EP 392 – End Of Year SD IRA Guidelines with Ingrid Chavez

NCS 392 | IRA

NCS 392 | IRA


The end of the year is something that makes anyone feel either anxious or excited. Partly the reason is the fact that so little time is left to meet your goals and finish up some pending tasks. Scott talks with Ingrid Chavez from Quest Trust to discuss some of the deadlines that self-directed IRA investors have to keep in mind as the year comes to an end. Learn more about evaluation and asset evaluation forms to submit as well as the fair market value of the assets. Also, take a peek into the new tool offered by Quest Trust and their upcoming events that will help you as investors even for the years to come.

Listen to the podcast here:

End Of Year SD IRA Guidelines with Ingrid Chavez

We have the amazing Ingrid from Quest Trust company. She’s joining us and we’re excited to have you here, Ingrid. What’s going on?

Not much. Just planning some end of the year. There are some important deadlines that come at the end of the year so I’m preparing for that and a lot of clients too. A lot of important deadlines and updates that we have to provide for you.

I imagine so because there’s always the end of the year account evaluation forms and the asset evaluation forms everybody submits. That’s the first one.

You have the end of the year, December 31st and then April 15. The tax filing deadline is the busiest times and there are certain forms whenever you have an asset with your retirement account. If it’s a real estate note asset and a private entity, you will have to submit the fair market value of that asset. Tell us what that asset is worth and what the value of that asset is. That has to be submitted by the end of the year to the custodian as well so the custodian can report that information over to the IRS. That’s one of the things that is pretty important. A lot of people don’t think it’s that important to submit them with the fair market value. They don’t understand why we need it. It’s a requirement for the IRS for us to be able to determine that value of the asset.

You can download the forms directly from the website. It’s a pretty easy thing. At the last week of the year, I’m always in the office working on those. I’ve got my staff ready to rock and roll and teaching them a little bit of it because it’s pretty simple. It’s a one-page form. The most challenging if you’re a note investor would be if you’ve got a nonperforming note in your portfolio. You need a third party to evaluate that because it’s not worth the full value of the loan or the UPB but it’s worth something by figuring out what it is. That’s still not too difficult to have a third party put that together. It’s easy. They email it into you and then you submit the IRS.

We launched the fair market values directly through the client portal so you no longer need to send the form. You can just go to the client portal. It’s so much easier. You’re going to love this. You log into the client portal, you click on the investments tab and you’ll be able to see all the investments for the account, updated FMB and where you’ll select the different market value. You’re even able to attach any supporting documentation like tax assessment or anything like that directly through the portal.

Is that the first announcement here on the Note Closers Show? A new tool on the portal. Is that for just the account holder? If I’m the investor or I have the deal, am I able to log in and submit that on behalf of our clients or our partners or not?

That will be for the account holder unless you have a limited power of attorney or a third party for their account then you may be able to do that. Our assistance team has been working on it hard. It wasn’t supposed to be released but they completed it. We’re going to be sending some announcements for that as well.

The Quest Trust is making my life easier.

They were trying to make it easy for our clients, as easy as they can be with all the technology and everything that we’re putting.

You had another deadline that you just passed on.

We had been talking about this. That was the last month rule that applies to the health savings accounts. For the HSAs, as long as you have a high deductible health plan or compatible health plan in place by December 1st, you’re able to contribute for that full year. Even if you weren’t covered all the past month, if you’ve got an HSA qualifying plan by December 1st, you’re able to make a full 2018 contribution to that account. We are waiting on account opening fees and we’re still waiving account opening fees because we know some people may have just switched over to their high deductible health plan. We’re waiving account opening fees for the HSAs until December 22nd. If anybody has a plan that’s HSA compatible, then they can open that account. They don’t have to pay $100 account opening fee and they can start making that full-year contribution in there and start getting those benefits.

I’m sure it’s a busy time of the year to people, especially business owners and entrepreneurs who are looking at their numbers and talk with their accountants about trying to max out especially as we get to the end of the year. What are some of the biggest things that you see people slacking on that they needed to spend a little bit more time on?

One of the things that we touched is the fair market value of the assets. That’s one of the things that some people tend to ignore or maybe wait until the end of the year. Just do that. It only takes a few minutes now with the new system in place. It’s easy for you to provide us with that asset value. Another thing that’s important for traditional IRAs or any inherited IRAs. Those are going to be subject to required minimum distributions or RMDs. With the traditional IRAs and pretax account, you put this contribution someday and you most likely get a tax deduction and also a pretax bucket of money. The IRA says once you reached the age of 70.5, you will have to start taking requirement of minimum distributions for that account. It will be based on your age and the end of the year value for that account. That would give you the amount that you are supposed to distribute every year. If you don’t take that requirement on distribution amount out from your traditional IRA by December 31st, there’s a 50% penalty for that. You have to make sure that you’re talking to your advisor. If you have any other IRAs anywhere else as well, you can aggregate those accounts and just take it out from one custodian, but you have to make sure you satisfy those requirements on the distributions.

