1 issued by the entity. If the UBTI 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. We do not monitor UBTI and does not prepare IRS Firm 990-T. If the tax is applicable, you must prepare or have prepared IRS Form 990-T and forward it to us 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 our EIN or your own Social Security Number. For more information on UBTI, please refer to IRS Publication 598 and/or consult your tax advisor.

Why is Digital Trust listed as the owner of my asset?

As the custodian, we own the assets in each account for the benefit of (FBO) your individual account. This means that we execute all investment documents and all documents related to the sale of the asset. This titling also ensures that the IRS recognizes that you are not personally benefiting from the assets held in your account before retirement. This allows you to recognize any potential tax benefits for which you might be eligible.

Are there any types of investments that I cannot hold in my IRA?

IRS regulations prohibit IRA investments in life insurance and collectibles such as artwork, rugs, antiques, metals (there are exceptions for certain kinds of bullion), gems, stamps, coins (there are exceptions to certain coins minted by the U.S. Treasury), alcoholic beverages, certain other tangible personal property, and S-Corporations.

What types of investment can I hold in my IRA at Digital Trust?

There are several types of investments that we will process. They include but are not limited to: Deeds of Trust/Mortgages, Real Estate, Partnerships, Limited Partnerships (LP), Limited Liability Company (LLC), Joint Ventures (JV), Checkbook, LLC, Private Placements and certain Precious Metals.