Due to scheduled maintenance, STRATA Trust's online Account Access feature will be unavailable on Sunday, October 22, 2017, between 12:00 am - 6:00 am Eastern Time. We apologize for any inconvenience this may cause.  

Frequently Asked Questions

Frequently Asked Questions

Opening a self-directed IRA is a big step toward financial independence and your retirement. But as with any major financial decision, it’s important to have all the facts. That’s why we’ve highlighted our most commonly asked questions and provided a set of clear, straightforward answers.

Self-Directed IRAs

Learn the basic information about self-directed IRAs with these commonly asked questions.
  • What is a self-directed IRA?
    A self-directed IRA is a retirement account that puts you in control of your IRA investment. Unlike most retirement accounts whose investments are chosen by an account and/or fund manager, you choose what to invest in with a self-directed IRA. This allows you to diversify your retirement portfolio’s investment and potentially maximize returns.
  • Are investments in a self-directed IRA insured?
    The cash held in your STRATA custodial account is FDIC-insured up to $250,000, but any other investments held by your IRA are not FDIC-insured, are not guaranteed by STRATA and may lose value.
  • Are self-directed IRAs a target for potential fraud?
    While self-directed IRAs can be a safe way to invest retirement funds, investors should be mindful of potential fraudulent schemes when considering a self-directed IRA. Investors should understand that the custodians and trustees of self-directed IRAs may have limited duties to investors and that the custodians and trustees for these accounts will generally not evaluate the quality or legitimacy of an investment and its promoters. As with every investment, investors should undertake their own evaluation of the merits of a proposal and should check with regulators about the background and history of an investment and its promoters before making a decision. Learn more about how to protect yourself from fraud.
  • Are self-directed IRAs reported to the IRS?
    Yes. As with any IRA custodian, STRATA is required to file Form 5498 with the IRS each year as well as Form 1099R (if applicable).
  • Can I have a self-directed IRA if I participate in a retirement plan at work?
    You can have a Traditional or Roth IRA whether or not you participate in another retirement plan through your employer or business. However, you might not be able to deduct all of your Traditional IRA contributions if you or your spouse participates in another retirement plan at work. Roth IRA contributions might be limited if your income exceeds a certain level.
  • Does STRATA offer any investment products or investment advice?
    As a directed IRA custodian, STRATA does not sell investment products or provide investment advice. Custodians do not provide investment, tax or legal advice, so clients needing these services are urged to contact their professional advisor.

Direct Transfer

Direct transfers are the most common method of funding a new or existing self-directed IRA due to the tax advantages and simplicity of the transaction.
  • What is a Direct Transfer?
    A direct transfer is the movement of IRA funds or assets directly from one IRA custodian to another. Through a direct transfer, the IRA owner never takes possession of their retirement funds or assets. The main advantage of a direct transfer is that there is no tax liability or IRS reporting with the distribution. This is because funds are transferred from one institution to another. In most cases a direct transfer is a simpler option as it avoids having to comply with the 60 day rule and the possibility of incurring taxes and penalties.
  • How do I initiate a Direct Transfer?
    It’s easy to request a direct transfer for your IRA funds or assets.
    • If you don't already have an account with us, you’ll need to open an account and set up an IRA. Go to our Get Started section to open an IRA using our Online Account Opening feature or download the IRA account forms.
    • If you’re an existing account holder, simply download our IRA Transfer Request Form.
     
  • How long does a Direct Transfer take?
    A direct transfer usually takes about 10-14 days. This time frame may be reduced if you request overnight delivery or wire transfer of cash or make arrangements with your resigning IRA custodian to process via fax.
  • What else should I know about a Direct Transfer?
    It’s important to remember when transferring assets in-kind (other than cash), the assets must be something that STRATA Trust Company will accept and hold. If the asset(s) to be transferred is property (directly-owned) or a private equity or private debt investment, please refer to the appropriate Investment Checklist and Form for that investment type. Direct transfers of publicly traded stocks, bonds and mutual funds require a brokerage account with any clearing firm or discount brokerage.

