Fact or Fiction? End-of-Year Edition

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The end of the year can be hectic with gifts to buy, parties to plan, and considerations for your self-directed retirement account. You may think you have more on your plate than you actually do, so let’s review some end-of-year circumstances that you may need to address and others that can wait until 2019.

I have to take my RMD by December 31 – FACT
December 31 is the perennial deadline for those who must take required minimum distributions (RMDs). NDTCO strives to execute your transactions as promptly as possible, but distribution processing times may vary (especially for in-kind distributions). With this in mind, completed and correct distribution paperwork received by December 31 will be processed for 2018, even if it takes a little longer to receive your actual withdrawal. Paperwork dated and received on January 1, 2019 or later will be processed for the 2019 tax year.

I have to make my IRA contribution by December 31 – FICTION
You have until April 15, 2019 (the 2018 tax filing deadline) to contribute to a Roth IRA, Traditional IRA, or health savings account (HSA), so there’s no need to rush your deposits or dip into your holiday budget if you haven’t made full 2018 contributions yet. SEP IRA contributions can be made until your business’s tax filing deadline in 2019 (plus extensions, if applicable).

Other self-directed accounts will require certain contributions by December 31:

  • Employee contributions to a SIMPLE IRA must be made by December 31 to qualify as 2018 contributions. Employer contributions to a SIMPLE IRA can be made up until the company’s tax filing deadline in 2019 (plus extensions, if applicable).
  • For employee contributions to a Solo 401(k) to count toward a given tax year, contributions must be deducted from income attributable to that year. As such, 2018 contributions may have to occur by December 31 depending on your plan document. Employers may contribute for the 2018 tax year until April 15, 2019 (plus extensions, if applicable).

NDTCO will file my Form 5498 and Form 1099-R (if applicable) to the IRS – FACT
Form 5498 will describe your 2018 IRA contribution activities as well as the most recent fair market value (FMV) of your account. If you took a distribution in 2018, Form 1099-R will codify the value and the appropriate tax code. Forms 5498 and 1099-R will be provided to you, but don’t feel obligated to immediately forward them to the IRS. NDTCO, as part of our custodial services and recordkeeping, will send copies of those same documents to the IRS for your convenience.

I have to submit a fair market valuation of assets in my account by December 31 – FICTION
While we encourage you to submit fair market values (required one per year, at a minimum) for your alternative assets as promptly as possible, you have until January 31, 2019 to submit FMV information for 2018. Information submitted in January will be recorded as current as of December 31 on your Form 5498.

My annual statement can help me file taxes – FACT
Because Form 5498 describes contribution activities and IRA holders have until the tax filing deadline to make deposits, NDTCO will issue Form 5498s only after that deadline. Your statement will be available well before then and can be used to verify contribution activities in the absence of your Form 5498. For example, if you rolled funds from a qualified plan and received a Form 1099-R, your annual statement can document the corresponding rollover contribution into your self-directed IRA with us.

I will have to pay annual fees with the turn of the calendar – FICTION
Annual fees come due in the anniversary month of your first transaction. So, if you opened your account in late-February but funded your first investment in early-March, your annual fees will come due in March of every subsequent year. You would therefore only pay annual fees in January if your first investment occurred in January of a previous year.

Please keep in mind that many of these factors are circumstantial; they may not be fact or fiction in all cases. Please consult with your attorney or tax professional to evaluate your unique situation.

For more information about self-directed investing or your alternative investment options, please don’t hesitate to call our office at 877-742-1270 or send us an e-mail at info@ndtco.com.