Does AET provide tax or legal advice regarding my investments?

At American Estate & Trust (AET), we prioritize compliance and customer service in managing Self-Directed IRAs (SDIRAs) and other retirement accounts. However, it’s important for our clients to understand the role of AET in the management of their retirement accounts and the limitations of the services we provide. Specifically, AET does not provide tax or legal advice related to your investments.

AET’s Role as a Custodian

As the custodian of your SDIRA, AET is responsible for ensuring that your account complies with all IRS regulations, maintaining proper documentation, processing investment transactions, and safeguarding assets. However, AET does not give investment advice, nor do we provide tax or legal counsel regarding the nature of your investments, their potential tax consequences, or their compliance with applicable laws.

While AET can assist with the procedural aspects of your SDIRA investments and ensure they are executed in line with IRS regulations, we cannot offer professional advice or interpret how specific investments may impact your overall tax situation or legal standing.

Tax and Legal Considerations Are Your Responsibility

While AET can guide you through the mechanics of Self-Directed IRA transactions, it is crucial for you, the account holder, to seek guidance from tax professionals, financial advisors, or attorneys regarding:

1. Tax Implications of Your Investments

Certain types of investments—such as real estate, cryptocurrency, precious metals, or business interests—may have unique tax implications, such as Unrelated Business Income Tax (UBIT) or Unrelated Debt-Financed Income (UDFI). A tax professional can help you understand how these taxes apply to your SDIRA investments.

2. Prohibited Transactions

The IRS has strict rules regarding what constitutes a prohibited transaction within a Self-Directed IRA. If you engage in a prohibited transaction, such as self-dealing or investing with disqualified persons, it could result in severe tax penalties. A legal or tax professional can advise you on what activities are permissible and what to avoid.

3. Investment Compliance

Some investment types require a thorough understanding of legal structures. For example, investing in private companies, partnership interests, or LLCs may require proper documentation, governance, and adherence to laws governing those investments. A lawyer or financial advisor can help ensure compliance with these legal requirements.

AET’s Compliance Role

Though AET does not provide tax or legal advice, we do ensure that your account remains in compliance with IRS guidelines. Our operational procedures are designed to ensure your investments are processed in line with federal regulations, and we provide documentation required for tax filings (e.g., IRS Form 1099-R for distributions, Form 5498 for contributions).

For example, AET will:

• Review investment documentation for compliance with IRS regulations
• Ensure the correct titling of assets within the SDIRA
• Process your investment requests and provide statements for tax reporting purposes

While we ensure that your IRA complies with the applicable regulations, we recommend that you seek outside professional advice on the specifics of your investments.

When to Seek Professional Advice

It’s essential to seek professional advice in the following scenarios:

• Tax Filing and Reporting: If you have any questions about how your SDIRA investments may affect your taxes, you should consult a tax advisor or CPA.
• Legal Concerns: If you're considering investments that have legal implications—such as starting or investing in a business, or if you're uncertain about the structure of your investment—you should seek a qualified attorney.
• Investment Strategy: While AET facilitates your investments, you should seek the advice of a financial advisor if you have questions about the suitability of investments for your financial goals.

Conclusion

While AET does not provide tax or legal advice, we play a vital role in facilitating your Self-Directed IRA and ensuring that your account remains compliant with IRS regulations. It is essential that you work with a tax professional, financial advisor, or attorney for specific advice regarding your investments, their tax implications, or any legal considerations. This will help you make informed decisions and keep your SDIRA in good standing with the IRS.