That’s a huge number. You don’t want a 50% tax.

The inherited IRAs even if it’s a Roth IRA, once you inherited an IRA, those are going to be subject to those requirement minimum distributions as well. That’s one of the other things that we want to make people aware of because you don’t want to have that 50% penalty because you forgot to take it out.

NCS 392 | IRA

IRA: Finish a task as soon as you can. It only takes a minute compared to a lifetime of dragging it out.


That’s an important aspect of things. Keep that in mind. Let’s talk about some of those amounts that people have not been contributing to their IRAs. What are the annual amounts again for putting them towards the Roth and traditional things like that?

For a traditional and Roth IRA for the past few years, those contributions haven’t increased. For 2019, it’s the first time they’re increasing the contribution limits for the traditional and the Roth IRAs. It goes from $5,500 that you’re able to put for 2018 and then for 2019, you’re able to put $500 extra. You’re able to put $6,000 in there. Once you reach the age of 50, you are able to contribute a catch-up contribution of $1,000. It can be over $6,500 or for 2019, you’re able to contribute $7,000 to those.

If you put $5,500, that’s $500 a month just putting in the retired for yourself. That’s not a bad way. That’s the easiest way to do it. I know a lot of people put catch-up and I know it will be dropping extra stuff to get caught up here by the end of December and before April 15 for sure. You started off and do a couple of option deals or maybe use that money to buy a partial. There are a lot of different things you can do with those smaller amounts.

Let’s say you had an HSA. You can contribute to your HSA account. For the HSA, the contribution limits are going to be $3,450 for single and then $6,900 for a family coverage HSA. If you had maybe one of those plans or maybe you have a Coverdell account for your kids. If you have kids and they’re going to school elementary and higher education, you can get a Coverdell Education Account. Set that up for them for $2,000 per child per year into one of those accounts and use that account to do an option or a partner with the other accounts that you may have.

Is there a deadline for ESAs as well?

The traditional, the Roth, the HSA and the ESA, you’re able to open and contribute to those accounts until April 15, until the tax filing deadline. Even if you haven’t had one set up yet, you have a little time for you to even open and contribute one if you wanted to make a contribution for the year 2018.

For the audience, make sure you write those dates down. April 15th is on a Monday. The end of the year lands on a Monday as well. That’s the thing. You were waiving fees on HSAs. Are there any other specials that are going on for December?

Through instance, we have those specialty plans that are the HSAs and the ESAs. We are waiving account opening fees for the Coverdell Education Savings accounts as well. On December 22nd, any HSA that gets opened or any ESA that gets open, you don’t have to pay any account opening fees. You can open those Coverdell for your grandkids and for your kids. Anybody can make a contribution to the Coverdell so it could be a good little Christmas gift there.

Deck the halls or stuff the stockings with an ESA. I see a whole image infographic there for you whether you’ve got grandkids or kids.

Nathan came up with this holiday bundle. The holiday bundle includes that, waiving the account opening fees for those plans but he also wanted to add something extra as well. He made it that if you open up an account with Quest, let’s say you have another IRA that is a self-directed IRA custodian. If you were to open an account and transfer that account over to Quest, we will give you our gold family plan, which is what we consider our VIP plan that covers all of your fees. You’ll get the free gold family plan for six months and you wouldn’t have to pay any Quest fees so take advantage of that. If you are on the fence or were thinking about switching IRA companies or if you wanted to transfer over to Quest, you’ll get that free gold family plan.

Save some money and get some rock and roll in there. That’s good stuff. You’re talking just with everybody in the office there about year-end, but you also got some exciting stuff coming up for people and even marketing and accountants.

We have our second annual Online Self-Directed IRA Boot Camp. A lot of people are familiar with these boot camps because we used to have them in Seattle. We had them in Houston, Dallas, and Austin. We had them at least once a year where we bring in a lot of different guest speakers and we were doing them just for one day. It was an all-day crash course. We’ve got so much great feedback from these that we decided to host them online. We had our first one last January 2018 and clients loved it. We were able to bring in more speakers because we were able to extend the dates and they didn’t have to fly over to Houston or fly over to Austin to be pressing for it. This year, we’re making it three days. Last year was two days and people still wanted more because it’s such great information. We have CPAs. Scott Carson always participates in them. We have attorneys and different investors that specialize in different types of assets. It’s a powerful event and that’s going to be January 18, 19 and 20th 2019.

That’s valuable stuff because it’s three days and it’s online. It’s very similar to our Virtual Note Buying Workshop or our Note CAMP. They do a great job with it bringing different speakers. You’ve got apartments, fix and flips, private lending, turnkey people, me speaking on the notes and investing basics. You’ve got a good all-star lineup of people who are going to be speaking on it for three days.

Our clients provide so much great feedback for that event and the best part is you get to watch this information and this content from the comfort of your home. We also provide you with a copy of the recording if you purchase a ticket for it, so you are able to replay it and watch it later. You’ll maybe learn some techniques that you will be able to apply to your retirement accounts.

The tickets are $199. What’s the website for that?

Just go to QuestTrust.com and you’ll be able to see that right there on our main page. It’s going to be one of the images to the right. If you go to the events and then Special Events, you’ll be able to sign up on there as well.

NCS 392 | IRA

Rich Dad Poor Dad: What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not!

What else do you have going on? You’ve got your Trillion Dollar Mixer and it’s taking place in January again. I know January is always one of the busiest months for a real estate investment club. Everybody’s wanting to do something new. They’re wanting to get off or they’ve read the Rich Dad Poor Dad or they’re motivated with New Year’s resolutions. Let’s talk about the dates. You’ve got those pulled up there for the Trillion Dollar Mixer. You’ve got Dallas, Houston, and Austin too, don’t you?

For Austin, we have it under the fourth Tuesday of the month.

That’s in Austin, Texas office. Tuesday, January 22nd, 6:30 to 9:30 and that’s a free event to go to, correct?

Yes, it’s a free event. We bring you different guest speakers that can come and provide education. We allow for networking and we allow for anybody who’s here. Maybe you’re looking to invest, maybe you are an investor already, maybe you can provide services. We allow for anybody who attends or anybody who watches online as well, you can come in and introduce yourselves in front of everybody who’s watching online and anybody who see all the class as well. It’s great not just for the education but for the networking part as well because your network is your network. We always try to incorporate networking into our events.

It’s a huge thing. It’s one of the great things to rub elbows with other investors there and expand your network as well. What are the dates you’ve got in Dallas and Houston? What are the dates for those just so they can put that on the calendar as well?

We have Jeff Watson that’s coming in from Ohio to speak for this event. It’s a great event as well. We’re expecting a lot of people to show up for that one. For Dallas, it’s going to be on January 23rd. We’re starting up 2019 with some good Trillion Dollar Mixers and also we have our weekly classes in every office as well. In Houston, it’s every Tuesday from 9:30 to 10:30. That’s where we started doing our classes. That’s where we got the idea of getting bigger offices in Austin and Dallas as well. We can have a classroom to be able to provide that education. Tuesdays for Houston from 9:30 to 10:30 different classes every week and then you have Dallas. You have them every Wednesday. We do lunch and learn in Dallas and Austin. It’s going to be from 12:00 to 1:00 in Dallas every Wednesday and Austin has their classes every Thursday from 12:00 PM to 1:00 PM as well. Our very first one for 2019 is going to be Quincy. He is coming. He hasn’t been here since the grand opening and I wanted to bring him. I said, “What better way to start the year than to have Quincy come by?” He’s going to be giving a class on Roth conversions.

We’ll be doing a live Note Closers Show straight from Quest offices. We’re live there with the Quest crew and live audience as well. If you’re in the Austin market, come on out and then we’ve also talked about starting a monthly Note Closers Austin-based note meetup for everybody in the Austin and central Texas market too.

Scott and I are going to be planning on that for 2019. We’ll be sending you guys our reminder emails and let you know when those are planned. We’ll be having that live from the vault here in Austin. I mentioned that Quincy is coming by to speak about Roth conversions. I wanted to touch one thing also. There’s a deadline for Roth conversions. This is when you may want to consider converting your traditional accounts over to Roth IRAs. The Roth IRAs are a fantastic way to grow your retirement completely tax-free and get access to that money that you have in there. The earnings and the contribution are completely tax-free at any time. There are a couple of requirements for that which are having that account open for five tax years and being over the age of 59.5. Once you have those two requirements, everything that you have in that Roth IRA, all that money that you have invested, and all the earnings will be completely tax-free. You’ll also able to pass on the tax-free bucket to your heirs as well.