Rollover

A rollover is typically initiated when a person changes jobs, retires or decides to transfer their IRA from one retirement account to another.
  • What is a Rollover?
    An IRA rollover is the movement of funds between two qualified retirement plans, such as from a 401(k) plan to an IRA, or from one IRA to another IRA. Rollovers may be subject to federal income tax unless all requirements are met (completed within 60 days and the same property is rolled over). Rollovers typically occur when you change jobs or retire and can take 2-6 weeks to complete. Rollover rules, which became effective in 2015, now limit each taxpayer to one IRA rollover during a 12-month period. Rollovers usually take place by one of these two methods: Indirect Rollover An indirect rollover is one method of transferring assets from a tax-deferred 401(k) plan to a Traditional IRA. With this method, the funds are actually given to you via check to be deposited into your own personal account. With an indirect rollover, it is then up to you to redeposit the funds into the new IRA within the allowed 60-day period to avoid penalty. If you choose to receive a direct payment of your funds, 20% of the funds may be withheld for taxes. You can recover the withheld amount if you deposit your assets into an IRA within 60 days — but you have to come up with the 20% withheld out of pocket. The deposit must be equal to the amount of your distribution, plus the 20% that was withheld. When you fund your Rollover IRA with 100% of your distribution, you will receive a refund for the withheld amount in the form of a tax credit when you file your tax return. If you do not make up the difference of the withheld amount, the IRS will consider it a distribution and will tax it as income. The amount may also be subject to an additional premature penalty tax if you are under age 59½. Direct Rollover By choosing a direct rollover, you can easily avoid the 20% withholding for taxes. With this method, the funds are actually made payable to your IRA custodian and may be mailed either to you or to your custodian. This allows for the funds to be rolled over directly from your employer’s qualified retirement plan into your IRA. Rollovers from retirement plans can be complicated. Consult your tax professional or contact us for assistance to make sure you understand and follow the rules.
  • Are there any restrictions on rollovers between IRA accounts?
    The IRS limits you to only one 60-day rollover during a 12-month period when rolling from one IRA account to another IRA. In addition, the same property rule applies, which means that you must rollover the same property (cash or in-kind assets) that was distributed to you from the other IRA.
  • How long does a Direct Rollover take?
    A direct rollover from an employer’s retirement plan generally takes 2-6 weeks, depending on how long it takes the plan administrator to process it.
  • How long does a Rollover take from one IRA to another IRA?
    You can request a distribution from another IRA and complete the rollover of the same cash or assets, generally in less time than it takes to complete a direct transfer. However, it is a reportable event which means the resigning IRA custodian will report the distribution on an IRS Form 1099. A distribution from your IRA is usually done either in the form of a check (if you've requested a liquidation) or as an in-kind distribution (if you requested re-registration of the assets). You then have up to 60 days to reinvest the funds or re-register the assets to your Rollover IRA. If the funds or assets are not rolled over within 60 days, taxes and possible penalties would be incurred. Important Note: A 2014 court ruling has changed the IRS's position regarding how often IRA rollovers may be completed. Since 2015, only one IRA-to-IRA rollover can be completed. Please review the One-Rollover-Per-Year Rule for more on this limit.
  • How is a Direct Rollover from a 401(k) or other employer-sponsored plan to STRATA accomplished?
    Whether you are retiring, changing jobs or separating from employment for any other reason, leaving a job can be the perfect opportunity to reevaluate your retirement plan needs. Moving your retirement funds to a Rollover IRA can seem like a daunting task, but it is really quite simple if you follow these easy IRA rollover rules: Step 1: Contact your plan administrator to get the distribution packet and complete the paperwork by selecting a direct rollover to STRATA. Step 2: If you’re not already an account holder, you’ll need to open an IRA. Just follow the easy steps outlined in the IRA Account Kit.   Step 3: Return the completed forms in the distribution packet to your plan administrator and provide a copy to STRATA.
  • Want to learn more information about Rollovers?
    Visit the IRS website to learn more about IRA Rollovers of employer retirement plans and IRA distributions.
  • What is the difference between a Direct and Indirect Rollover?
    A direct rollover is when you roll over from a qualified retirement plan and your plan administrator makes the rollover check payable to your IRA custodian, in which case it may be mailed either to you or to your custodian. By choosing a direct rollover, you can avoid the normal 20% federal withholding requirement for taxes. An indirect rollover is when your plan administrator makes the rollover check payable to you for deposit into your own personal account. With an indirect rollover, it is then up to you to redeposit the funds into the new IRA within the allowed 60-day period to avoid penalty. Also, an indirect rollover requires that your plan administrator withhold 20% for federal withholding taxes — and you must rollover the additional 20% withholding out of pocket. If you do not make up the difference of the withheld amount, the IRS will consider it a distribution and will tax it as income. The amount may also be subject to an additional premature penalty tax if you are under age 59½.
  • When should I initiate a Rollover?
    • When you retire, change jobs or separate from employment for any reason, you are entitled to receive a distribution of your 401(k), 403(b), 457 or Thrift Savings Plan retirement funds and rollover to an IRA.
    • When you receive a distribution of cash and/or assets from an existing IRA, you have 60 days to complete the rollover of the same property in order to avoid taxes and possible penalties.
  • Why consider a Direct Rollover from a 401(k) or other employer-sponsored retirement plan?
    By rolling over an ex-employer’s retirement plan into a Rollover IRA, you maintain the tax-deferred status of your retirement account. Also, a Rollover IRA will allow you to consolidate all of your ex-employer’s retirement accounts into one IRA, making it easier to manage your retirement investments. A significant advantage of using a Rollover IRA versus leaving your retirement assets with an ex-employer is increased investment flexibility.   Other advantages:
    • More Control
    When the rollover process is complete, you’ll no longer be restricted by the rules and policies of your former employer's retirement plan. In addition, you can avoid potential problems seen with some retirement plans such as untimely statements, lack of account information, limited investment options and any risk of the plan getting tangled in a bankruptcy matter should the former employer encounter financial troubles.
    • Avoid Withholding and the Tax Risk
    If you request a check from your employer-sponsored retirement plan, your employer will have to withhold 20% for federal income taxes. Unless you initiate a direct rollover to an IRA or transfer into a new employer’s plan, you will need to come up with the 20% from your own pocket in order to avoid taxes and early withdrawal penalties. By requesting a direct rollover to an IRA, you can avoid the withholding and the risk of missing the 60-day deadline.
    • Keep Your Money
    By rolling over funds or assets, you will maintain the tax-deferred status of your retirement money and, best of all, you won’t have to pay taxes on your earnings until you withdraw the money. If you request a check from your employer-sponsored retirement plan, your employer will have to withhold 20% for federal income taxes.   
    • Greater Investment Diversification
    Your previous employer’s plan probably had between 10-15 mutual funds from which to choose. By completing an IRA rollover, you will increase your investment options and improve your investment flexibility. You will also maintain the tax-deferred status of your retirement money and, best of all, you won’t have to pay taxes on your earnings until you withdraw the money.
    • Accessibility
    Because you cannot take a loan out against your IRA as permitted by some 401(k) plans, penalty-free withdrawal options are available with IRAs for events such as a first-time home purchase or for certain education expenses.
    • Estate Planning
    By naming a beneficiary on your IRA, that beneficiary would be able to take payouts from the inherited IRA over his or her life expectancy, thus stretching the life of the IRA account. Many employer-sponsored retirement plans require non-spouse beneficiaries to take a one-time lump distribution.
    • An Opportunity for Roth Conversion
    The income limitation that had once prevented many individuals from converting to a Roth IRA no longer applies. Now all individuals are eligible to convert regardless of your Modified Adjusted Gross Income (MAGI). Although a Roth conversion is a taxable event, a tax professional can help you determine if the potential long-term tax advantages of converting outweigh the short-term tax consequences.

