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Glossary

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Custodian

An agent, bank, trust company, or other organization which holds and safeguards assets for an individual, IRA, mutual fund, or investment company. A Self-Directed IRA must have a custodian to hold IRA funds or assets. For a list of some of the custodians who provide self-directed IRA services click here.

Disqualified Person

According to IRC 4975, those individuals or entities with which a retirement plan owner cannot do business: typical examples are the owner of the IRA or other retirement plan, the spouse of the IRA owner, lineal ascendants and descendants, certain fiduciaries and entities owned/controlled by disqualified persons.

Non-Recourse Loan

A loan where there is no personal guarantee and the lender’s sole recourse is the asset securing the loan. This type of loan may have a higher down payment and/or different interest rate and term than a loan that carries recourse.

Registered Agent

A registered agent is a responsible third-party who is registered in the same state in which a business entity was established and who is designated to receive service of process notices, correspondence from the Secretary of State, and other official government notifications, usually tax forms and notice of lawsuits, on behalf of a LLC. The owner of the LLC may serve as registered agent if he or she lives in the same state.

Roth IRA

An individual retirement account which is funded with post-tax money. Although no tax deduction is available for contributions, the account is allowed to grow tax-deferred, and qualified distributions are tax-free. Eligibility for this type of account includes maximum income restrictions.

Self-directed IRA

A self-directed Traditional, Roth IRA or SEP  retirement account that allows individuals to invest in alternative investment options not allowed within typical retirement plans. Self-directed IRA investments include:

• Real estate – residential and commercial properties, land, renovation or new construction, passive rental income
• Mortgages and other loans
• Private hedge funds
• Precious metals
• Limited partnerships
• Commercial paper and notes
• And more

Traditional IRA

An individual retirement account where the IRA owner funds the account using pre-tax money for which a tax deduction can be claimed in most instances. In addition, income grows tax deferred while it is in the account. Tax occurs at time of distribution.