DIRECTION LETTER. Type of payment (capital call, foreclosure fees, property taxes, etc.)

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1 DIRECTION LETTER IRA Holder Account # I have read and understand Prohibited Transactions in Self-directed IRAs (page 3). I will not personally benefit from this investment while it is held in my IRA. IRA Holder s initials required PURCHASE the following asset: Borrower(s) Name & Type of Note; Name of LP/LLC; Company Name for Stock Purchase; or Real Property address & APN $ Description of Asset/Units (LP/LLC) & cost per unit/number of Shares (private stock) & cost per share, etc. Purchase Amount If the asset is a Secured or Unsecured Note: Is the borrower and/or the seller a disqualified person, as described on page 3? No Yes If the asset is a LP/LLC: Do any disqualified person(s), described on page 3, own an interest in the entity? No Yes If yes, enter % owned. I have read and understand the LP and LLC Guidelines (page 4). IRA Holder s initials required. If the asset is Real Property: Is the seller a disqualified person, as described on page 3? No Yes I have read and understand Real Property Requirements (page 6). IRA Holder s initials required. If the asset is Private Stock: Do any disqualified person(s), described on page 3, own an interest in the entity? No Yes If yes, enter % owned. Investment Contact Information Address: Phone Number: MAKE PAYMENT to maintain the following asset: Type of payment (capital call, foreclosure fees, property taxes, etc.) CHOOSE ONE: MAKE CHECK PAYABLE TO: $ Payment Amount WIRE FUNDS: Wiring instructions attached. Wire fees apply. SIGN the attached paperwork which I have read and approved. Name of Asset: SELL the following asset: Name of Asset: Quantity: DELIVERY INSTRUCTIONS FOR CHECK AND/OR EXECUTED DOCUMENT(S): MAIL FEDEX* HOLD for pick-up at Name, Address and Phone Number *FEDEX requires street address and phone number. Overnight service fee applies unless FedEx account number is provided. ADDITIONAL INSTRUCTIONS: I understand that additional fees may apply for special services. It is further understood that neither Polycomp Administrative Services nor Polycomp Trust Company will accept any liability for complying with the above instructions and that neither Polycomp Administrative Services nor Polycomp Trust Company has recommended or rendered any advice with respect to this investment. The custodian is hereby authorized to execute all documents on my behalf to effect this transaction. I have read and approved the documents. IRA Holder s Signature / / Authorized by: Polycomp Administrative Services, Inc. / Polycomp Trust Company Custodian (two signatures required) Date See page 2 for Documentation Required to Purchase an Asset. Rev Date

2 Polycomp Trust Company (PTC) Documentation Required to Purchase an Asset If you have an Inherited IRA or an Inherited Roth IRA please contact our office at for the correct vesting information. Please note: All pages requiring PTC s initials/signatures must also be initialed/signed by the IRA holder as read and approved. All purchases require a signed Direction Letter and the following document(s): Note and Deed of Trust: A draft copy of the Note and Deed of Trust designating the beneficiary as Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA). If applicable, an amortization schedule must be provided at the time of funding. Assignment of Note and Deed of Trust: A copy of the original Note and recorded Deed of Trust & a draft copy of the Assignment of Note and Assignment of Deed of Trust designating the beneficiary as Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA). If applicable, an amortization schedule must be provided at the time of funding. Note Secured by UCC1/Lien: A draft copy of the Note and UCC1 Financing Statement designating the beneficiary as Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA). If applicable, an amortization schedule must be provided at the time of funding. Unsecured Note: The original executed Note designating the lender as Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA). The borrower s signature must be notarized. If applicable, an amortization schedule must be provided at the time of funding. Limited Partnership: The Limited Partnership Agreement or Partnership Agreement and a Subscription Agreement identifying the investor/limited partner as Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA). The partner s identification number is the FEIN of the custodian: Please sign the documents as read & approved and complete any investor questionnaire information. PTC must sign the document as a limited partner. Limited Liability Company: An Operating Agreement or Membership Agreement and a Subscription Agreement identifying the