Annual Contribution

An annual contribution may be made to your self-directed IRA, within the federal limits, on an annual basis, or set up as a recurring (monthly or biweekly) basis.
  • How do I make an annual IRA contribution?
    To contribute to your IRA with STRATA, simply follow these easy steps:
    1. Make your contribution check payable to: STRATA Trust Company
    2. Write your account number and reference the year of the IRA contribution on your check
    3. Complete and include a Deposit Certification with your check. Mail your check and Deposit Coupon to:   
      STRATA Trust Company PO Box 23149 Waco, TX  76702-3149              
  • How long does it take to open a self-directed IRA and make a contribution?
    The process can take as few as 1-2 days.
  • How much can I contribute to an IRA for 2016-2017 according to the contribution rules?
    If you are eligible to make an annual IRA contribution, you may contribute up to the maximum of $5,500 if under age 50 or up to $6,500 if age 50 or over. You may contribute as often as you wish during the year (monthly, quarterly, etc.) as long as you do not exceed your eligible limit, which cannot exceed the maximum of $5,500 if under age 50 or $6,500 if age 50 or over. With a Simplified Employee Pension (SEP), the annual contribution limit increases to as high as $53,000 for 2016 and $54,000 for 2017, enabling a quick source of funding for a self-directed SEP IRA. Plus, if you also consider making an additional annual IRA contribution of $5,500 (or $6,500 if age 50+), you can quickly amass a sufficient balance to start self-directing an IRA.
  • What's the deadline for making my IRA Contribution?
    The envelope must be postmarked to STRATA (not to your dealer) by April 15 (excluding extensions). If contributing for the current tax year, your contribution can be made as early as January 1.

Account Security and Protection Concerns

  • Business Continuity
    We maintain a comprehensive data recovery plan, including business continuity services and daily backup of data at a secure offsite facility. Strict policies are maintained to ensure the security of our clients’ records.
  • Client Information Privacy
    As a regulated financial institution, it is our policy not to disclose, either directly or indirectly, any personal information about our clients to third parties without the prior written consent of the client, except for our legitimate business purposes and in compliance with all applicable laws and regulations. In addition, we do not provide account or personal information to outside companies that conduct independent telemarketing or direct mail marketing.
  • Professional Liability Insurance
    Through Horizon Bank, we maintain a comprehensive insurance package, including financial institution bond policy, banker’s professional liability insurance and directors and officers’ liability insurance through underwriters rated A+ (excellent) by A.M. Best.
  • Regulatory and Audit Controls
    As a subsidiary of Horizon Bank, we are regulated by the Texas Department of Banking, which conducts regular examinations of our operation. In addition, we are audited regularly by independent auditing firms such as RSM and Ascensus for IRA compliance.
  • Uninvested Cash
    Funds received into an account are deposited into an interest-bearing account with our parent company, Horizon Bank, or other financial institutions selected by us where balances are FDIC-insured up to $250,000 per account holder. Aside from this FDIC coverage on uninvested funds, there is no protection provided for investments held in our IRA accounts unless specifically provided by the investment.

Managing your account

Everything you need to know about managing your STRATA account.
  • How do I establish a recurring ACH contribution in order to fund my STRATA IRA?
    You may request a recurring ACH contribution from your personal bank account by completing the ACH Contribution Authorization Agreement.
  • How do I fund my account via an IRA Contribution?
    You may remit a wire, ACH or check directly to STRATA when making an IRA contribution. Please be sure to submit our Deposit Coupon at the time of deposit to ensure funds are deposited correctly. The deadline for making a prior year contribution is Tuesday, April 18, 2017. (The deadline for residents of Massachusetts and Maine is Wednesday, April 19, 2017, due to the federal holiday.)
  • How do I fund my STRATA IRA?
    The most common methods of funding a self-directed IRA are by direct transfer, direct rollover or an IRA contribution. You may even use a combination of these options.
  • How do I open an account with STRATA?
    STRATA offers two account opening options: Option 1: Download and complete our IRA Account Kit for a Traditional, Roth or SEP IRA Option 2:  Submit your application through our secure online account opening portal
  • How do I transfer/roll over assets into my STRATA IRA?
    If you plan to fund your IRA via direct transfer or direct rollover, you will need to complete our IRA Transfer/Direct Rollover Request Form. Certain information regarding your current custodian is required to complete this form. If you plan to fund your IRA via an indirect rollover, please contact your current account custodian for instructions. Also, please be aware that rollovers are subject to certain IRS rules that limit your ability to roll over funds from an IRA over a 12-month period. Once the funds have been distributed to an individual, he or she must roll them into another qualified account within 60 days. Please be sure to submit your Deposit Certification at the time of deposit to ensure funds are deposited correctly.
  • How long does the transfer/rollover process take?
    STRATA will initiate your transfer request within two business days of receiving your instructions. Please be aware that the processing time frames vary from custodian to custodian. Cash-only transfer requests are usually processed within 3-5 business days. However, in-kind asset transfer requests may require additional processing time. The asset(s) must go through an administrative review process by STRATA, and additional documentation from you and/or the investment sponsor may be required.

