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Find answers to common questions about self-directed IRAs, account types, alternative assets, and more.
Required Minimum Distributions (RMDs) are the minimum amounts generally required to be withdrawn from certain retirement accounts each year once the account owner reaches the applicable RMD age.
Roth IRAs generally do not require RMDs during the original account owner’s lifetime. Different distribution rules apply to inherited retirement accounts.
A self-directed IRA provides greater flexibility and control over the types of assets your retirement account can hold. In addition to traditional assets, a self-directed IRA can hold a broader range of allowable alternative assets, including real estate, promissory notes, private entities, precious metals, and more.
The account retains the tax advantages associated with its IRA type while providing additional choices for how retirement assets are held.
Certain assets, including collectibles and life insurance contracts, are not permitted in an IRA. In addition, IRS rules prohibit certain transactions involving the IRA owner and other disqualified persons. These are known as prohibited transactions.
Prohibited transactions generally include certain forms of self-dealing or using IRA assets for the personal benefit of a disqualified person. Violating these rules can result in significant tax consequences and may affect the tax-advantaged status of the IRA.
Account owners are responsible for ensuring their assets and transactions comply with applicable IRS rules. Consult a qualified tax or legal professional when guidance is needed.
Mountain West IRA provides administrative and recordkeeping services for self-directed IRAs and other retirement accounts. We assist with account establishment, funding, asset purchases, ongoing account administration, and required reporting.
As a passive administrator, Mountain West IRA processes transactions at the direction of the account owner. We do not select, recommend, endorse, or evaluate assets and do not provide financial, tax, or legal advice.
Visit our Retirement Plans page to learn more about the account types we administer.
The appropriate retirement plan will depend on your individual circumstances. Factors to consider may include:
You can review our Retirement Plans section to learn more about available account types, eligibility requirements, and contribution limits.
Mountain West IRA does not recommend or select retirement plans for clients. Consult a qualified tax or financial professional to determine which account type may be appropriate for your circumstances.
Mountain West IRA provides educational resources to help you learn more about self-directed IRAs, alternative assets, account requirements, and related topics. You can sign up for our monthly newsletter and explore our articles, guides, and other educational resources.
For current federal tax rules and retirement account requirements, refer to official IRS resources. For guidance specific to your circumstances, consult a qualified tax, legal, or financial professional.
Mountain West IRA provides educational information but does not provide financial, tax, legal, or asset advice.
IRAs must be held by a qualified custodian or trustee, which is responsible for certain custody and IRS reporting requirements. Because self-directed IRAs can hold alternative assets, not all IRA custodians support these types of assets or transactions.
Mountain West IRA provides administrative and recordkeeping services for self-directed IRAs, including account establishment, transaction processing, account statements, and required reporting. Mountain West IRA processes transactions at the direction of the account owner and does not select or evaluate assets.
Learn more about Mountain West IRA.
Yes. Self-directed IRAs are an established retirement account option for individuals who want greater flexibility in the types of assets their IRA can hold. They provide access to a broader range of allowable alternative assets than are typically available through traditional IRA providers.
Self-directed IRAs generally follow the same tax rules as other IRAs of the same type. The primary difference is the broader range of allowable assets the account can hold. Tax treatment depends on the type of retirement account and the individual’s circumstances.
Yes. A self-directed IRA may hold a variety of non-traditional assets, provided the asset and transaction comply with applicable IRS rules and regulations. Certain assets and transactions are prohibited.
No. A self-directed IRA may hold real estate, provided the transaction complies with applicable IRS rules, including prohibited transaction requirements.
A prohibited transaction is a transaction involving a self-directed IRA that is not permitted under applicable IRS rules. These rules generally restrict certain transactions between the IRA and disqualified persons, including the account owner and certain family members or related parties.
Examples may include using IRA assets for personal benefit, selling personally owned property to the IRA, borrowing money from the IRA, or conducting certain transactions with other disqualified persons.