investor/member as Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA). The member s identification number is the FEIN of the custodian: Please sign the documents as read & approved and complete any investor questionnaire information. PTC must sign the document as a member of the LLC. Private Placement (Stock): A Subscription Agreement or Purchase Agreement identifying the subscriber/investor as Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA). The subscriber/investor s identification number is the FEIN of the custodian: PTC must sign the document as the subscriber/investor. Real Property: Proposed preliminary title report with full property description (legal description and street address); Contract of Sale, independent escrow and closing documents drafted in the name of Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA), signed as read and approved by the IRA Holder; Phase I or Phase II Environmental Report, if applicable, for commercial and industrial property; Property Appraisal or equivalent for foreclosed property to determine the current fair market value (FMV). Documentation required after funding to complete your asset file (exceptions may apply): Note & Deed of Trust/Assignment of Note & Deed of Trust (Multi-beneficiary): A copy of the executed Note/Assignment of Note and recorded Deed of Trust/ Assignment of Deed of Trust. Note & Deed of Trust/Assignment of Note & Deed of Trust (Single-beneficiary): The original executed Note/Assignment of Note and recorded Deed of Trust/Assignment of Deed of Trust. Original documents are held in safekeeping. Note Secured by UCC1/Lien: The original executed Note and state recorded UCC1 Financing Statement/Lien. Original documents are held in safekeeping. Exceptions may apply. Unsecured Note: The original executed note (provided before funding) is held in safekeeping. Limited Partnership/Limited Liability Company: An executed copy of the agreement s signature page and the executed acceptance page, if applicable, including the General Partner/Managing Member and/or Representative s signature(s). Private Placement (Stock): The original Stock Certificate or Confirmation of Book Entry. Original certificate is held in safekeeping. Real Property: Title Insurance Policy; Recorded Grant Deed; Trustee s Deed Upon Sale; Deed in Lieu of Foreclosure, etc. Copies of documents and amortization schedules can be faxed to the IRA Dept. Please note: PTC does not evaluate assets as to merit or appropriateness as an investment. Rev PTC Documentation Required to Purchase an Asset

3 Polycomp Trust Company (PTC) Prohibited Transactions PTC is committed to providing professional services within the applicable guidelines of federal and state statutes and regulations. PTC will not accept, process, or hold any investment that is a prohibited transaction as defined in Internal Revenue Code (IRC) Section 4975 or Internal Revenue Service (IRS) Publication 590. In addition, PTC reserves the right to refuse to hold an investment that may potentially be considered a prohibited transaction or an indirect prohibited transaction. Any improper use of your Investor Choice IRA by you, your beneficiary, or any disqualified person is considered a prohibited transaction. Prohibited transactions include the direct or indirect: Sale, exchange, or leasing of any property between the IRA and a disqualified person. For example, an IRA cannot buy an investment currently owned by the IRA Owner. Lending of money or other extension of credit between the IRA and a disqualified person. For example, the IRA cannot loan money to the IRA Owner or a disqualified person. Furnishing of goods, services, or facilities between the IRA and a disqualified person. For example, an IRA Owner cannot pledge the IRA assets as collateral for a personal loan. Transfer of the income or assets of the IRA to a disqualified person, or use by or for the benefit of a disqualified person. For example, the IRA cannot loan money to a third party who uses the funds to benefit the IRA Owner or another disqualified person. A disqualified person includes: You Your spouse Ancestors Lineal descendants Spouses of lineal descendants An entity (i.e., partnership, trust) in which any disqualified person(s) holds a combined interest of 50% or more The consequence of engaging in a prohibited transaction in an IRA is generally a total disqualification of the IRA, resulting in a taxable distribution of the entire value of the IRA to the IRA Owner, which may also incur penalties. We recommend that questionable transactions be reviewed by an ERISA attorney, who specializes in retirement law. If you would like to review these rules, please call us. Rev PTC Prohibited Transactions

