How should my investment be titled?

Proper investment titling is essential when purchasing assets within an AET Self-Directed IRA (SDIRA) or Solo 401(k) cash account. Incorrect titling can lead to processing delays, compliance risks, or IRS penalties.

AET has adopted a client-first titling structure for IRAs to simplify transactions and allow clients to sign investment-related documents without requiring AET’s signature. This article explains the correct titling formats and why they matter.

Correct IRA Titling Format

For all IRA investments at AET, use the following format:

✅ (Client Name), legal owner via non-trust custodial IRA with AET

Example:

• John Smith, legal owner via non-trust custodial IRA with AET

Why This Format Matters

AET previously used a custodian-first format, requiring AET’s signature on certain transactions, such as real estate sales. By listing the client’s name first, investors can sign investment-related documents directly, streamlining the process while ensuring compliance.

Solo 401(k) Titling & Custody Considerations

AET acts as the custodian for cash assets held within a Solo 401(k) but does not custody investments made by the plan. The trustee of the Solo 401(k) is responsible for holding and managing the plan’s investments.

When titling an investment held within a Solo 401(k), use the following format:

✅ (Solo K Name), (Client Name) Trustee FBO (Trustee Name) - (Use the Solo(k) TIN)

Example:

• Smith Consulting 401(k), John Smith Trustee FBO John Smith - 12-3456789

Key Considerations for Solo 401(k) Investments

• AET only custodies the cash assets of the 401(k); investment assets remain under the control of the plan trustee.
• Investment income or proceeds must be deposited into the Solo 401(k) account, not a personal account.
• The trustee is responsible for ensuring investments comply with IRS regulations.

Why Proper Titling Matters

1. Ensures Compliance with IRS Regulations

The IRS requires that assets within an SDIRA be titled in the name of the account, not the individual personally. Improper titling could be interpreted as a personal asset purchase, leading to taxes and penalties.

2. Allows Clients to Sign Investment Documents Without AET's Signature

The client-first IRA titling structure allows investors to sign contracts directly without needing AET’s involvement, preventing unnecessary delays.

3. Prevents Prohibited Transactions

Improper titling may lead to unintended self-dealing, potentially triggering a prohibited transaction that could result in the entire IRA becoming taxable.

4. Avoids Legal & Processing Delays

Investment issuers (such as real estate title companies or private stock issuers) require exact titling for proper record-keeping. Using the correct titling ensures smooth transactions and compliance.

Titling for Different Investment Types

Real Estate

If purchasing real estate with an SDIRA, the property deed should be titled as:
✅ John Smith, legal owner via non-trust custodial IRA with AET

Important Notes:

• The IRA must be listed as the owner on all property-related documents.
• Rental income or sale proceeds must be deposited into the IRA, not a personal account.
• Clients can now sign real estate sale agreements directly without requiring AET’s signature.

Private Stock or LLC Ownership

If investing in a private company or IRA-owned LLC, the operating agreement or stock certificates must list the ownership as:
✅ John Smith, legal owner via non-trust custodial IRA with AET

Important Notes:

• The IRA cannot invest in a business the client or family members personally control (more than 50% ownership).
• All income distributions must be made to the IRA, not personally.

Private Loans & Promissory Notes

If your IRA is issuing a loan to a third party, the borrower should list the lender as:
✅ John Smith, legal owner via non-trust custodial IRA with AET

Important Notes:

• Loan payments must be made directly to the IRA.
• Loans to disqualified persons (e.g., yourself, spouse, children, parents) are prohibited.

Precious Metals & Cryptocurrency

For precious metals or cryptocurrency purchases, the depository or exchange should list the ownership as:
✅ John Smith, legal owner via non-trust custodial IRA with AET

Important Notes:

• The client cannot take personal possession of metals or cryptocurrency—they must be stored in an approved depository or exchange account.

Common Mistakes to Avoid

🚫 Titling the investment in your personal name

• Example: John Smith IRA ❌
• Why? This incorrectly suggests personal ownership, creating tax compliance risks.

🚫 Using an incorrect custodian name

• Example: AET, FBO John Smith IRA ❌
• Why? This format requires AET’s signature on investment documents, causing unnecessary delays.

🚫 Depositing investment income into a personal account

• Example: Rental income or loan payments sent to your personal bank account ❌
• Why? All investment income must be deposited directly into the IRA.

Final Thoughts

Proper investment titling is critical for maintaining IRS compliance, avoiding prohibited transactions, and ensuring smooth transactions.

For IRAs, always use:
✅ (Client Name), legal owner via non-trust custodial IRA with AET

For Solo 401(k) investments, use:
✅ (Solo K Name), (Client Name) Trustee FBO (Trustee Name) - (Use the Solo(k) TIN)

By following these guidelines, investors can ensure seamless investment execution while maintaining the tax-advantaged status of their accounts.

If you have any questions about proper titling, contact AET before proceeding to prevent errors and ensure compliance.