Managing your Private Lending Investment

Loan Maintenance

NDTCO does not act as a loan servicer, it is the responsibility of the account holder to keep records of the payments, both principle and interest, for the loan.  

The borrower needs to ensure that all principal and interest payments go directly back to your retirement account, not to your personal bank account. The borrower must make at least one payment per year. Borrowers can make payments back to your retirement account through the following options.

Note Payments Online

Your IRA’s borrowers have the option to make note payments online via ACH at portal.ndtco.com and it’s FREE! All they need to do is click the “Pay Now” button and fill out a few simple fields.  

Incoming funds will have a 5-business day hold before the funds are available in your account. 

Checks Mailed to NDTCO

Instruct your renters to make the rent checks payable to your IRA as follows: NDTCO, as Custodian, FBO Account Holder’s Name IRA. 

We cannot deposit any check payments into your IRA that are made payable to you personally, any such checks will be returned to the borrower. All checks need to be accompanied by a deposit coupon.  

There is a 5-business day hold on incoming checks beginning on the date of deposit. 

Checks can be mailed with the deposit coupon to our office: 

New Direction Trust Company 
1070 W. Century Drive. 
Louisville, CO 80027 

Automatic ACH Withdrawals

You have the option to set up automatic note payments with your borrower using the Authorization Agreement for Direct Withdrawals form.  

Once the loan is repaid in full, you will need to cancel automatic ACH withdrawals by completing the form again. 

Please note, if a note is approaching maturity you must work to amend or extend the note. The following section provides details on the items needed for note amendments, extensions and modifications. 

Note Amendment: Extensions and Modifications

Please see the following items below needed for note amendments, extensions, and modifications.  

Note Amendment – Accessed via the “Take Action” button in the Portal

A copy of the note amendment

The amendment must reference the existing note and terms, detail the changes being made to the note, and state that it either replaces or adds to the existing note. The new note or note amendment must be signed by the borrower as well.

If the security on the note is changing, the following items will also be needed. 

For adding security to the note (i.e., adding a deed of trust), we require:

A copy of the signed, original security instrument.

If using a title company, a copy of the above is sufficient.

The new Deed of Trust will need to be recorded to the county by the account holder.

For removing security from the note (i.e., release of deed of trust), we require:

The release instrument.

The account holder must provide a written statement requesting the original security instrument be mailed to the borrower or the title company as well as any other instructions.

Original Document Release Form– This form is needed to authorize and instruct NDTCO where to send the specified original document, as well as any other instructions.

The release of Deed of Trust is recorded at the county by the account holder or their agent, not NDTCO.

For exchanging security on the note, both of the above must be provided, in addition to the Note Amendment.

Paying off a Loan

PAYING OFF A SECURED LOAN

When the loan is ready to be repaid in full, please complete a Payoff Statement from your Portal Overview page, under the “take action” button.   

A payoff statement must be completed when the final payment for the note is received so that the note can be removed from your account in a timely fashion.

You are responsible for providing the release of the Deed of Trust. Coordination with outside third-parties such as a Mortgage Company or Lender, Attorney, or Title Company is your responsibility. In order to release the asset, NDTCO will need to sign the Deed of Trust.

The final payment needs to come to NDTCO. We need both the Payoff statement and the payment before we can remove the asset. Any asset in the account at the time of annual billing will be assessed an annual administration fee. Annual administration fees are not refundable or pro-rated.   

PAYING OFF AN UNSECURED LOAN

When the loan is ready to be repaid in full, please complete a Payoff Statement from your Portal Overview page, under the “take action” button.   

A payoff statement must be completed when the final payment for the note is received so that the note can be removed from your account in a timely fashion.

The final payment will not be deposited into the IRA holder’s account until New Direction Trust Company has a payoff statement.

Defaulted and Uncollectable Loans

If payments have stopped, contact the borrower. If the borrower does not comply with the loan terms, New Direction Trust Company strongly recommends that you seek legal counsel. NDTCO is not a loan servicer and will not contact our account holders or the borrowers if payments have stopped or changed. NDTCO does not work on our account holder’s behalf to uphold the terms of the agreement between our account holder and the borrower. 

If funds are deemed uncollectable, the loan will become a zero-value asset. In order to adjust the asset value to zero and remove it from the account, New Direction Trust Company will need: 

Proof that the investment is worthless – Documentation to prove the asset is valueless can come from the borrower, third-party (attorney or CPA), or public document.

Zero Value Form.  This can be found after logging into the portal by clicking on Take Action to right of the asset name and then choosing Valuate.  This online form will allow you to attach your supporting documentation.

Once the above documents have been received and reviewed, New Direction Trust Company can remove the zero-value asset from your IRA. 