Account Maintenance

Need help managing your account? Take a look at some of our most common questions and answers.

Fees

Have questions about account fees or our fee structure? You’ve come to the right place.
  • What are the annual account fees?
    STRATA assesses an annual fee as the acting custodian on the account. Our custodial duties include the accounting for your investment(s), quarterly statements, required IRS and state filings, facilitation of your investment, distribution requests and compliance.
  • What are my STRATA IRA fees?
    You may access a complete list of the fees associated with your IRA here. Please be aware that fees vary based on the account type, asset holdings and services requested by the account holder.
  • How are my annual account fees calculated?
    The annual account fees are generally based on the account type and asset holdings. Please be aware that your cash balance is considered an account asset and is included in the account value total.
  • How can I pay my annual account fees?
    You may remit payment by mailing a check to us or by completing our credit card charge request form. Alternatively, our Client Services team can accept your credit card payment over the phone.

Online Account Access

Need help accessing or managing your account online?
  • How do I access my account online?
    Log in to your account. If you have not registered for online account access, please complete the registration process as follows: Access our online account portal. On the Login page, click the New User link. Enter your Account Number, SSN and Date of Birth in the appropriate fields. Hit the "Next" button. Enter your Security Information in the fields provided. Hit the "Next" button. Please note a valid, unique email address is required for all users. If you share an email address with another account holder, you will need to provide separate email addresses for each user access requested. You will receive an email which then requires you to complete the required email verification and login. Go to your email inbox, open the email message from "Info@StrataTrust.com" and click on the link provided to complete the verification step. It is important that you do not proceed until you have completed this step. The link will bring you back to a confirmation page. The page will display the message, "Log On is confirmed." To continue, click on the "Log On" button in the top right hand corner. On the Login page, select "Private computer" and re-enter your username and password. You will be prompted to enter a new password. The password must be between 8-20 characters and must include at least one letter, number and symbol (e.g., dallas1$). You will be notified that your password has been successfully changed.
  • How do I change my password?
    Log in to your account. Choose “My Account” on the top-right corner of the welcome screen. Choose “Change Password.” Follow the instructions to enter your current password and new password. After setup is complete you should receive a confirmation of your new password to a specified email.
  • What happens if I cannot remember my password?
    Log in to your account. Choose whether you are using a Private/Trusted or Public/Shared Computer. Choose the “Click here if you’ve forgotten your password” option underneath the password text box. Enter the username and email address you used to set up your account. If you do not remember your username or email address, you may contact one of our Client Services Representatives at 866-928-9394.

Distributions

Have questions about complete, partial or recurring distributions?

Required Mandatory Distributions

Learn about taking Required Minimum Distributions.
  • What is a required minimum distribution?
    A required minimum distribution (RMD) is the minimum amount that the IRS requires you to withdraw from your IRA each year, usually after you turn 70½. The exact amount will vary from year to year based on certain factors.
  • Are self-directed IRAs subject to RMDs?
    RMDs apply to Traditional, SEP and SIMPLE IRAs, whether they are self-directed or not. Roth IRAs (self-directed or otherwise) do not require RMDs until the death of the owner.
  • How are RMDs treated for tax purposes?
    For most IRA accounts, distributions are treated as taxable income. For Roth IRAs, distributions are generally tax-free. You should consult with your tax professional regarding any possible tax consequences.
  • When should I begin taking RMDs from my self-directed IRA?
    In most cases you are required to take your first RMD by April 1 of the year following the year you turn 70½. After that, each yearly RMD must be taken by December 31. For example, if you turn 70½ in 2017, you’ll need to take your first RMD by April 1, 2018 and your next RMD by December 31, 2018.
  • How is my RMD calculated?
    Your RMD is based on your account balance as of December 31 of the year that precedes the year you are taking the distribution. That number is then divided by the amount indicated in the IRS’s Uniform Lifetime Table.
  • What if I have IRAs with multiple firms?
    You must calculate the RMD for each IRA account that you own. However, you may withdraw the total amount from one account or more than one account. Please keep in mind that you must take the total amount.
  • What if my IRA account cash balance is insufficient to cover the RMD amount?
    If you don’t have enough cash to cover the RMD in one IRA, then your options are as follows: 1. Take the total RMD amount from a different IRA account and leave your STRATA IRA intact. 2. Liquidate assets in order to make the distribution. 3. Take the distribution in-kind.
  • Will STRATA automatically distribute my RMD to me?
    Unfortunately we are unable to process any distributions without express written consent from the account holder. However, satisfying your RMD requirement can be accomplished by simply completing our IRA Distribution Request Form. Fees may be associated with your request. You may refer to our IRA Fees Page for more information.
  • Will STRATA calculate my RMD for me?
    Yes. STRATA provides an estimated RMD calculation for the accounts you hold with us by January 31 each year. As a courtesy, we provide RMD reminders throughout the year as well. We strongly encourage our account holders to act early.
  • What happens if I fail to take my RMD?
    If you fail to take your RMD or if you take less than the minimum amount, you may be subject to a 50% excise tax on the amount not distributed. For example, if your RMD is $3,000 and you only take out $1,500, you may be required to pay excise tax in the amount of $750 — or half of the amount that was not distributed.

