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Frequently Asked Questions
No, you can select any depository, but there are depositories that Digital Trust currently holds metals with.
Segregated storage is when you choose to store your Precious Metals in a separate vault at the depository storing your metals. There are typically higher fees associated with this storage option. Non-segregated (commingled) storage is when you choose to store your metals in a vault that also holds metals for other customers. Commingled vaults have sub-accounting in place for each customer to ensure appropriate accounting.
No. You can only contribute cash to your qualified account with annual contributions or through rollovers or transfers from other qualified accounts.
Because the LLC is the owner of the investment, all income and expenses can go through the business checking account.
No. That would be considered a prohibited transaction.
Yes. Please contact customer service at Digital Trust for information on the procedure to purchase real estate through a corporate entity such as an LP or LLC.
If your qualified account invests in an LLC or LP that you or a disqualified person owns or controls, the investment could be a prohibited transaction.
Yes. Investments in newly formed private entities are not prohibited under the Internal Revenue Code, with the exception of subchapter S corporations.
According to the IRS, a Mortgage note must be made for value and cannot be a gift or for free.
No, different percentages can be permitted so long as the note is for more than the amount being borrowed.
No. This is potentially considered a prohibited transaction, per Internal Revenue Code 4975. You may not purchase a property or an interest in a property that is currently owned by any disqualified party. Per IRS Publication 590: disqualified parties include your fiduciary and members of your family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant), and more.
You can purchase real estate directly through your IRA account, have real estate transferred from an existing IRA or roll it over from a qualified plan. It may also be acquired by your IRA account as a result of a foreclosure on a mortgage or deed of trust which is currently held within your IRA account.
Yes. Digital Trust will hold direct title to real property, in addition to interests in Limited Liability Companies (LLC) or Limited Partnerships (LP) that hold title to real property; notes secured by trust deeds/mortgages; and interests in Real Estate Investment Trusts (REITs).
This is where 50% or more of the entity will be owned by the Digital Trust IRA and other disqualified persons or family members.
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.
More information can be found on IRS.gov, particularly their page on Unrelated Business Income Tax. Additionally, many tax advisors and CPAs will be able to assist in the determination and calculation of UBIT and UDFI owed on your retirement account’s investments.
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.
No. This is not a service that Digital IRA provides. You will need to contact your attorney or tax advisor with respect to the entity’s formation.
The supporting documents needed to purchase an investment vary based on the investment being purchased. Types of documents required for each investment type are listed on our Direction of Investment Form listed on our Self-Directed Account Forms page.
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.
Investments made from accounts with us must be titled:
DIGITAL TRUST FBO YOUR NAME & ACCOUNT TYPE
Example: Digital Trust FBO John Smith Roth IRA
Your IRA account is buying the property and not you as an individual. Therefore, it must be titled as follows: “Digital Trust FBO: Account holder name and Account Type”. All documents related to the purchase of the property such as the contract/purchase agreement, title commitment/insurance, liability insurance, etc. must be titled accordingly.
No. If you should need tax or legal advice regarding your investment, you may engage a specialized tax law firm to provide the needed advice.
If your IRA or Qualified Retirement Plan loans funds to certain family members, such as lineal descendants and spouses of lineal descendants, or an entity that you or certain family members own or control, whether controlled individually or as an officer of a corporate general partner, managing member, etc., the transaction could possibly be a prohibited transaction under the Internal Revenue Code Section 4975. Our policy on this issue is that if you or another disqualified person is an officer or director of an entity, or an officer of a corporate general partner, managing member, etc., and you will collectively own less than 50% of the entity, then you will need to obtain a legal opinion from an ERISA or tax attorney addressed to you in which the transaction is discussed in detail prior to us processing your investment instructions. If you, any family member, or disqualified persons collectively will own 50% or more of the entity, we will not process the investment even if you are able to obtain a legal opinion.
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.
Alternative assets can be held in a variety of qualified accounts including Traditional IRAs, Roth IRAs, SIMPLE IRAs, SEP IRAs, HSAs, ESAs, and 401(k)s including Solo 401(k)s.
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.
Generally, a loan can be taken from a 401(k) account for no more than $50,000 or 50% of the current vested account balance (whichever is less). Please see Retirement Plans FAQs Regarding Loans at IRS.gov for more information.
A traditional IRA can be converted to a Roth IRA by:
- Rollover – A distribution from a traditional IRA can be contributed to a Roth IRA within 60 days after distribution.
- Trustee-to-trustee transfer – The financial institution holding the traditional IRA assets will provide directions on how to transfer those assets to a Roth IRA with another financial institution.
