Archives: FAQs

What happens when the loan is ready to be repaid?

Unsecured Promissory Notes– You will provide Madison Trust with a Satisfaction of Note. Madison will sign the Satisfaction on behalf of your IRA and retire the asset. Secured Promissory Note– You will provide Madison Trust with a Release of Mortgage or a Request of Full Reconveyance. Madison will sign the Satisfaction on behalf of your […]

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What happens if the borrower defaults on the loan?

The Lender would refer to the terms of the note and take appropriate legal action to attempt to collect the debt.

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How is the Lender titled on Loan Documents?

Titling is held in the name of your IRA as follows: “Madison Trust Company Custodian FBO [your name][your MTC Account #]”.

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Who’s responsible to prepare a payoff statement when the loan is satisfied?

It is the accountholder’s responsibility to calculate the payoff amount and prepare a payoff statement.

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How do loan payments get deposited into my IRA?

Payments are made by the borrower to your IRA using the Delivery Instructions form. You will provide Madison Trust company with a Deposit Information form documenting the source of the deposit. In Section B, you will select “Deposit from an Investment”. 

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Can I issue a loan from my IRA to myself personally?

No. All investments made by your IRA are to benefit your IRA, and not yourself personally. Issuing a loan from your IRA to yourself personally is a violation of the IRC and has adverse tax consequences. 

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How do I issue a loan from my Self Directed IRA?

Please refer to the following checklist for step by step instructions on issuing a loan from your IRA.

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How does Madison Trust company handle UBIT?

K-1s issued by your Investment Sponsor will show whether the proceeds of your investment are subject to Unrelated Business Income Tax. If taxes are due, your Accountant or Tax preparer will prepare Form 990-T. The form will be sent to Madison Trust for signature. Madison will sign the 990-T on behalf of your IRA and […]

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Where will my investment sponsor send dividends?

Dividends will be issued to “Madison Trust Company Custodian FBO [your name][your MTC Account #]” and deposited directly into your IRA. 

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How does my IRA fund a Capital Call?

You will complete an Investment Authorization form and provide us with a copy of the Capital Call Notice. If a Capital Call Notice is unavailable, then you can provide a Letter, Notice or an additional Subscription Agreement from your Investor Sponsor.

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