How should my investment be titled?

Proper Investment Titling for AET Accounts (Updated)

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 SDIRAs 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 SDIRA Titling Format (Updated)

✅ For All SDIRA Investments (Except Real Estate):

AET fbo (Client Name)
Example: AET fbo John Smith

✅ For Real Estate Purchased in Florida:

AET fbo (Client Name)
Example: AET fbo John Smith

✅ For Real Estate Purchased Outside Florida:

(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, which often required AET’s signature on certain transactions, such as real estate sales. The updated client-first titling structure:

• Allows clients to sign investment-related documents directly
• Reduces delays in processing
• Ensures compliance with IRS regulations
• Clarifies ownership for third parties (e.g., title companies)

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.

✅ Solo 401(k) Titling 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
   Assets must be titled in the name of the account—not the individual—to maintain tax-advantaged status.

2. Allows Clients to Sign Investment Documents Without AET's Signature
   The client-first format empowers investors to act quickly and independently.

3. Prevents Prohibited Transactions
   Improper titling may lead to self-dealing or disqualified transactions.

4. Avoids Legal & Processing Delays
   Correct titling ensures smooth coordination with investment issuers and custodians.

Titling for Different Investment Types

Real Estate (SDIRA Only)

• Florida Properties:
  ✅ AET fbo John Smith

• All Other States:
  ✅ 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.
• Clients can sign real estate sale agreements directly.

Private Stock or LLC Ownership

✅ AET fbo John Smith (or)
✅ John Smith, legal owner via non-trust custodial IRA with AET (if not real estate and outside Florida)

Important Notes:

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

Private Loans & Promissory Notes

✅ AET fbo John Smith

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

✅ AET fbo John Smith

Important Notes:

• Clients cannot take personal possession of metals or crypto.
• Assets must be stored in an approved depository or exchange.

Common Mistakes to Avoid

🚫 Titling the investment in your personal name
Example: John Smith IRA ❌
Why? Suggests personal ownership, risking tax penalties.

🚫 Using an outdated custodian-first format
Example: AET, FBO John Smith IRA ❌
Why? May require AET’s signature, causing delays.

🚫 Depositing investment income into a personal account
Why? All income must go directly to the IRA or Solo 401(k) account.

Final Thoughts

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

• For SDIRAs:
  ✅ Use "AET fbo (Client Name)" for most investments
  ✅ Use "(Client Name), legal owner via non-trust custodial IRA with AET" for real estate outside Florida

• For Solo 401(k)s:
  ✅ Use "(Solo K Name), (Client Name) Trustee FBO (Trustee Name) – (TIN)"

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