Prohibited transactions can result in significant tax consequences and may affect the tax-advantaged status of the IRA. Consult a qualified tax or legal professional if you have questions about a specific transaction.
A self-directed IRA follows the same IRS rules as other IRAs of the same type. The primary difference is the range of assets the custodian or administrator allows the account to hold.
Many traditional IRA providers limit accounts to conventional assets. Mountain West IRA specializes in self-directed IRAs that can hold a broader range of allowable alternative assets, including real estate, private entities, promissory notes, precious metals, and more.
All assets and transactions must comply with applicable IRS rules and Mountain West IRA requirements.
Many retirement account providers limit the assets available to traditional options such as stocks, bonds, mutual funds, and CDs. Self-directed IRAs can hold a broader range of allowable alternative assets, including real estate, private entities, promissory notes, and certain precious metals.
The same general IRA rules apply, along with additional requirements that may apply depending on the assets and transactions involved.
Understanding self-directed IRAs can help real estate professionals better serve clients who may choose to purchase real estate through their retirement accounts.
Knowing the basic requirements and process can help you recognize when a self-directed IRA is involved, understand how the transaction differs from a traditional real estate purchase, and work more effectively with the account owner, title company, and IRA administrator.
Mountain West IRA provides education and administrative support throughout the process but does not provide financial, tax, legal, or asset advice.
No. Mountain West IRA is a passive self-directed IRA administrator. We provide account administration, process transactions at the direction of the account owner, prepare account statements, and complete required IRS reporting.
Mountain West IRA does not sell or offer assets for purchase and does not select, recommend, endorse, research, evaluate, or perform due diligence on assets. Account owners are responsible for selecting their assets and conducting their own due diligence.
Mountain West IRA does not provide financial, tax, legal, or asset advice. Consult a qualified professional when guidance is needed.
Mountain West IRA typically processes transaction funding within 3 business days after all required documentation and complete funding instructions have been received.
Processing times may vary depending on the type and complexity of the transaction, documentation requirements, and third parties involved. Expedited processing may be available for an additional fee on eligible transactions. Contact Mountain West IRA to confirm availability and current fees.
A self-directed IRA can hold a wide variety of alternative assets, provided the asset and transaction comply with applicable IRS rules and regulations. Examples include:
Certain assets, including collectibles and life insurance contracts, are prohibited.
For additional information about the types of assets a self-directed IRA may hold, visit our Asset Options page.
UBIT comes in two forms. Unrelated Business Income Tax (UBIT) and Unrelated Debt Financed Income Tax (UDFI).
UBIT applies to IRAs invested in entities that do not pay taxes (such as many LLCs) that are an operating entity of a business that produces in excess of $1,000 per year in income.
UDFI relates to an individual retirement account that has a debt financed portion. The UDFI tax is based on income from the Debt Financed portion provided that the net gain is more than $1,000 in a year.
Preparation of the 990-T tax forms is performed by you. The trustee or custodian or appropriate agent will file such taxes and sign the tax forms on behalf of your plan.
Read more on UBIT/UDFI here.
Yes. Depending on the account types and applicable rules, you may be able to consolidate multiple self-directed retirement accounts. Examples include:
Eligibility and tax treatment can vary based on the account types and circumstances.
Processing times vary depending on the type of request and when Mountain West IRA receives all required items.
For a new account, processing begins once we receive the completed account application, required documentation, and account establishment fee. The time it takes to fund the account will depend on the funding method, such as a transfer, rollover, or contribution, and may also depend on third-party processing times.
Asset purchases and other transactions have separate processing requirements and timelines based on the type of asset, required documentation, and parties involved.
If additional information or documentation is needed, our team will contact you. To help prevent delays, please submit complete and accurate documentation and respond promptly to any requests for additional information.
Several retirement plan options may be available to small business owners, depending on the business structure and whether the business has employees.
An Individual 401(k)may be available to a business owner with no common-law employees other than a spouse. Businesses with employees may have other options, including SEP IRAs, SIMPLE IRAs, or employer-sponsored 401(k) plans that allow for self-direction.
Eligibility, contribution limits, and plan requirements vary by plan type. Visit our Retirement Plans page to learn more about the options available for small businesses.
Fees vary based on the assets held within your self-directed IRA. Please review our Fee Schedule for general account fees. If your account holds precious metals, please refer to the Precious Metals Fee Schedule, which outlines the fees specific to those assets.
No. You and other disqualified persons cannot personally use or live in property owned by your self-directed IRA. Doing so would be considered a prohibited transaction.
Yes, provided it is a new purchase and the ownership percentages are established at the time of purchase.
The self-directed IRA’s share of all income and expenses must correspond to its ownership percentage, and all applicable IRA rules continue to apply.
No, your child is considered a disqualified person and this will create a prohibited transaction.
Yes. A self-directed IRA may obtain financing to purchase an asset. The financing must be non-recourse, meaning you or other disqualified persons cannot personally guarantee the loan or pledge personal assets as collateral.
No. Paying a company you own to provide services to an asset held by your self-directed IRA may constitute a prohibited transaction because you are a disqualified person.
No. Your self-directed IRA cannot purchase property from you because you are a disqualified person. A purchase between you and your IRA would be considered a prohibited transaction.
When your self-directed IRA purchases real estate, the funds are paid directly from the IRA and the property is held as an asset of the IRA. Because the funds are not distributed to you personally, the purchase itself is not considered a distribution.
All income generated by the property, such as rental income, must be returned directly to the self-directed IRA. Property-related expenses must also be paid from the IRA.
There may be several ways to fund a real estate purchase when your self-directed IRA does not have sufficient cash. Depending on your circumstances, options may include:
All funding methods must comply with applicable IRA rules, contribution and rollover requirements, and prohibited transaction rules.
A self-directed IRA may hold a variety of real estate assets, provided the property and transaction comply with applicable IRS rules and regulations.
Financing for real estate held by a self-directed IRA must be non-recourse, meaning the IRA holder or other disqualified persons cannot personally guarantee the loan. Non-recourse financing may be available through private lenders, financial institutions, or other financing sources.
You may choose to manage the property or hire a third-party property manager. If you manage the property yourself, you may oversee administrative matters, but you cannot personally perform repairs or provide services to the property that could result in a prohibited transaction.
All property-related expenses must be paid from the self-directed IRA. Mountain West IRA processes authorized payments from the IRA for expenses such as property taxes, insurance, repairs, maintenance, utilities, and property management fees. The IRA owner should not pay these expenses personally. Rental income and other property income must also be returned to the IRA.
No. You are a disqualified person, so your self-directed IRA cannot make a loan to you. Doing so would be considered a prohibited transaction.
Yes, provided the borrower is not a disqualified person and the transaction complies with applicable IRS rules. The loan may be secured or unsecured and the loan terms must be established and properly documented.
Yes. Two or more IRAs may participate in the same loan. Each IRA’s ownership percentage must be established when the promissory note is created, and all income and expenses must be allocated according to those ownership percentages.
Promissory note assets are written agreements in which a borrower agrees to repay a lender according to established terms. A self-directed IRA may hold certain promissory notes, which may be secured by real estate or other collateral, or may be unsecured.
When real estate is used as collateral, the loan may be secured by a deed of trust or mortgage, depending on the transaction and applicable state law.
The loan terms, including the repayment schedule and interest rate, are established between the parties and documented in the loan agreement.
Mountain West IRA provides administrative services for allowable promissory note and trust deed assets but does not select, recommend, endorse, or evaluate these assets.
Yes. A self-directed IRA may hold interests in certain private entities, provided the asset and transaction meet applicable requirements.
Mountain West IRA does not identify, recommend, endorse, research, or perform due diligence on private entities. Account owners are responsible for selecting the asset and conducting their own due diligence.
