Does My Self Directed IRA Need an EIN?

Does my selfdirected IRA need an EIN

Self-directed IRAs allow investors to invest in alternative assets, such as real estate, precious metals and startup equity with less regulation oversight and often limited liquidity options.

The Internal Revenue Service imposes stringent rules regarding illegal transactions. You must abide by them, or face penalties from them.


Self-directed IRAs provide more investment options than typical mutual fund or stock accounts, but are subject to higher fees and more complex recordkeeping requirements. Furthermore, there are specific rules and guidelines which must be observed – failing which could incur large tax bills and penalties.

Investors with self-directed IRAs have the flexibility of investing in everything from real estate and promissory notes to tax lien certificates and even real estate investments on specialized exchanges that work with self-directed IRA custodians – adding extra complexity and increasing fraud risks in the process.

Understanding the complex IRS rules surrounding self-directed IRAs is vital. Failing to comply can result in extra taxes, financial penalties and even losing its tax deferred status altogether. There are ways you can mitigate risks, however. Consult a tax advisor prior to any transactions being completed while selecting a custodian who provides both UBTI and UDFI protection as two examples.

Checkbook control

Checkbook control refers to an individual IRA owner’s ability to write checks directly against their retirement funds without needing approval from a custodian or trustee. One strategy to accomplish this goal is creating a self-directed IRA LLC (limited liability company) with full signing authority; using this method allows for swifter investments into alternative properties, precious metals, or nontraditional assets.

Self-directed IRA investments require adhering to IRS rules regarding prohibited transactions, such as not living in your IRA-owned rental property or providing services such as fixing its toilet.

To avoid prohibited transactions, IRAR advises choosing a custodian who is established and regulated by state and federal laws. You can verify their legitimacy by reviewing the list of registered IRA custodians on the IRS website; otherwise it would be wise to conduct thorough research into any custodian not appearing there prior to depositing any funds with them.


As self-directed IRAs are tax-advantaged vehicles, their investment income does not incur taxes. Nonetheless, the IRS requires annual reports to provide information to them regarding fair market value of assets and earnings for an IRA’s fair market value and earnings in order to assess whether an individual holder meets their required minimum distribution (RMD).

Self-directed IRAs that own businesses that generate UBTI or UDFI must file Form 990-T with the IRS; however, most SDIRAs don’t generate such income and therefore are exempt from having to submit this report.

IRA owners completing W-9s should use their reporting EIN instead of their personal SSN to avoid confusion when providing this information to banks or other parties requiring it. Applying for an EIN with GovDocFiling’s quick application process makes obtaining one easy, so once obtained it will be available immediately for entry into forms requiring this data.


As every IRA investor knows, there are strict regulations and rules to abide by when investing in an Individual Retirement Account (IRA). Failing to comply may result in severe IRS penalties being levied against your account balance, especially when dealing with real estate investments or alternative assets such as physical gold or private equity investments.

Self-directed IRAs are an attractive investment option for people who want to invest in things not covered by regular IRAs, like cryptocurrencies or second homes. But the Securities and Exchange Commission warns against their use as fraud risky. Red flags could include brand new investment companies without track records, claims of unreasonable high returns and no third-party audits being performed on these funds.

To avoid fraud, it is essential that your self-directed IRA be stored with a trustworthy custodian. A great place to begin searching is the IRS list of approved nonbank custodians; be sure to verify whether or not they possess professional licensing and liability insurance before making your choice.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

Categorised in: