There are several types of investments that Horizon Trust will process inside of your self-directed IRA. 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.

IRS regulations prohibit IRA investments in life insurance and collectables 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.

If your IRA or Qualified Retirement Plan loans funds to certain family members, such as lineal descendents and spouses of lineal descendents, 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. Horizon’s 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 Horizon processing your investment instructions. If you, any family member, or disqualified persons collectively will own 50% or more of the entity, Horizon will not process the investment even if you are able to obtain a legal opinion.

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 descendents and spouses of lineal descendents), 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.

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.

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

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. Horizon does 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 Horizon 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 Horizon’s 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 Horizon provides. You will need to contact your attorney or tax advisor with respect to the entity’s formation.

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. Please contact customer service at Horizon Trust Company for information on the procedure to purchase real estate through a corporate entity such as an LP or LLC.

Your IRA account is buying the property and not you as an individual. Therefore it must be titled as follows: “Horizon Trust Company, Custodian fbo Accountholder name and Account Number”. 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. 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.

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