In the unfortunate event that an asset in your self-directed IRA has become uncollectible, unredeemable, or has otherwise been determined to no longer carry value, there are several important steps you can take to mitigate the overall effects. Our zero valuation process allows you to officially assign a value of $0 to your asset. Doing so eliminates any tax or penalty implications upon distribution. Let’s explore some common questions or concerns that may arise from self-directed investors who hold zero-value assets.
Questions about submitting an account valuation? Send us a message through the Client Portal.
Why can’t I just tell New Direction Trust Company that my asset is worthless?
The IRS requires that all distributions are reported as income, including in-kind distributions of assets with no value. As with fair market valuations, and all other matters related to self-directed investing, proper documentation must support the updated valuation of the asset. You may contact our office to initiate the zero valuation procedure. However, we’re unable to modify your account holdings solely by virtue of your notification.
What’s the process for submitting a zero valuation?
To update and distribute a zero-value asset, please complete and submit the following:
- Zero Value Distribution Form – Click here to complete this simple form electronically.
- Supporting Documentation – Official documentation from a qualified third-party valuator to affirm that the asset or assets in question no longer have a monetary value. To submit supporting documentation, scan the document to your computer, log in to the Client Portal, click Messages at the top of the screen, attach the documentation, and submit your message once composed. Doing so will send your paperwork directly and securely to our office.
Can I get a break on my account fees?
In some cases, yes. We will suspend annual administrative fees for the applicable assets if:
- You submit a zero value request to our office. However, if you take no further action within 12 months, NDTCO will assess suspended fees and normal billing will resume.
- NDTCO receives valid notification that a business or entity in which your account is invested has become the subject of a criminal investigation or that investors in said business or entity are believed to have been defrauded.