You've invested in a private company with your self-directed IRA— now what? The paperwork is signed, the funds have been sent out, you're all done... right? Well, sort of. With a self-directed IRA, you're in the driver's seat— but that means you've got a few things to handle when it comes to your investment.
Here's what to remember to keep your self-directed retirement in check:
Once you've finalized the paperwork and IRA Resources has sent off the funds, that's the final step in your initial investment process. When complete, the investment provider may send a certificate showing the details and terms of your agreement. IRA Resources will need the original copy of this document for recordkeeping purposes as the administrator of the account— if you receive this document instead of IRAR, please forward the original to us for safekeeping.
The timing on the arrival of the confirmation varies. Sometimes they are sent as soon as the investment provider receives your funds, other times there's a set date the fund closes and they'll wait to send confirmations to all their investors— it really depends on the investment provider. If you haven't heard from your investment provider and it's been a while, reach out to them to inquire. We'd be happy to help you determine the next appropriate steps, but we are not directly associated with your investments and cannot speak on behalf of the investment provider.
Some investment providers want to have a copy of the subscription agreement in their files, which we send with your initial documents if required. IRA Resources does not need the original of this document, but we recommend you keep a copy for your own personal records.
Things To Remember:
- Does IRA Resources have the original certificate?
- Do you have a copy of the finalized subscription agreement?
Setting Up Systems For Success
To make sure the value of your asset stays up-to-date, make sure your investment provider is sending statements to both yourself and IRA Resources. This makes keeping your asset's fair market value updates hassle-free in the event you want to sell shares or take a distribution.
Similarly, you should monitor your statements from IRA Resources to ensure the value of your account is being updated as you expect, and that dividends are being paid as outlined in your purchase agreement. Is the value of your asset listed lower than it should be? Do you usually get dividends every month but suddenly they aren't showing up? These things are best to get sorted out sooner rather than later, and they're easier to catch if you're monitoring your account.
It's also important for you to read and, if needed, ask for financial or legal assistance in handling any communications from your investment provider. IRA Resources does not recommend or vet investments or investment providers, this is something you must do yourself. That is why it is essential to carefully look over any paperwork you receive to ensure correctness when managing your investment.
Things To Remember:
- Is my investment provider sending a copy of my statement to IRAR?
- Is my IRAR statement showing the asset value and income as expected?
- Am I monitoring all communications from my investment provider?
Capital Calls and Additional Fundings
Since you've invested in your private stock or fund through your IRA, all dividends need to go back into the IRA— not to you personally (this would be a prohibited transaction). To make this easy, make sure your investment provider has the correct address for IRA Resources, so they can send the funds to us directly. We'll reach out to you if we receive any correspondence that requires your input.
It's also a good idea to keep some cash in your account in case of unexpected expenses, capital calls, or perhaps an upcoming required minimum distribution. Since your IRA owns the stock itself, any payments must be made directly from the IRA. If you don't have enough money in the account, you can transfer, rollover, or contribute more funds— but if you hit your contribution limit and don't have other retirement accounts, you can find yourself in a bind. Prevent this ahead of time by keeping some liquidity in the account, so there's no need to worry if you suddenly have a bill to pay.
If you have any regularly recurring payments, like a yearly processing fee to your fund manager, you can avoid the hassle of manually submitting your payment authorization by setting up a recurring payment. Investors do this to better automate the process, making payments hands-off and stress-free, and it's simple to set up.
Things To Remember:
- Does the investment provider have the right address to send dividends?
- Do I have enough cash in my account to take care of unexpected expenses?
- Do I have any required recurring payments set up with IRAR?
The freedom to invest as you choose (and reap big rewards!) is one of best reasons to use a self-directed IRA. At IRA Resources, we aim to make it as easy as possible to succeed, and if you keep the above in mind after your investment, you're well on your way.
Have you covered all your bases? If you've got anything else on your mind, we'd be happy to answer your self-directed IRA queries. Submit a question and one of our Certified IRA Services Professionals (CISPs) will get back to you within one business day. Happy Investing!