Qualified Recordkeeping

Qualified Recordkeeping Accounts

Most third-party administrators (TPAs) only allow conventional assets in retirement plans they oversee. However, if you are a business owner with a qualified plan, you can purchase alternative assets (real estate, private equity, gold, etc.) within that plan using qualified recordkeeping accounts.

Qualified recordkeeping accounts allow individuals, small businesses, and sole proprietors to carve out a portion of their pension, 401(k), or cash-balance plan and use it to invest in alternative assets.

A new plan is not opened and funded for this purpose—the alternative investments are held within the existing plan. Advanta IRA maintains the records pertaining to alternative assets the plan purchases and reports required administrative details to your TPA so they can perform their annual reporting duties for your plan as a whole.

Features

  • Current pension or qualified plans do not have to be terminated to invest in assets
  • With the cooperation of your TPA, you can make intra-plan transfers of cash to invest in any asset
  • Advanta IRA maintains the records of the alternative asset, receives income, pays expenses related to that asset, and reports the asset’s year-end value to the TPA

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Eligibility

Small businesses operating a separate 401(k), pension, cash-balance, or any other qualified plan are eligible

Business owners must check with their TPA for eligibility and coordinate with Advanta IRA. If the business owner is the trustee of the plan (as is true in many cases), the business owner may simply request an amendment to the existing plan to allow alternative holdings.

Contributions & Distributions

  • Contributions and distributions from the plan are reported and calculated by the TPA. Each qualified plan has its own contribution limits and distribution options.
  • Advanta IRA receives funds into the accounts as non-reportable deposits and disburses funds out of the accounts as non-reportable withdrawals.
  • The deposits and withdrawals are made at the direction of the trustee/business owner and should be approved by the TPA.

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