Private placement assets are interests in privately held companies or entities that are not publicly traded. A self-directed IRA may hold certain private placements, including LLCs, partnerships, joint ventures, and privately held stock, provided the asset and transaction meet applicable requirements.
Mountain West IRA does not select, recommend, endorse, or perform due diligence on private placement assets.
A Joint Venture (JV) is an arrangement between two or more individuals or entities formed for a specific business activity or project. The joint venture agreement generally establishes each party’s responsibilities, ownership interests, and how income, expenses, profits, and losses are allocated.
A self-directed IRA may participate in certain joint ventures, provided the asset and transaction meet applicable requirements. Account owners are responsible for reviewing the agreement and conducting their own due diligence.
A Limited Liability Company (LLC) is a business structure that generally provides limited liability protection to its owners while offering flexibility in how the business is structured and managed. A self-directed IRA may hold an ownership interest in certain LLCs, provided the asset and transaction meet applicable requirements.
Mountain West IRA requires annual documentation confirming the LLC is in good standing and an annual fair market valuation provided by a qualified third party.
Account owners are responsible for conducting their own due diligence and ensuring the transaction complies with applicable rules.
A Limited Partnership (LP) is a business structure that generally includes one or more general partners who manage the business and limited partners who typically do not participate in day-to-day management. A self-directed IRA may hold an interest in certain limited partnerships, provided the asset and transaction meet applicable requirements.
Partnership interests held by a self-directed IRA may generate Unrelated Business Taxable Income (UBTI), which could require the IRA to file Form 990-T and pay applicable taxes.
Account owners are responsible for reviewing the partnership documents, conducting their own due diligence, and determining potential tax implications. Consult a qualified tax or legal professional regarding your specific transaction.
Mountain West IRA does not select, recommend, endorse, research, or evaluate partnership assets.
A private stock asset represents ownership in a privately held company whose shares are not publicly traded on a stock exchange. A self-directed IRA may hold certain private stock assets, provided the asset and transaction meet applicable requirements.
Private stock may be subject to federal and state securities laws and restrictions related to its purchase, transfer, or sale. Account owners are responsible for reviewing the offering documents and conducting their own due diligence.
Mountain West IRA does not select, recommend, endorse, research, or evaluate private stock assets.
Yes. A self-directed IRA may hold certain precious metals and foreign currency, provided the assets meet applicable requirements.
Eligible precious metals may include certain gold, silver, platinum, and palladium products. Foreign currency may also be held when purchased and maintained in accordance with applicable requirements.
Mountain West IRA provides administrative services for these assets but does not select, recommend, endorse, or evaluate specific precious metals, currencies, dealers, or vendors.
No. You cannot transfer personally owned precious metals or foreign currency into your self-directed IRA. Because you are a disqualified person, transferring or selling personally owned assets to your IRA would be considered a prohibited transaction.
No. Account owners are responsible for selecting the dealer and the assets they wish to purchase. Mountain West IRA does not select, recommend, endorse, or promote specific dealers, vendors, or assets.
A self-directed IRA may hold certain qualifying precious metals in the form of bullion or coins, provided they meet applicable IRS requirements. Precious metals must also be held in accordance with applicable custody and storage requirements.
Allocated storage means specific precious metals are separately identified and held for the account. When distributed, the same specifically identified metals are returned.
Unallocated storage means metals are held with other metals of the same type. When distributed, the account receives metals matching the applicable type and specifications rather than the exact items originally deposited.
Storage options and availability may vary depending on the type of precious metal and the depository.
Gold: Generally must meet a minimum fineness of .995, with certain IRS-approved exceptions, such as American Gold Eagle coins.
Silver: Generally must meet a minimum fineness of .999.
Platinum and Palladium: Generally must meet a minimum fineness of .9995.
Foreign Currency: Certain foreign currencies may be held within a self-directed IRA and must be purchased through a currency dealer.