Recharacterizations

Learn how to request a recharacterization of your funds.

Transfers Out

For questions about full and partial transfers, you’re in the right place.
  • How do I request a partial transfer of my IRA account to a successor custodian?
    Transfers are initiated by the receiving custodian. Please complete the successor custodian’s transfer request form. The completed form must include clear asset delivery instructions, the account holder’s signature and a letter of acceptance signed by an authorized signer of the successor custodian firm. The form may be submitted to us via fax, email or mail. Please see our IRA Fee Schedule to determine the fees associated with this request.
  • How do I request a transfer of my entire IRA account to a successor custodian?
    Transfers are initiated by the receiving custodian. STRATA requires a copy of the successor custodian’s transfer request form. The completed form must include clear asset delivery instructions, the account holder’s signature and a letter of acceptance signed by an authorized signer of the successor custodian firm. The form may be submitted to us via fax, email or mail. Please see our IRA Fee Schedule to determine the fees associated with this request.

Account Termination

Have questions about terminating your account? We’re happy to answer them (but sad to see you go).
  • How do I close my account with STRATA?
    There are two options to close your account: 1. You may elect to transfer your account to a successor custodian. 2. You may take a complete distribution of your IRA account. Contact us for more information regarding account termination.

Investment Options

With so many investment options it’s understandable that you would have questions. We’ve done our best to answer them.
  • How do I direct an investment within my IRA?
    Due to the diverse nature of investments, we offer several convenient investment checklists to help you gather the information necessary to direct your investment. Please visit our Investment Options Page to access the investment checklist that fits your needs.
  • What types of investments are permitted within my STRATA IRA?
    STRATA allows you to diversify your self-directed IRA with investments such as real estate, precious metals, crowdfunding, trust deeds, brokerage accounts, private equity and much more.
  • What types of investments are not permitted?
    Prohibited IRA investments include collectibles like artwork, coins (except for certain U.S. coins and bullion), stamps, rugs, antiques, beverages, S-corp stock, gemstones and metals (except for certain U.S. coins and bullion) and insurance contracts. If you have a question about a particular investment, please contact us.

Real Estate Investments

See common questions about purchasing and holding directly-owned real estate within a self-directed IRA.
  • Are there any types of property that STRATA will not hold?
    Yes. STRATA will not process certain investments including, but not limited to, timeshares, foreign real estate or property purchased through an auction or tax sale.
  • Can I pay the earnest money deposit out-of-pocket to secure the contract for my IRA?
    No. The earnest money deposit must be funded by your STRATA account. You cannot use personal money for the deposit and then be reimbursed later. You will need to send a copy of the contract or purchase agreement to STRATA along with an Earnest Money Deposit Authorization to remit the earnest money from your IRA to the title company or closing attorney.
  • Can I use the property held within my IRA?
    Neither you nor any other disqualified person can have any personal use or benefit of the property while it is held in your retirement account. The property must be purchased for investment purposes only.
  • Can my account invest in real estate through a Limited Partnership or Limited Liability Company?
    Yes. If real estate is being acquired through an entity such as an LP or LLC and your IRA will hold an equity interest in the entity, please refer to and provide the items shown on STRATA’s Investment Checklist for Private Equity. If your IRA will be originating a loan that will be secured by a mortgage or deed of trust, please refer to and provide the items on STRATA’s Investment Checklist for Private Debt.
  • Can my IRA purchase a portion of a property along with other investors?
    Yes, but only if the other owners are not disqualified persons. The deed must also specify the undivided interest owned by each party.
  • Can my IRA use leverage to finance a real estate purchase?
    Yes, an IRA-owned property may be debt-financed, but only with a non-recourse note. The property must be the only collateral for the loan, and all payments must be made from your IRA. You cannot guarantee the loan personally or make payments on the loan out of pocket. In addition, debt-financed property in an IRA may be subject to unrelated business taxable income (UBTI). For more information, please consult your tax advisor.
  • Do I need to carry liability insurance on property held in my IRA?
    If you choose to carry liability insurance on the property, the named insured must be STRATA Trust Company Custodian FBO (Account holder name) IRA (Account #), and the annual premium must be paid directly to the insurance company by your IRA. You cannot add the IRA property to your personal homeowner’s policy or list your IRA as an additional insured.
  • Do I need to provide STRATA with a property appraisal?
    After the initial purchase you will be required to provide either an updated appraisal or our Real Estate Valuation Form completed by an appraiser, broker or realtor on an annual basis. In addition, a new appraisal will be required for any taxable event such as an in-kind distribution of the property or Roth IRA conversions.
  • Does rental income have to be deposited in my IRA?
    Yes. All rental income must return to your IRA. STRATA requires you to appoint an unrelated third party to act as the property manager for income-producing property. The property management agreement will be provided by the property manager and will be signed by you and the property manager. Your third-party property manager may also pay expenses from rents received if STRATA is provided with a monthly or quarterly report of income received and expenses paid. The report should accompany the property manager’s deposit check (if any).
  • Does STRATA provide any management services with regards to the property?
    No. You must appoint a property manager to handle all property servicing functions, and you are responsible for monitoring the performance of the property manager. Please refer to STRATA’s Investment Checklist for Real Estate.
  • How are expenses and/or improvements handled for real estate held in my IRA?
    All earnest money deposits, insurance premiums, taxes, debt payments or other expenses of the property (including any improvements) must be paid by the IRA to an unrelated third party. A copy of the invoice or tax notice must be provided to STRATA along with a completed and signed Expense Payment Form. You may not pay for an expense out-of-pocket or on a credit card and remit the statement for payment. STRATA will not process payments to a credit card issuer.
  • How do I report income and expenses in an IRA?
    An IRA-owned property may be rented or leased, as long as the rental income flows back to the IRA. Property that is rented or leased requires a third-party property manager which cannot be the IRA owner. Also, keep in mind that your IRA will need to retain enough uninvested cash to cover all expenses such as property taxes, improvements and even the earnest deposit.
  • How is title held on property in an IRA?
    The property must be held in the name of STRATA Trust Company Custodian FBO (Account holder Name) IRA (Account #). This is how the purchase contract, title commitment/insurance, deed and liability insurance must be titled.
  • If I decide I want to use the property in my IRA, how do I take possession of the property?
    You may withdraw the property from your account as an in-kind distribution (at the current market value) and pay any taxes and/or possible penalties if you are under age 59½. You will need to provide STRATA with a completed and signed Distribution Form and a deed prepared for STRATA’s signature that conveys the title of the property from your IRA to you individually. You will also need to provide either an updated appraisal or our Real Estate Valuation Form completed by an appraiser, broker or realtor.
  • May I purchase foreclosure property with my IRA?
    Only if the property has already been foreclosed upon and you can provide all the items on STRATA's Investment Checklist for Real Estate. However, STRATA will not process a foreclosure purchase directly through an auction or tax sale.
  • May I sell property that I currently own to my IRA?
    No. Property that you or a disqualified person has ever owned is not eligible to be purchased by your IRA since this would be a prohibited transaction.
  • What is a prohibited transaction?
    In general, Internal Revenue Code Section 4975 defines a prohibited transaction as a transaction between a plan (your account) and a disqualified person. Generally, "disqualified persons" are defined to be the account holder, other fiduciaries, certain family members (lineal descendants and spouses of lineal descendants) and businesses under the account holder’s (or disqualified person’s) control. The prohibited transaction rules prohibit an IRA from acquiring a piece of property which will be purchased from or used personally by the account holder or other disqualified persons.
  • What is the process to sell property within my IRA?
    Please refer to our Real Estate Sales Checklist for complete information on selling property owned by your IRA.
  • What types of property can I purchase with my IRA?
    You may purchase vacant lots, raw land and income-producing property such as rental houses, condominiums or commercial real estate.
  • When I sell the property in my IRA, can the IRA seller finance the transaction?
    Yes. Once the property is sold, you may carry the note and deed of trust/mortgage within your account. The principal and interest payments will be deposited into your STRATA account, and you can reinvest the cash however you choose. Please see STRATA’s Investment Checklist for Private Debt.
  • Who should be listed as the buyer on the real estate contract?
    The contract or purchase agreement must list STRATA Trust Company Custodian FBO (Account holder name) IRA (Account #) as the buyer. You (or other disqualified persons) cannot be listed as the buyer and then later assign the contract to your IRA.