4 Polycomp Trust Company (PTC) Limited Partnership (LP) and Limited Liability Company (LLC) Guidelines IRA Owner s Responsibilities and General Guidelines: If you, your IRA, and other disqualified persons and/or entities combined own 50% or more of an existing LP/LLC your IRA will not be able to invest in the LP/LLC. The IRA cannot be the general partner of an LP or a managing member or manager of an LLC. The IRA and the IRA Owner cannot guarantee loans to the LP/LLC; loans to the LP/LLC must be nonrecourse. Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA) must be shown on all documents as the limited partner/investor/subscriber/member. Contact PTC for correct vesting for an Inherited IRA or an Inherited Roth IRA. The IRA Owner must provide an annual 12/31 Fair Market Value (FMV) from the general partner/manager or a reliable third party by May 1 st of the following year. This year-end value must be provided before calculating age 70½ Required Minimum Distributions (RMD). An updated FMV, dated within the last month, must be provided when requesting the distribution of a LP/LLC interest or the Roth conversion of a LP/LLC interest in-kind. Foreign investments will be reviewed on a case by case basis to determine if it is a type of asset that PTC will hold as Custodian. The asset must be valued annually in U.S. dollars. For single member LLCs (your IRA will own 100% of the LLC): The assets of the LLC are considered assets of the IRA. The Operating Agreement or Subscription Agreement must require that the manager appoint a qualified professional such as a CPA or attorney to either serve as the manager or to conduct a review of each transaction before execution. o Note: The IRA Owner may be required to provide documentation of all transactions upon audit. If the manager is the IRA Owner or other disqualified party no compensation can be paid to the manager of the LLC. If the manager is the IRA Owner or other disqualified party the manager s activities are restricted to administrative and investment oversight, i.e., the manager cannot physically work on property owned by the LLC. Capital calls are allowed and expenses of the LLC can be paid directly from the IRA. If disqualified persons/entities combined will own 50% or more of the LLC: The Operating Agreement or Subscription Agreement must require that the manager appoint a qualified professional such as a CPA or attorney to either serve as the manager or to conduct a review of each transaction before execution. o Note: The IRA Owner may be required to provide documentation of all transactions upon audit. If the manager is the IRA Owner or other disqualified party no compensation can be paid to the manager of the LLC. If the manager is the IRA Owner or other disqualified party the manager s activities are restricted to administrative and investment oversight, i.e., the manager cannot physically work on property owned by the LLC. Additional investments, capital calls, and payment for expenses in the LP or LLC may be prohibited; the Operating Agreement or Subscription Agreement should not require these types of additional funding. We recommend that you seek legal counsel regarding additional contributions or investments into multi-member LLCs made after the formation or initial investment into the LLC by the IRA. Plan Asset Regulations: If the LP/LLC is an investment company and the LP/LLC is owned 25% or more by IRAs and employee benefit plans (retirement plans) then Plan Asset Regulations prohibit new investments by retirement plans or additional contributions or capital calls from existing retirement plan investors. If the LP/LLC is an operating company the 25% restriction does not apply. The general partner/manager should determine if this regulation applies. Rev LP and LLC Guidelines

5 Documentation required to invest in an LP or LLC: Completed and executed PTC Direction Letter Limited Partnership Agreement or Operating Agreement or equivalent document Subscription or Purchase Agreement (if not included in the documents above). o Note: A Subscription or Purchase Agreement (or similar documentation) is required for additional purchases and capital calls. Once the LP or LLC investment is funded, the IRA Owner must provide a copy of the fully executed document(s) evidencing the IRA s ownership, including the Subscription Agreement or Purchase Agreement signed by the general partner or manager accepting the IRA as an investor. How to complete the LP/LLC Documents : PTC as Custodian signs all documents as the limited partner/member/investor/subscriber. All pages requiring PTC s initials/signatures must also be initialed/signed by the IRA Owner as read and approved. If required by the LP/LLC, the IRA Owner completes and signs/initials the investor questionnaire pages in the agreement. If the investor questionnaire is a separate document please complete, sign and return the questionnaire to PTC with the agreements and the Direction Letter, so that a complete document can be sent to the LP/LLC. The limited partner/member/investor/subscriber is Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA). Contact Polycomp for correct vesting for an Inherited IRA or an Inherited Roth IRA. The tax ID number of the limited partner/member/investor/subscriber is that of the custodian: Please note: PTC does not evaluate assets as to merit or appropriateness as an investment. Rev LP and LLC Guidelines

