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Year-end is a busy time, yet in our holiday preparations, we should not overlook tax year requirements. For self-directed investors, this could mean fair market valuations (FMVs) of their self-directed retirement accounts, which are due January 15th.
Ready to submit your FMV? Log in to your Client Portal and follow the instructions below.
What Are Fair Market Valuations?
A fair market valuation is the value of an asset at a given point in time. Fair market valuations are valid for 12 months and only need to be updated once a year.
As the custodian for your self-directed investments, New Direction Trust Company is required by state and federal regulators to report an accurate market valuation of the assets held in your account. To accomplish this, we require account holders to submit an FMV for each tax year. NDTCO uses this information to complete IRS Tax Form 5498, which we provide to clients after the tax filing deadline (Form 5498 also reports contributions, which can be made for a given tax year until that year’s filing deadline). While some assets have readily available FMVs, you may need to engage the services of a qualified third-party valuator who can accurately assess the value of an asset held in your self-directed IRA, 401(k), or HSA.
Do I Need to Seek FMV Information?
Which Assets Qualify?If your account holds one of these assets, you NEED to submit an annual FMV |
Which Assets are Exempt?These assets DO NOT require an annual FMV. |
| Real Estate – Individual properties, regardless of their purpose (rental, buy and hold, etc.), may fluctuate in value over a given year. | Precious Metals – NDTCO designates the up-to-date spot values of your account-held items as the current FMV of said items. |
| Private Equity – The value of your self-directed plan’s equity position may change depending on the recent success of the private company. | Public Equity – Publicly traded stocks, mutual funds, and ETFs carry public market values and needn’t be independently valued. |
| Checkbook IRA – The cumulative FMV of your account-held LLC (or other such entity) is formed by the individual FMVs of any assets owned by the LLC/entity. | |
| Private loans – Secured, unsecured, or convertible notes all require annual valuations. | |
| Other Assets – Your tax-advantaged plan can hold oil/mineral rights, lumber rights, livestock, and just about anything else you can think of! |
It’s worth pointing out that if you elect to take an in-kind distribution of real estate, private equity, a Closely Held LLC, or another non-exempt asset to satisfy a required minimum distribution, you will need to obtain a new, current FMV of that asset for value reporting purposes.
Supporting Documentation
Once the value is determined you must request and receive valid supporting documentation. Supporting documentation cannot be provided by disqualified persons or entities. Examples of valid supporting documentation include:
Asset Type |
Example of Supporting Documents. |
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Real Estate |
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Private Equity |
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Checkbook IRA/Closely Held LLC |
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Private loans |
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Please note that e-mail communications, advertisements, or similar marketing materials, outdated documents (over 12 months old), and Schedule K-1s do not constitute valid supporting documentation.
How to Submit Your Fair Market Valuations
When you know the FMV of your asset(s) and are ready to submit your documentation, you can easily do so through the NDTCO client portal:
- Log into the Client Portal.
- On the Overview page, find the appropriate asset and click on the “Valuate” link in the righthand column. If this is a real estate holding, you will need to click “Take Action” and then “Valuate.”
- Provide any requested information and upload your supporting documentation.
- Agree to the Terms & Conditions and click “Submit.”
Your supporting documentation will require your valuator’s signature or, if applicable, must be printed on company letterhead or be received directly from county or government website.
Please don’t hesitate to give us a call at 877-742-1270 to address any questions or concerns you may have about acquiring and submitting an FMV. You can also submit a message directly to our staff through your Client Portal.