Private Equity

Frequent questions about private equity, prohibited transactions and UBTI.
  • Are there any types of investments that STRATA will not process?
    STRATA will not process investments including, but not limited to, single-member entities, family-owned entities (owned 50% or more by family members), foreign entities, joint ventures and/or oil and gas working interests. Please contact us prior to establishing your account to be sure your private equity investment is something STRATA can process.
  • Can my STRATA account invest in an entity that I or a family member owns or controls?
    If your IRA invests in an entity that you or certain family members own or control (whether controlled individually or as an officer of a corporate general partner), the transaction could be a prohibited transaction under Internal Revenue Code Section 4975. If you or another disqualified person is an officer or director of an entity (or an officer or director of a corporate general partner, managing member, etc.), and you will collectively own 10% or more of the entity, STRATA Trust Company will require you to obtain a legal opinion from a tax attorney addressed to you in which the transaction is discussed in detail prior to processing your investment instructions. If you or any family member or disqualified persons collectively will own 50% or more of the entity, STRATA will not process the investment even if you are able to obtain a legal opinion.
  • What is a prohibited transaction?
    Internal Revenue Code Section 4975 defines a prohibited transaction as a transaction between a plan (your account) and a disqualified person. In general, "disqualified persons" are defined to be the account holder, other fiduciaries, certain family members (lineal descendants and spouses of lineal descendants) and businesses under the account holder’s (or disqualified person’s) control. Please review the Code for specific information and definitions. Other useful resources are Publications 560 and 590.
  • What is the maximum ownership interest that a STRATA account can own in an entity in conjunction with other disqualified persons or family members?
    STRATA will not process an investment where 50% or more of the entity will be owned by your STRATA account and other disqualified persons (including family members).
  • What is Unrelated Business Taxable Income?
    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 for any taxable year, IRS Form 990-T must be filed along with the appropriate amount of tax, payable from your account. STRATA does not monitor UBTI and does not prepare Form 990-T except as a supplemental service for an additional fee. If the tax is applicable, you must prepare, or have prepared, Form 990-T and forward it to STRATA along with an Expense Payment Form to pay the tax from your account. If you are required to file Form 990-T, you must apply for and utilize an Employer Identification Number (“EIN”). You may not use STRATA’s EIN or your Social Security number. For more information on UBTI, please refer to IRS Publication 598 and/or consult with your tax advisor.
  • What types of private equity investments can I hold within my account?
    Types of private equity investments that STRATA will process include limited partnerships (LPs), limited liability companies (LLCs), C-corporation stock and real estate investment trusts (REITs).