6 Polycomp Trust Company (PTC) Real Property Requirements PTC will hold property subject to the following: The property must be for investment purposes only. The IRA Owner and disqualified persons (i.e., children, spouse, parents) may not use, live in, rent, or benefit from the property while it is held in the IRA. The IRA Owner must make the initial offer to purchase the property in the name of Polycomp Trust Company Custodian FBO (IRA Owner s Name) IRA or (Roth IRA) as the buyer/purchaser. The earnest money deposit must come from the IRA. The property must be titled directly in the name of PTC (or through an entity in which PTC holds an interest; PTC will not hold Rights of Possession). The IRA must obtain title insurance at the time of purchase. If title insurance is not available in the country where the property is located the IRA Owner will be required to sign a waiver. For residential or commercial property the IRA must have an agreement with a third party property manager (vacant land excluded). o Any income generated by the property must be payable directly to PTC as custodian or to the property manager. o If payments are made to the property manager only a small portion should be retained for ongoing expenses. o The balance must be forwarded to Polycomp Trust Company Custodian FBO (IRA Owner's Name) IRA (or Roth IRA) via check as soon as administratively feasible. The check must be accompanied by detailed instructions as to how the funds should be applied, i.e., deposit, rental income, etc. o The property manager is responsible for ensuring that all expenses, such as property taxes, insurance premiums, homeowner s association fees and maintenance expenses are paid in a timely manner from the property management trust account. If the expenses exceed the retained cash the property manager must forward the bills/invoices to PTC for payment. Expenses cannot be paid by the IRA Owner with personal funds. A Direction Letter signed by the IRA Owner is required for Polycomp to pay expenses. o The property manager must provide an accounting of the income and expenses for the property and a year-end cash balance of the management account annually by May 1st. The management account cash balance will be reflected on the IRA statement and included in the FMV of the IRA which is reported annually to the IRS. The IRA Owner must provide the 12/31 Fair Market Value (FMV) of the property by May 1st of the following year. For further information, refer to the PTC Fair Market Value (FMV) Requirements, available on our website or upon request. Each parcel purchased will be held as a separate asset and separate administration fees will apply. To fund the earnest money deposit for a new purchase, PTC requires the following documentation: Direction Letter for Earnest Money Deposit: Completed and executed by the IRA Owner. Purchase Agreement (PA): A copy of the fully executed PA showing Polycomp Trust Company Custodian FBO (IRA Owner s Name) IRA or (Roth IRA) as the purchaser (contact Polycomp for the correct vesting for an Inherited IRA or an Inherited Roth IRA). To fund the final purchase, PTC requires the following documentation: Direction Letter: Completed and executed by the IRA Owner. Proposed preliminary title report (or chain of title) with full property description (legal description and street address) or executed waiver if title insurance is not available. Purchase agreement, independent escrow and closing documents, including a copy of the Grant Deed, drafted in the name of Polycomp Trust Company Custodian FBO (IRA Owner s Name) IRA or (Roth IRA). o The IRA Owner signs/initials all documents as read and approved and PTC signs/initials the documents as Custodian/buyer. If annual property tax bills were mailed prior to the sale of the property, the new owner (the IRA) may not receive a reminder when the remaining payment is due. It is the IRA Owner s responsibility to confirm when property taxes are due to avoid penalties. Please contact our office if you have questions Rev Please note: PTC does not evaluate assets as to merit or appropriateness as an investment. PTC Real Property Requirements