Certain coins and collectibles are not permitted. All assets must meet applicable requirements to be eligible for purchase by a self-directed IRA.
The account owner selects the depository used to store precious metals held by the self-directed IRA. Mountain West IRA does not select, recommend, endorse, or evaluate depositories. Account owners are responsible for conducting their own due diligence when selecting a depository.
Contributions that exceed the applicable annual limit may be subject to a 6% excise tax for each year the excess remains in the IRA. Certain corrective options may be available depending on when the excess is identified and corrected.
Because the requirements and tax consequences can vary, consult a qualified tax professional or current IRS guidance when correcting an excess contribution.
Not necessarily. A self-directed IRA is subject to the same IRS rules as other IRAs of the same type. However, holding alternative assets may involve additional requirements related to prohibited transactions, valuations, reporting, and other compliance matters.
Account owners are responsible for ensuring their transactions comply with applicable IRS rules. Mountain West IRA provides administrative and custodial services but does not provide tax, legal, or financial advice. Consult a qualified tax or legal professional when guidance is needed.
Depending on the activity in your account, you may receive:
Additional tax forms may apply depending on your account activity and the assets held within your self-directed IRA.
Processing times vary based on the type and complexity of the asset and begin once all required documentation and complete funding instructions have been received.
Straightforward transactions, such as private notes, are typically processed within 3 business days. Real estate purchases, private entities, and other more complex transactions may require 3–10 business days.
Incomplete documentation, third-party requirements, or changes to funding instructions may extend processing times.
Eligible funds from a 401(k), 403(b), TSP, or another IRA may generally be moved to a self-directed IRA without immediate taxes or penalties when completed as a direct rollover or transfer.
If funds are paid directly to you instead, different rules apply. Generally, an eligible rollover distribution must be deposited into an eligible retirement account within 60 days to avoid potential taxes and penalties.
Tax treatment and rollover eligibility can vary based on the account type and individual circumstances.
Yes. A prohibited transaction can have significant tax consequences and may cause the self-directed IRA to lose its tax-advantaged status. Because the consequences can vary, you should consult with a qualified tax or legal professional regarding your specific situation.
Yes. However, the taxable portion of a distribution taken before age 59½ may be subject to income tax and an additional 10% tax unless an IRS exception applies.
Exceptions may be available for certain circumstances, including qualified higher education expenses, certain first-time homebuyer expenses, birth or adoption, qualifying medical expenses, and disability.
Consult a qualified tax professional to determine the tax treatment of your distribution and whether an exception applies.
A self-directed IRA may make distributions in cash or, in certain circumstances, distribute an asset directly to the account owner. When a non-cash asset is distributed, additional valuation, reporting, and tax requirements may apply.
The IRS provides exceptions to the 10% additional tax for certain early IRA distributions. Examples may include qualified higher education expenses, certain first-time homebuyer expenses, qualifying medical expenses, disability, birth or adoption, and other circumstances defined by the IRS.
Income taxes may still apply depending on the account type and distribution. Different rules may also apply to SIMPLE IRAs and other account types. Consult a qualified tax professional or current IRS guidance to determine whether an exception applies.
Your self-directed IRA generally passes to the beneficiary or beneficiaries you have designated. The options available to beneficiaries depend on factors such as their relationship to the account owner, the type of IRA, and applicable IRS distribution rules.
Beneficiaries may be able to maintain alternative assets within an inherited IRA while completing required distributions. Different rules apply to spouses, non-spouse beneficiaries, trusts, and other beneficiaries.
Because inherited IRA requirements vary by beneficiary and individual circumstances, beneficiaries should consult a qualified tax or estate planning professional regarding their options and distribution requirements.
Yes. Self-directed IRAs are subject to federal rules, but state laws may also affect areas such as state tax treatment, creditor protection, and inheritance matters. These laws vary by state, so consult a qualified tax or legal professional regarding your specific circumstances.