- Same trustee transfer – As with the trustee-to-trustee transfer, the financial institution holding the traditional IRA assets will provide directions on how to transfer those assets to a Roth IRA. In this case, things should be simpler because the transfer occurs within the same financial institution.
A conversion results in taxation of any untaxed amounts in the traditional IRA. Also, the conversion is reported on Form 8606, Nondeductible IRAs.
To initiate a transfer of cash to your account with us, please complete the Incoming Transfer Form and select either Option A) Complete Transfer or Option B) Partial Transfer and select Cash. Please enter the amount of cash you would like to transfer in the line beside the Cash option. If selecting a “Complete Transfer”, please note that we cannot hold publicly traded stock, bonds, or mutual funds. This means that all assets must be liquidated prior to submitting the request. Incoming Transfer Forms must be sent to us so that we can execute the document and include a Letter of Acceptance with our submission to your current custodian. Sending this form directly to them without our signature or letter of acceptance will result in the rejection of your transfer request. This form can be sent to us via fax or email (if the resigning custodian accepts faxed transfer requests) or mail (required if the resigning custodian requires original transfer requests).
We only require a medallion signature guarantee on outgoing transfer requests that are faxed to us. If the originals are sent by mail, we do not require a medallion signature guarantee.
A direct rollover is a direct movement of assets from an eligible retirement plan to an IRA or another eligible retirement plan, or from an IRA to an eligible retirement plan, in which the individual does not take constructive receipt of the assets. An indirect rollover is a distribution of IRA or eligible retirement plan assets to an individual (individual takes receipt of the assets) that within 60 days is rolled over to the same type of IRA or to another eligible retirement plan. The amount sent to the new financial institution must be the same amount distributed from the old financial institution. This means that if funds were withheld for taxes, the amount withheld must be made up for by the client. Funds must be sent to the new financial institution within 60 days of constructive receipt of the funds from the old financial institution.
A transfer is a direct, nonreportable movement of assets, generally between two IRAs of the same type. A rollover is a reportable movement of assets between IRAs, between IRAs and eligible retirement plans, or between eligible retirement plans. Please note that as of 2015, the IRS has issued limitations on the number of IRA-to-IRA Rollovers. Only one IRA-to-IRA rollover can be done per 12-month period. Please see IRA One Rollover Per Year Rule for additional information regarding this change.
A transfer is a direct movement of assets, generally between two IRAs of the same type (i.e., Traditional IRA to Traditional IRA, Roth IRA to Roth IRA, etc.) from one financial institution to another in which the account owner does not take constructive receipt of the assets.
No. You or any disqualified person may not have any personal use or benefit of the property while it is held in your IRA account. The property is to be purchased for investment purposes only.
If an IRA holder is found to have engaged in a prohibited transaction under Internal Revenue Code Sections 4975 or 408 with IRA funds, it will result in a “deemed distribution” of the IRA. The taxes and penalties are severe and are applicable to all of the IRAs assets on the first day of the year in which the prohibited transaction occurred. If this deemed “distribution” occurs, it will be subject to ordinary income tax and, if you were under the age of 59 1/2 at that time, a ten (10%) percent excise tax on premature distributions may also be assessed. 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.
The Internal Revenue Code Section 4975 defines a prohibited transaction as any improper use of your retirement account. Additionally, a transaction between your IRA account and a disqualified person is a prohibited transaction. Disqualified Persons are defined to be the account owner, other fiduciaries, certain family members (lineal descendants and spouses of lineal descendants), and businesses under the account owners or disqualified person’s control. Please review the code for specific information and definitions. Other useful resources are the IRS Publications 560 and 590.
Generally, a “disqualified person” includes, but is not limited to:
- Your lineal ascendants and descendants
- The spouse of a lineal descendant
- Your spouse
- Any entity that is owned 50% or more by disqualified persons
- An entity that is controlled 50% or more by disqualified persons
Yes, your IRA can invest with other partners and yourself individually. However, it is important to consult legal counsel in these situations to observe formalities and rules that may be associated with that investment.
Tax forms filed with the IRS and annual statements back to 2014 can be accessed via our Online Portal. Starting in May of 2017 with the Form 5498, forms were uploaded annually as soon as they were mailed. If you need a copy of an annual statement or tax form filed with the IRS prior to 2014, please contact our VIP Services Team.
We assess a fee to custody and administer the account for the account holder. We do not receive a fee on your investment or your investment’s performance. Administration duties include the accounting for your investment, required IRS and state filings, facilitation of your investment, distribution requests, access to our Online Portal, and compliance. We charge a flat-rate annual fee to maintain your account, rather than a fee that increases based on the number of assets or the value of the assets held in your account.
