IRA Financial is the only Self-Directed IRA provider that offers its clients an in-house tax filing, IRS tax reporting, and annual tax consulting services. Starting in 2024, the annual service will also handle BOI reporting requirements under the Corporate Transparency Act (CTA) with FinCEN.
IRA Financial has designed a specialized Self-Directed IRA tax annual tax filing and compliance service, which will now offer our clients the necessary IRS filing services to keep the Self-Directed IRA retirement solution in IRS compliance. Now – as part of annual consulting service, IRA Financial will prepare and file Form 1065 (U.S. Return of Partnership Income), Form 990-T (UBIT income tax return), and the BOI Report with FinCEN.
The following are the IRS tax forms that IRA Financial will now help file for your Self-Directed IRA.
IRS Form 1065 – U.S. Return of Partnership Income
With a Self-Directed IRA with checkbook control, a special purpose LLC is established that would be owned by the IRA and managed by the IRA holder (you). As manager of your Self-Directed IRA LLC, you have the authority to make IRS-approved alternative asset investments on behalf of your IRA on your own, in privacy, and with limited liability protection. With a Self-Directed IRA LLC with Checkbook Control, you will be able to make investments, such as real estate, by simply writing a check. Since all your IRA funds will be held at a local bank in the name of the IRA LLC, all you would need to do to make the IRA investment is write a check straight from the IRA LLC bank account or simply wire the funds.
In the case of a Self-Directed IRA, a single-member IRA LLC is not required to file a partnership return (IRS Form 1065) as it is treated as a disregarded entity for federal income tax purposes. However, an LLC owned by two or more IRAs is treated as a partnership for federal income tax purposes, and, in general, a partnership return (IRS Form 1065) must be filed BY MARCH 15, 2024 for the 2023 taxable year.
IRS Form 990-T – UBTI Income Tax Return
Form 990-T is the tax form where a charitable organization or retirement account, such as an IRA, reports income that would be subject to the unrelated business taxable income tax (UBTI or UBIT). In general, a Self-Directed IRA plan will trigger the UBTI tax in the following circumstances:
- Use of a nonrecourse loan to acquire an asset, such as stock
- Use of a nonrecourse loan to acquire real estate. Note – there is an exception for a Solo 401(k) plan
- Investment in an active business operated through a pass-through entity, such as an LLC
For Self-Directed IRA investors who will have unrelated business taxable income or unrelated debt-financed income (UDFI) in excess of $1,000 after taking into account allowable deductions and expenses, such as depreciation, debt servicing, etc., the IRA would be required to file IRS Form 990-T, and Schedule A by April 15, 2024, for the 2023 taxable year. Filers may request an automatic extension of time to file Form 990-T by using Form 8868, Application for Automatic Extension of Time to File an Exempt Organization Return.
The return must be filed by the IRA and not by the individual or plan trustee. In addition, the retirement account should acquire its own tax Identification number if it does not already have one.
BOI Report
Beginning on January 1, 2024, a significant number of companies in the United States will have to report information about their beneficial owners (the individuals who ultimately own or control the company). The beneficial owners will have to report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury.
All entities formed or registered to do business in the United States will need to either (i) confirm they qualify for an exemption from the CTA’s reporting requirements or (ii) timely submit a BOI report to FinCEN.
A Reporting Company must disclose the following information with regard to each individual beneficial owner to FinCEN via the BOI report:
- full name.
- date of birth.
- complete current residential street address.
- ID number and jurisdiction of issuance for one of the following:
- US passport
- state, local, or Indian tribal identification document, or
- state-issued driver’s license; and
- an image of the document from which the ID number was obtained. If the individual has none of the above listed documents, a passport issued to them by a foreign government will suffice.
Does my Self-Directed IRA Need to File a BOI?
A full-service Self-Directed IRA is exempt from filing a BOI report. The BOI requirements under FinCEN will only apply if your Self-Directed IRA owns an entity, such as an LLC (“checkbook control”), and you, as the IRA owner manages the entity.
Does my Self-Directed IRA LLC Need to File a BOI?
Under the CTA rules, a Self-Directed IRA LLC would be deemed a reporting company and would, thus, be required to file a BOI report with FinCEN. A “Checkbook Control IRA” is an investment structure where an IRA owns an LLC and is managed by the IRA owner. Since the BOI report must be completed by an individual and an IRA is not an individual, but a retirement account, the report would need to include the information for the IRA owner, who is the person in control of the LLC as the manager.
Self-Directed IRA LLC Established Prior to January 1, 2024
If you have a Self-Directed IRA LLC that was established prior to January 1, 2024, you will until December 31, 2024 to complete the BOI report with FinCEN.
Self-Directed IRA LLC Established After January 1, 2024
If you establish a Self-Directed IRA LLC on January 1, 2024 or later, a BOI report will be required to be filed with FinCEN within 90 days of formation.
Will IRA Financial will File the BOI Report with FinCEN for My Self-Directed IRA LLC?
In order to relieve our clients of the stress and responsibility of acquiring a FinCEN number and filing a BOI report for their Self-Directed IRA LLC, we will be offering this service to all our clients that have elected to join our annual consulting/compliance program. Note – we can only file the BOI report if ALL members of the entity are retirement accounts administered by IRA Financial.
Conclusion
IRA Financial has helped over 24,000 clients with over $3.2 billion in assets take control of their future by investing in alternative assets with a self-directed retirement plan. We are proud to be the only self-directed retirement company that offers an in-house tax filing, IRS reporting, and annual tax consulting service for its Self-Directed IRA clients. IRA Financial is the only self-directed retirement company that will handle all your Self-Directed IRA setup, administration, and IRS tax filing/reporting needs.