Prohibited Transactions

The following actions are considered prohibited transactions and could result in the distribution of this asset from your plan. Prohibited transactions apply to all disqualified persons to your plan. 

Receive loan payments directly instead of having them go to the IRA

Engaging in private lending between your account and a disqualified person

Yield a commission/fee for the purchase, sale, or exchange of assets

Cover account expenses with personal, non-account funds

Use of your IRA’s assets as collateral for a personal loan

Use of your IRA’s assets to guarantee credit for a loan

All expenses for the investment are the IRA’s responsibility. Never pay any bills with personal funds. Such payments may be considered prohibited transactions, which could jeopardize the tax-advantaged status of your IRA. 

Annual Fair Market Valuation

Per IRS regulations, each retirement account must be valued annually.  Once per year, NDTCO accounts that hold promissory notes must complete a Fair Market Valuation (FMV).  

Supporting documentation from a qualified 3rd party or based on the note’s amortization schedule is required for the valuation to be processed.  3rd Party documentation may include a letter from the borrower, a CPA, an attorney, or a public document.   

Supporting documents not accepted:

Schedule K-1s (which report annual earnings or losses but not fair market values)
documents older than 6 months from creation date
recorded phone conversations
e-mails do not constitute valid supporting documentation.

Failure to provide an annual valuation may result in the taxable distribution of your asset. Accounts that have shown no activity, including the valuation, will not be held by NDTCO because we cannot meet the IRS requirement to annually update the value of your IRA and file an accurate IRS Form 5498 for your account.  

To complete a Fair Market Valuation Form, please: 

Log into the NDTCO Account Holder Portal.

On the Overview page, find the appropriate asset and select Take Action in the right-hand column, and then choose Valuate.

Provide any requested information and upload your supporting documentation.

Agree to the Terms & Conditions and click Submit. Done!

In-Kind Distribution

To take a full in-kind distribution of Private Debt, the following items are needed: 

Distribution and Notice of Withholding Form – this can be completed through the portal. To access the form, login and select ‘Distributions’ from the left-hand options. Complete the section for in-kind distributions.

A copy of the new note (with the borrower’s signature) showing your name as the new lender instead of the IRA’s naming convention.

Fair Market Valuation (FMV) will need to be completed with documentation submitted within the past year prior to the distribution. The FMV requirement is waived if the asset was purchased by your account within the past year prior to the distribution.

To take a partial in-kind distribution of Private Debt, the following items are needed: 

Distribution and Notice of Withholding Form – this can be completed through the portal. To access the form, login and select ‘Distributions’ from the left-hand options. Complete the section for in-kind distributions.

Note Amendment – Required for amending existing notes, outlining the changes for the portion of the note that will be staying in the NDTCO account.

A copy of the note amendment

The amendment must reference the existing note and terms, detail the changes being made to the note, state that it either replaces or adds to the existing note. The new note or note amendment must be signed by the borrower as well.

If applicable, the new Deed of Trust will need to be recorded at the county by the account holder or their agent, not NDTCO.

In-kind distributions will incur both a distribution fee (unless the account holder is taking an RMD) and an in-kind asset re-registration fee.  Please refer to our fee schedule for details. 

In-Kind distributions are reported as income on tax form 1099, please seek counsel from a qualified tax professional if you have any questions about the form or how to report it with your taxes. 

Unrelated Debt-Financed Income (UDFI/UBIT)

Earnings from some investments may be subject to Unrelated Business Income Tax. If your investment’s entity has earnings from the sale of goods/services or earnings from debt, consult with your tax professional to determine if UBIT is owed. You, as the IRA holder, are responsible for deciding if the earnings are taxable or not. If so, you must file form 990-T with the IRS. 

NDTCO does not calculate UBIT or submit form 990-T. Click here  to  download our free UBIT calculator. 

See here for more information on UDFI, UBTI, and UBIT.  

Managing Your Account

Our online portal combines human power and digital innovation, making it simple to view all your account information in one centralized location. Within the portal, you have the ability to directly message our support team, review recent transactions, download account documents, and review a vast library of educational content easily and securely.  

Simply log into our Account Holder Portal to access and manage all of your account information.  Learn more. 

Forms

Please login to the Portal to view forms. 

Promissory Note Buy Direction Letter – This form directs us to process the loan investment. This form can be accessed through the portal from the Invest tab on the left-hand side.

Note Amendment– The Note Amendment, Extensions and Modifications Form is required for amending existing notes, whether it is extending the maturity date or adding additional funds to note.

Distribution and Notice of Withholding Form– To access the form login to the portal and select ‘Distributions’ on the lefthand side.

Payoff Statement – This form is accessed by logging into the portal, clicking on the take action button to the right of the asset name and choosing Payoff Asset.