By December 31st, you’ll have to have converted those funds. Maybe you have some traditional IRA funds. You can convert some of those funds over into a Roth IRA. Why would you want to do that? It’s because maybe now the tax brackets are going to be lower than they may be in the future. With the tax bill, that allows the tax brackets to be restructured so we may not have to pay that many taxes if you convert from your traditional IRA to a Roth IRA now. We ask you that you consult with an advisor to see maybe if you should do a conversion from your traditional IRA to a Roth IRA depending on what your tax bracket will be. Another thing is that with the tax bill, before once you went from your traditional IRA to the Roth IRA, you had what was called a recharacterization, which was like a built-in oops button. With the tax bill, you can no longer recharacterize those funds.

Roth conversions were very popular at the beginning of the year because if you don’t have a conversion in January, you had all that year until tax deadline, plus any extensions if you filed for any, to be able to analyze the deal or to see if it was a good deal or not. If it was a bad deal, you will be able to convert that money back into a traditional IRA and try back again later next year. As of 2018, you can no longer recharacterize those conversions. A lot of people will now wait to maybe do that conversion at the end of the year so they can figure out if they are able to pay for those taxes or if it’s a good investment for them. That’s December 31st. The last time that you can do a conversion for 2018.

There are no income requirements to do a conversion from a traditional to a Roth if you were starting a traditional Roth.

There are no income requirements. A lot of people say, “I can’t have a Roth IRA because I have too much money.” One thing that you could do this is called the backdoor conversion. You’ll make a nondeductible contribution into a traditional IRA and then you can immediately convert that over to a Roth IRA because there are no limits on the conversion. You can convert whatever amount in your traditional IRA over to the Roth IRA. Everybody can have a Roth IRA.

Think about that tax. If you put $5,000 and you maxed out 2018 earlier in the year, now you could go convert it to a Roth with no income requirements. Just pay the taxes that are on the amount that you convert over based on your tax bracket for the year.

This is also a great strategy for people to do. Let’s say if you’re 55. If you haven’t had a Roth IRA before you’re 55, like I mentioned, the Roth IRA has to have five years seasoning period. You have to have the account open for five tax years and be over the age of 59.5 to be able to take that money and that account tax-free. If you open a Roth IRA, that counts if you open your Roth IRA as of January 1st, 2018. If you open and contribute as a matter of you just put $10 into it, that will start your five-year clock. It’s important for those who are maybe over the age of 59.5 and then it started taking those advantages or maybe you’re nearing the age of 59.5 as well.

That is going to be the big money nugget right there. That’s a huge thing. If you’ve got money sitting in a traditional account, you can decide how much of that amount you will turn over.

You can always consult with your financial advisor to figure out what amount you can convert that year to make sure it doesn’t put you to a higher tax bracket. When you convert, there’s not going to be any penalty. That penalty gets removed but that money that you covert will be added to your income for that year.

A hypothetical question for you, Ingrid. Let’s say they’ve got $5,000 in their traditional IRA account right now. It was a rollover from a job or something like that. They take $1,000 of that and convert that to a Roth. You’re going to pay taxes on that $1,000, right?


They have a Roth and a traditional. Could they then max out contributions above before April 15 for 2018?

The traditional and the Roth IRA, you can put the $5,500 into each. It’s just total. Even if you have multiple traditional IRAs or traditional Roth, the $5,500 is the max.

If you still put $5,500 into your Roth at that point, it means that $6,500 total tax-free growth no matter what you invest in and that’s a huge thing.

NCS 392 | IRA

IRA: If you’ve got money sitting in a traditional account, you can decide how much of that amount you will turn over.


Even if you think, “Maybe I shouldn’t start a Roth IRA because I’m young. I’m not nearly the age of nearing where I’m going to start taking that money out,” you still may want to do it that way because you have more money to convert. Let’s say if you started with an account right now and you put the $5,000 in there but let’s say you kept it in a traditional IRA. You started in investing that account by the time that you retire. Let’s say you grew that $5,000 and that’s the only thing that you contributed but you starting to do some creative investments. You grew that account to $500,000. Now you have to take that money out. You’re going to have to be required to start taking that out and you’ll have to pay taxes. If you do that with a Roth IRA, then you don’t get a tax deduction on the $5,000 but now you have that $500,000 once you retire and you have a completely tax-free bucket. Another thing with the Roth IRAs, any contributions that you put into those accounts you can also take out any time tax-free and penalty-free. There are a lot of benefits and if you have been on the fence about a Roth IRA, go ahead and take advantage of that.

They start a traditional right now. Anybody can do a traditional and then before December 31st, once that check clears then they could do a conversion and apply that to a Roth.