Your Custodial and Document Fee are due at the time of account establishment and then annually thereafter on the anniversary of the establishment of your account. Transactional fees are due at the time of the transaction.
Download and complete a “Change/Update Contact Information” form which can be found on our Forms page at: https://digitalira.com/self-directed-account-forms/
Once completed, sign and submit to us:
Via Email: email@example.com
Via Fax: 800-777-9878
Via Mail: Lockbox #52417 P.O. Box #24812 Miami, FL 33102
Your account earns interest by lending your assets through our partner Genesis Global Trading Inc (“Genesis”). Genesis is the largest institutional digital asset lender in the market with an active loan portfolio of $3.8B (as of 12/31/2020). In addition to its lending services, Genesis serves as a leading prime broker in the market offering both spot and derivative execution services along with custody. Learn more about Genesis here.
Your funds are sent to Genesis who lends them out to the leading institutions in the digital asset space including some of the largest hedge funds, trading firms, and exchanges and does not underwrite any retail borrowers. Genesis utilizes a robust risk management framework composed of credit underwriting standards and procedures, 24/7 collateral management systems, and live-time liquidity monitoring and the company has faced zero defaults since inception in March of 2018.
We currently offer interest-earning on Cash (USD), Bitcoin (BTC), and Ethereum (ETH).
The interest rates display on our website are the rates you’ll receive (rates may change at any time, see your agreement for final rates). We charge $100 to start and $100 to stop your program.
Individuals in all 50 states are eligible, including New York, and a $10,000 minimum commitment is required.
Assets can be sold after they’ve been withdrawn. Funds require a settlement period of up to 5 days before they can be used for other purchases or to be withdrawn.
The fees for gold are the same as they are for all other assets.
Buying gold through a traditional firm can have high fees, it’s difficult to transfer, and it’s expensive to store. Our gold program removes the middlemen and is a cost-effective, convenient, and safe way to invest in physical gold using our proven, industry-leading platform.
Yes. Your gold is insured at Brink’s bullion vault facility and for any gold in transit. Learn more. Additionally, all digital assets purchased on our platform are stored with BitGo Trust, a US-registered qualified custodian, with a $100M insurance policy.
You have immediate ownership rights of your gold, similar to buying or selling any stock. The order can take up to 24 hours to settle and appear in your account after your purchase.
Your gold bars are held in leading Brink’s bullion vault facilities and it is identifiable with a unique serial number, purity, and weighting for each bar.
For every purchase of 1 gold, you are receiving ownership rights to one fine troy ounce of gold. Its value ties directly to the real-time market value of physical gold.
Yes. You are receiving ownership rights (“allocated gold”) to investment-grade physical gold bars. The gold is approved and regulated by the New York State Department of Financial Services and is fully backed by allocated gold.
We will attempt, but cannot guarantee, customers will receive any tokens derived from “hard forks.”
No. Your IRA funds are rolled over from your existing IRA account to a new IRA. Your funds remain in a retirement setting and will not result in any early withdrawal fees.
No. At this time, you cannot transfer your current cryptocurrency holdings into an account with us. The IRS requires that buying into a cryptocurrency-based IRA be done with US dollars.
Spending or withdrawing funds from any IRA account before you reach the retirement age of 59 ½ will result in early withdrawal tax penalties. Any IRA account is meant to be a fund drawn upon only after you retire. Selling your funds is approved so long as it is used to reinvest in an IRA or is held in your account in a liquid state.
We’re a full-service platform, and we will walk you through the process from start to finish. Our specialists can help you set up your account, roll over your funds from an existing retirement fund or from your bank, execute a self-directed trade, and move your coins securely into a digital wallet.
No. You are unable to purchase cryptocurrencies for your retirement account with any other custodian or exchange at this time. We offer cryptocurrencies like Bitcoin for IRAs and other retirement accounts.
There is a $3,000 minimum and no investment cap. We provide a full-service solution that facilitates the process for account set up, rollover of funds from an existing IRA custodian, access to our self-trading platform, and moving funds to a secure digital wallet for all retirement account types.
You can roll over funds from an existing IRA, Roth IRA, SEP IRA, SIMPLE IRA, 403b, or 401k into a self-directed IRA account with us.
We currently offer Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Stellar Lumens (XLM), Zcash (ZEC), Bitcoin Cash (BCH). You can invest entirely in one cryptocurrency or a combination of multiple cryptocurrencies.
There is an initial one-time service fee that varies depending on your investment amount. This service fee covers our comprehensive services, which include full support services for rollover of retirement funds, complete set up of a self-directed retirement account with BitGo, and best-in-class security storage, among other offerings. In addition, there is a minimal custodian and security fee.