Annual FMV Of Notes Within SD401k?

[Ryan K.]

The (newer) custodian of my SD401k is requesting an annual real estate appraisal for each note I hold within the account. As in, pay for a house appraisal each year for each note. This can’t be right, can it? Shouldn’t the FMV simply be the UPB as reported by my servicer at year’s end and satisfy the IRS’ requirement?

[Ronald Lambert]

I have always used the investment amount less any money returned to the IRA. When you purchased it, the value of the investment (the note) was X. If you have received any income from the note, that goes against the value. The value of the underlying asset (house) cannot be your guide - as the borrower has title to that asset and may have equity, for example. Also, until you actually sell the note or asset, you do not know what the market value it. My 2 cents.