The conversion is easy to do. Just fill out a Roth conversion form of mine to complete that electronically and we processed that conversion within 24 to 48 hours.

You’d have a new account set up if you’re opening up a new one. What kind of fees are involved with that?

If you’re looking at opening your traditional IRA to just make that contribution and then immediately convert that to Roth, normally we don’t charge for the traditional IRA. We have a lot of people who use this strategy. We’ll be closing that account at some point because we’re moving it over to the Roth. It will just be the $100 account opening fees for you to establish that account.

Just $100 and you’ll get a Roth. It is well worth it, especially if you’re using your money and growing it to put some partials or some performing notes in there on the growth. One big thing that most people don’t know. If you like buying notes in Georgia, an exception getting around the mortgage broker’s license requirement in Georgia to buy notes in Georgia or contract for deeds is to fund with your self-directed IRA. We see different licensing things happen with states and stuff like that. That’s one of the niches of knowing out there. Do you get some big New Year’s resolutions Quest or some big New Year’s resolutions for 2019 that you’ve been talking about?

We are having our marketing meeting. We meet at the beginning of the year to plan out our entire schedule. We’re in the process of putting something together and we’re going to have some very special things for you. If you’re a client, we’re still doing some of those updates. We’re also looking at doing some more online training sessions to reach all of our clients who are not just in Texas. We’re looking at doing a lot of different things.

A lot of people look at December and they start coming up with New Year’s resolutions. If you’re looking to get back on track retirement, put some things in. Ingrid talked about a couple of ways and a couple of important deadlines as well. Do you get anything you want to share, Ingrid? Things you’ve focused on for the New Year? I know growing the Austin office is a big thing and what’s going on there? Do you have anything big going on before the end of the year?

I do have quite a bit of plan. What I’m planning is teaching more classes as well and creating the content also for Quest. I’m also wanting to create an all-Spanish section on the website to target all the Spanish speakers. I have a couple of classes that I just recorded on there. I’m getting some Spanish presentations also. I’m having a Spanish section on our website as well for those who prefer reading them in Spanish.

That’s a very important aspect of things, certainly in Austin and Texas itself and other parts of the country for sure. One of the top five markets is Spanish speaking clients out there. When I was a banker, I didn’t speak much Spanish, but it came in handy using Google Translator to do some fun stuff with clients. If you can embarrass yourself a little bit, they’ll often speak better English than you will sometimes. It makes them put it comfort because most people, their English is their second language. They may not want to speak it because they’re embarrassed of butchering it. Trust me, I can butcher any second language a lot better than they can.

My Spanish is Spanglish sometimes. There are some certain words that you just can’t think of.

Ingrid, thank you so much for being on here. Once again, thank you for everything. You are part of our extended family. The whole staff out there is just amazing and part of what we’ve done so well this year has also been because of our partnership with Quest. Thank you so much for what you do.

We appreciate it. I just wanted to leave a last reminder for the holiday bundle that we have. If you are opening an account or transferring, make sure on your applications that you put the promo code Quest Bundle.

We are jacked up. It’s hard to believe that the year has flown by so fast. Take advantage of what Ingrid is talking about. Reach out to her. Get this Roth conversion started. Go online and pull your account valuation updates. They’re online. I will be sending some stuff out to our funding partners on those as well but don’t miss out. There are plenty of opportunities to get things to rock and rolling. Sign up for the online boot camp that Quest Trust has. Go out and make something happen. We’ll see you all at the top.

Important Links:

About Ingrid Chavez

NCS 392 | IRA

Ingrid Chavez joined Quest IRA in 2012 and currently holds the position of Marketing Director. Ingrid graduated from Houston Baptist University with her Bachelor of Science in Biology and since joining Quest IRA fulltime, has held various positions throughout the company. Her expertise in promissory notes and private entities paved the way to her promotion to IRA Specialist and later to Marketing Director.

In 2014, Ingrid received the designation of Certified IRA Services Professional, after passing the rigorous examination by the American Bankers Association. Ingrid has served as manager of both the Quest IRA Dallas and Austin offices, before returning to the Houston corporate office as a Marketing Director.

Throughout her time at Quest IRA, Ingrid has led the redevelopment of the Quest IRA website, as well as the video and visual content used by the Marketing Department. As a bilingual IRA Specialist and native to Honduras, Ingrid has been a strong asset to the company in developing client relationships with Spanish speakers.


Love the show? Subscribe, rate, review, and share!
Join The Note Closers Show community today:

Leave a Reply

Your email address will not be published. Required fields are marked *