Adam Bergman

Founder, Tax Lawyer, Author

Year-end is when Self-Directed IRA owners do the housekeeping that keeps an account compliant and the reporting clean. Alternative assets don’t have a daily market price, so the fair market value your custodian reports to the IRS often depends on information you provide. Every January I see investors scramble for appraisals they could’ve lined up in November. This Self-Directed IRA year-end checklist covers valuations, Form 5498, and the other items to handle before December 31.

Valuation and Form 5498

Fair Market Value

Custodians report the account’s year-end FMV to the IRS and to you. For assets like real estate, private placements, notes, and LLC interests, the custodian generally relies on values you or the investment sponsor supply. Your year-end checklist:

• List every non-public asset held in the account as of December 31.
• Gather a current valuation for each one: an appraisal, broker opinion, sponsor statement, or account statement, whichever fits the asset.
• For a checkbook IRA LLC, add the LLC’s bank balance to the value of everything the LLC owns.
• Note any asset whose value has changed meaningfully since last year, including a write-down.
• Submit values to your custodian by their deadline, which is often early in the new year.
• Keep a copy of each valuation and its source in your records.

The valuation doesn’t always have to be a formal appraisal. For most real estate, a broker price opinion or comparable sales analysis is reasonable. A formal appraisal makes more sense when the stakes are higher, such as a Roth conversion or an in-kind distribution, where the value sets your tax bill. I go deeper on methods in my guide to valuing alternative assets in a Self-Directed IRA.

Form 5498

Form 5498 is the IRS form your custodian files to report contributions, rollovers, Roth conversions, and the account’s year-end FMV. Under the IRS instructions for Forms 1099-R and 5498, custodians also report the value of hard-to-value assets separately in Boxes 15a and 15b. Box 15b uses a code to identify the asset type, such as real estate, an LLC interest, a partnership interest, or non-publicly traded stock. That means the IRS can see exactly which accounts hold alternative assets and what values were reported for them.

Typical timing:

• Your year-end FMV statement is generally provided by January 31.
• Form 5498 is generally due to the IRS and to account holders by May 31. That’s after the tax filing deadline, because you can still make prior-year contributions until then.

You don’t file Form 5498 yourself. Compare it against your own records and ask your custodian to correct any mismatch.

Other Items for Your Self-Directed IRA Year-End Checklist

• Contributions. The 2026 IRA limit is $7,500, plus a $1,100 catch-up for those 50 and older. You have until April 15, 2027, to make 2026 contributions, but confirm you’re within the limit across all your IRAs combined.
• Roth IRA eligibility. For 2026, the Roth phase-out range is $153,000 to $168,000 for single filers and $242,000 to $252,000 for joint filers.
• Required minimum distributions. If you’re subject to an RMD, it generally must be taken by December 31. The one exception is your first RMD, which can be delayed until April 1 of the year after you turn 73, though that means taking two RMDs in one year. Missing an RMD triggers a 25% excise tax on the shortfall, reduced to 10% if you correct it promptly. If the account holds illiquid assets, plan ahead so you have cash, or take an in-kind distribution of part of the asset at its appraised value.
• Roth conversions. A conversion has to be completed by December 31 to count for 2026, and illiquid assets need a valuation before they can be converted. If an asset’s value is temporarily down, a year-end conversion can move more of it into a Roth for less tax.
• Pay account expenses from the account. Property taxes, insurance, repairs, fees, and any other costs of IRA-owned assets come from the IRA, not from personal funds.
• Confirm income was deposited into the IRA. Rent, interest, and distributions from IRA investments belong in the account.
• UBTI and UDFI. If the IRA had debt-financed property or business income, ask your tax professional whether a Form 990-T is needed.
• Review prohibited transaction exposure. Check that there was no personal use, no personal loans, and no related-party dealings during the year.
• Update beneficiary designations. Marriages, divorces, births, and deaths should all prompt a review.
• Organize records. Keep statements, valuations, closing documents, and receipts in one place.

Key Dates and Common Mistakes

These are the mistakes I see most often:

1. Stale valuations. Reporting last year’s value for an asset that has changed. If you plan to convert to a Roth or take a distribution later, an outdated number can cost you.
2. Missing the RMD in an illiquid account. Waiting until December, then finding there’s no cash to distribute.
3. Paying expenses personally. Even a small property tax bill paid from your own account can create a problem.
4. Skipping records. If a valuation is ever questioned, your documentation is your defense.

At IRA Financial, our team reaches out to clients ahead of year-end for alternative asset valuations, and our in-house tax professionals can help with questions like Form 990-T or an in-kind RMD.

Final Thoughts

Very little of this checklist is hard. It just has to be done on time, every year. The investors who handle year-end well treat it like closing the books on a small business: confirm the values, check that the money moved the right way, and file everything in one place. Spend a few hours on it in November and December, and January will be uneventful. That’s exactly how a Self-Directed IRA should feel.

This content is for educational purposes only and does not constitute legal, tax, or investment advice. Consult a qualified professional before making any investment decisions.