Private Debt Investments

Learn more about private debt investing, prohibited transactions and debt servicer agreements.
  • Are there any types of debt investments that STRATA will not process?
    STRATA does not process unsecured loans to individuals or loans secured by vehicle titles, foreign real estate and/or personal property. If you are uncertain whether STRATA can process the type of debt you have in mind, please contact us first.
  • Can my account loan funds to family members or to an entity that I or a family member owns or controls?
    If your IRA loans funds to certain family members (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 Internal Revenue Code Section 4975. STRATA’s policy on this issue is that if you or another disqualified person is an officer or director of the borrowing entity (or an officer or director of a corporate general partner, managing member, etc.), and you will collectively own 10% or more of the entity, then you will need to obtain a legal opinion from an ERISA or tax attorney addressed to you in which the loan transaction is discussed in detail prior to STRATA processing your investment instructions. If you, any family member or disqualified persons collectively will own 50% or more of the borrowing entity, STRATA will not process the investment even if you are able to obtain a legal opinion.
  • Does there need to be a servicing agent to monitor the collection and terms of the debt instrument?
    Yes. As a directed custodian, STRATA does not provide these services and requires the account holder to either enter into a Debt Servicer Agreement with a third party or to act as his/her own agent. Please review the debt checklist for complete details and requirements.
  • How should payments be sent to STRATA?
    Payments from the borrower or servicing agent should be sent to STRATA along with a completed Deposit Certification. If a payoff is being wired to STRATA, the borrower or servicing agent should provide a copy of the Deposit Coupon via email or fax.
  • What do I need to provide to STRATA when a secured loan is paid off or sold?
    You will need to provide STRATA with a request for reconveyance, satisfaction of mortgage, assignment, transfer of lien, etc., along with a letter of instruction for STRATA to sign the instrument and send all original loan documents to the title company or agent handling the payoff or sale.
  • What happens if the borrower defaults on a deed of trust/mortgage held by my account?
    You may direct your servicing agent to initiate foreclosure proceedings. Please review STRATA’s Real Estate Processing Checklist for the items you will need to provide in order for your account to hold title to any property acquired through a foreclosure.
  • What types of debt investments can I hold within my account?
    Types of private debt investments that STRATA will process include, but are not limited to, notes secured by deeds of trust/mortgages/security agreements, crowdfunding debt offerings and convertible notes.

Crowdfunding Investments

Gold & Precious Metals Investments

Learn more about precious metal investments, valuations and storage options.
  • How do I open a precious metals IRA account?
    Step 1: Open an account. ● To open an IRA, visit our Open an Account page or download the IRA kit on our Forms page for the type of IRA you wish to open (Traditional, Roth, SEP or SIMPLE IRA). ● Complete the forms and submit them either electronically or by U.S. mail and include your payment of IRA Fees and the Precious Metals Storage Fee. You may pay by check or credit card. If by credit card, please complete our Credit Card Charge Form. If payment is not included, the fees will be deducted from the transfer, rollover or contribution funds prior to STRATA processing the purchase. Note: The depository storage fee is an annual fee due at the time the storage account is opened and annually in conjunction with your IRA renewal fee. Both fees will be billed by STRATA at the time the IRA is opened and each year afterward during the anniversary month of the IRA account opening. Fees will not be prorated. Step 2: Fund your IRA with a rollover, transfer or contribution. IRA Transfer ● The IRA can be funded through an IRA to IRA transfer. Simply complete the Transfer Request Form included in the IRA Kit. ● Mail the completed and signed IRA Transfer Request Form to STRATA Trust Company 7901 Woodway Drive, Suite 200 Waco, TX 76712. 401(k) Rollover ● A direct rollover from a 401(k) or other qualified retirement plan is another way to fund your self-directed IRA. Contact the plan administrator to obtain the form(s) needed to request or authorize a direct rollover. IRA Contribution ● If eligible, you can make an annual IRA contribution to fund your Precious Metals IRA. See our IRA Annual Limits chart.Learn more about rollovers, transfers and contributions. Step 3: Once funds are available in your IRA, choose a precious metals dealer and place your trade. ● You determine the precious metals dealer you wish to use, and you will negotiate the precious metals to be purchased and place your precious metals buy order directly with the dealer. Step 4: Authorize STRATA Trust Company to remit payment for your purchase. ● To authorize, simply sign and date the dealer's precious metals order ticket or complete and sign our Precious Metals Investment Direction Form and submit with the order ticket. The order ticket must be itemized to show the type, quantity and price of the precious metals purchased. ● Fax it to STRATA at 512-495-9554. ● Upon receipt, STRATA will remit payment to the precious metals dealer and provide the dealer with instructions for delivery of the precious metals to the depository.
  • What types of precious metals can I invest in?
    To qualify as IRA allowable precious metals and be accepted by STRATA, the following minimum fineness requirements must be met:
    • Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure.
    • Bars, rounds and coins must be produced by a refiner, assayer or manufacturer that is accredited/certified by NYMEX, COMEX, NYSE/Liffe, LME, LBMA, LPPM, TOCOM, ISO 9000, or national government mint and meeting minimum fineness requirements.
    • Proof coins must be encapsulated in complete, original mint packaging, in excellent condition, and include the certificate of authenticity.
    • Small bullion bars (other than 400-ounce gold, 100-ounce gold, 1000-ounce silver; 50-ounce platinum and 100-ounce palladium bars) must be manufactured to exact weight specifications.
    • Non-proof (bullion) coins must be in brilliant uncirculated condition and free from damage.
    To see examples of IRA-allowable gold, silver, platinum and palladium coins and bullion, please visit our Gold & Precious Metals section (see the "Types" tab).
  • Are there any precious metals that cannot be held in an IRA?
    Precious metals which do not meet the following minimum fineness requirements do not qualify as IRA allowable precious metals and will not be accepted by STRATA:
    • Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure.
    • Bars, rounds and coins must be produced by a refiner, assayer or manufacturer that is accredited/certified by NYMEX, COMEX, NYSE/Liffe, LME, LBMA, LPPM, TOCOM, ISO 9000, or national government mint and meeting minimum fineness requirements.
    • Proof coins must be encapsulated in complete, original mint packaging, in excellent condition, and include the certificate of authenticity.
    • Small bullion bars (other than 400-ounce gold, 100-ounce gold, 1000-ounce silver; 50-ounce platinum and 100-ounce palladium bars) must be manufactured to exact weight specifications.
    • Non-proof (bullion) coins must be in brilliant uncirculated condition and free from damage.
    The following list contains examples of precious metals that cannot be held in an IRA.
    Any rare or collectible coin Chilean Peso Hungarian Korona
    Austrian Corona and Ducat Columbian Peso Italian Lira
    Belgian Franc Dutch Guilder Mexican Peso and Onza
    British Brittania (pre-2013) French Franc South African Krugerrand
    British Sovereign German Mark Swiss Franc
     
