Matured Notes
Matured Notes in a Self-Directed IRA
A self-directed IRA is a wonderful investment vehicle that allows clients to invest in what they know best. One of these investment options includes promissory notes, secured and unsecured. When notes are drawn up, they include a date of final repayment for all interest and principal known as a maturity date. When a promissory note has reached the maturity date outlined in its terms and appears to remain open, QTC will contact the client about the investment status. To maintain accurate records and comply with regulatory requirements, we ask clients to notify QTC which scenario applies:
- If the asset will be or has been paid off. In this situation clients should submit disposition of asset instructions on the client portal to close the asset;
- The asset is still viable and the terms of the loan are being extended; please update via the note modification page on the client portal, along with sending the original modification/extension agreement for the note, signed by the borrower to the QTC Corporate office in Houston, Texas.
- The asset is uncollectible; if the borrower is unable or unwilling to satisfy the loan, the asset may be deemed as zero-valued. Please go to the Zero Value page for more information.
Quest is often asked why a letter from an attorney is required instead of simply writing off the debt instrument. As a self-directed custodian we have an obligation to report accurate values to the IRS. A promissory note is considered a legal instrument, and as Quest does not provide legal advice, we require a legal opinion to remove the unfulfilled note from the retirement account.
- If the above options do not apply and an extenuating circumstance exists, reach out to our Special Services Department.
Please understand that if no action is taken, the asset may be deemed as administratively infeasible for QTC to hold. If this happens, your asset will be distributed at the last known value and reported to the IRS as taxable income.
Should you have any questions or concerns, please contact the Special Services Department at 855-386-4727.