  • Where are my STRATA IRA-owned Precious Metals stored?
    Your IRA-owned Precious Metals will remain in the custody of STRATA, and placed with your choice of one of the following third party depositories for storage and safekeeping:
    • Brink’s Global Services (Salt Lake City) or
    • Delaware Depository Service Company (Wilmington, Delaware)
    More information about each depository can be found at www.delawaredepository.com and www.brinksglobal.com, respectively. The dealer you buy precious metals from may have a depository preference.  Please check with your dealer to determine which depository will be used.  You may not hold the Precious Metals yourself while owned in the IRA, nor can you select a different storage facility other than the depository options allowed by STRATA.
  • Does STRATA offer a home storage option for precious metals?
    No. IRA-owned assets must remain in the custody of the IRA custodian (STRATA) until distributed or sold.  This means that you can’t personally hold IRA-owned precious metals while in the IRA.  STRATA requires that your precious metals be stored with one of the third party depositories as outlined above. The IRS recently provided further guidance with regards to the "home storage" issue which you can review by visiting the link to the IRS website below: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-investments
  • What research should I do before I choose a dealer?
    We encourage you to do your own research and educate yourself before choosing a dealer and buying precious metals with your IRA funds.  Few states have regulatory oversight of precious metal dealers. Therefore, it's important that you do your own due diligence to protect your retirement savings.
    1. Use sites such as the Better Business Bureau (www.BBB.org) to find whether the dealer is accredited and rated, how long the dealer has been in business, and review the dealer's history of any consumer complaints or disputes. Be aware of any dealer that you can't find any information about.
    2. Check to see if the dealer is a member of any industry trade groups such as American Numismatic Association (ANA), Professional Numismatics Guild (PNG), and Industry Council for Tangible Assets (ICTA). To be a member, dealers must agree to abide by a code of conduct and be willing to resolve customer disputes.
    3. Be aware of dealers that use high pressure sales tactics in their sales calls to try to get you to do business with them - and don't reveal any personal information about your income, your age or your assets, including how much you may have in savings or retirement accounts.
    4. Read the recent Precious Metal Fraud Advisory issued by the U.S. Commodity Futures Trading Association, and view the CFTC's consumer protection video on Precious Metals Fraud.
    5. Be familiar with the different pricing terms (spot, bid and ask) and understand what they mean.
     
  • How do I authorize a buy, sell, or exchange order for Precious Metals?
    You will place your buy, sell or exchange order for Precious Metals with the dealer of your choice.  Once your transaction has been initiated with your dealer, you will need to complete and submit STRATA's Precious Metals Investment Direction and Disclosures form as directed.  This form is available in our Forms menu.
  • Does STRATA buy, sell or exchange precious metals?
    No, STRATA does not buy, sell or exchange precious metals. You will need to negotiate the purchase, sale or exchange of any precious metals through the broker of your choice.
  • Can I take possession of my Precious Metals after investing?
    As required by law, you may not take possession of or control your Precious Metals while held in your STRATA IRA.   You may, however, take an “in-kind” distribution of precious metals from the IRA at any time. The distribution is a taxable event, which means it will be reported to the IRS and may also be subject to withdrawal penalties. As always, consult your tax professional regarding these matters prior to taking any action. To take an in-kind distribution of all or part of your Precious Metals, complete our IRA Distribution Request for Precious Metals form, available on our Forms menu.
  • Why does my STRATA account statement show a value of my Precious Metals that is less than what I invested?
    The fair market value shown on your STRATA account statement and on our online Account Access portal is based on spot value, which is the current spot price multiplied by the ounces of fine metal contained in the coin or bar.  Spot values do not include any mark-ups, mark-downs, premiums or commissions. The actual precious metals type and quantity of a transaction may affect the price received for any given bullion item. Spot values should be used as an indication of value only and should not be construed as a firm bid price to buy by any broker or dealer. Please call your dealer for real-time pricing or information regarding their fees or commissions.

Structured Settlements Investments

Public Investments