Roth IRA Conversion Appraisal

What assets require an IRA Conversion Appraisal?

IRA-Owned LLC Interests

Fair Market Value appraisals for single-member and multi-member LLCs held inside IRAs or Solo 401(k)s. Entity-level valuations when required by custodians prior to conversion.

Private Company & Partnership Interests

Valuation of minority or controlling interests in privately held businesses, limited partnerships, and investment entities lacking a readily available market value.

Real Estate Holding Entities

Alternative & Illiquid Investments

LLCs or partnerships that hold residential, commercial, or mixed-use property. We value the ownership interest — not just the underlying asset.

Notes, structured investments, private equity, fund interests, and other non-public assets requiring third-party FMV for Roth conversion reporting.

If your retirement account holds assets without a readily available market price, your custodian will typically require an independent Fair Market Value before a Roth conversion.

If the asset does not have a publicly traded price, your custodian will typically require independent valuation documentation.

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- David

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Responsive, professional, first class deliverables -- especially considering that that the appraised assets are extremely complex financial assets with little by way of comps. The deliverable satisfied my accountants and advisers as being more than adequate to support the valuation needed to complete a conversion to a Roth IRA.

About IRA Conversion Appraisals

IRA Conversion Appraisals was founded by Joe Kattan to deliver independent, defensible Fair Market Value valuations for retirement account conversions involving privately held and alternative assets.

The firm focuses specifically on valuations required in connection with Traditional IRA and 401(k) to Roth IRA conversions where no publicly traded market price exists. Each engagement is designed to produce a well-supported, thoroughly documented report suitable for custodian submission and federal tax reporting. We primarily support HNWIs, tax advisors, RIAs, and IRA Custodians.

Joe’s background includes experience at Bain & Company, where he advised large enterprises and asset-intensive businesses on operational excellence, transaction execution, and strategic growth initiatives. That foundation in analytical rigor, structured problem-solving, and high-stakes decision support informs the firm’s disciplined approach to valuation scoping, documentation standards, and quality control.

IRA Conversion Appraisals has a team of highly experienced business valuation professionals, including appraisers who are members of the American Society of Appraisers (ASA). These credentialed specialists bring deep expertise in valuing privately held companies, LLC interests, partnership interests, and other alternative assets commonly held within self-directed retirement accounts.

By combining consulting-grade operational standards with credentialed valuation expertise, the firm delivers independent Fair Market Value reports that are structured, defensible, and prepared with the level of rigor expected by custodians, CPAs, and tax advisors.

How Our Roth IRA Conversion Appraisal Process Works

Our valuation process is structured to deliver a clear, independent Fair Market Value determination suitable for custodian submission and tax reporting. From when we are engaged for the valuation work, the entire process takes about 2-3 weeks, with rush options available as needed.

1. Engagement & Scope Definition. We review the ownership structure, asset type, and intended conversion timing to clearly define the scope of work and issue your appraisal quote.

2. Information Collection. Once you decide if you'd like to move forward, we gather relevant financial statements, governing documents, capitalization tables, operating agreements, and other supporting materials necessary for a comprehensive analysis.

3. Independent Valuation Analysis. A credentialed valuation professional conducts a detailed analysis using appropriate valuation methodologies. Where applicable, ownership characteristics such as lack of control or lack of marketability are evaluated in accordance with accepted valuation standards.

4. Delivery of Signed Fair Market Value Report. You receive a structured, well-supported report prepared for Roth conversion reporting purposes and suitable for custodian and advisor review. We will also sign any additional documents you might need for your conversion.

Frequently Asked Questions (FAQs)

What is a Roth IRA conversion?

A Roth IRA conversion occurs when assets are moved from a Traditional IRA or 401(k) into a Roth IRA. The value of the assets converted is treated as taxable income in the year of conversion.

While Traditional IRAs often provide a tax deduction at contribution, Roth IRAs are funded with after-tax dollars. In exchange, qualified withdrawals from a Roth IRA may be tax-free in retirement and are not subject to required minimum distributions during the original owner’s lifetime.

What is an IRA conversion appraisal?

An IRA conversion appraisal is an independent Fair Market Value determination of assets held inside a retirement account at the time of conversion. When assets do not have a publicly traded market price — such as LLC interests, private companies, partnership interests, or other alternative investments — a qualified third-party valuation is typically required to support the value reported for tax purposes. The appraised Fair Market Value determines the amount of income recognized on the conversion.

How long does an IRA valuation take?

Typically 3 weeks. Shorter, simpler engagements can take 2 weeks, while more complex assignments can take up to 4 weeks.

How much does a business valuation cost?

On a single asset, you can expect the fees to be anywhere from $6500 to $8000 for an IRA conversion appraisal.

IRA Conversion Appraisals' valuations typically start at $5K for the most basic engagements up to $12K for more complex assets. When multiple assets are involved, fees exceed this range but discounted pricing is offered for all of the investments.

Who does IRA Conversion Appraisals serve?

IRA Conversion Appraisals serves retirement account holders and their advisors who require independent Fair Market Value determinations in connection with Roth conversions involving privately held or alternative assets.

We commonly work with:

• Self-directed IRA and Solo 401(k) investors

• High-net-worth individuals holding private investments

• CPAs and tax advisors overseeing Roth conversions

• Financial advisors coordinating conversion strategies

• Attorneys advising on retirement account transactions

Our reports are structured to meet the expectations of custodians, tax professionals, and other reviewing parties involved in the conversion process.

When is an appraisal required for a Roth conversion?

An appraisal is generally required when the assets being converted do not trade on an established public market.

Common examples include:

• IRA-owned LLC interests

• Closely held business interests

• Private equity or venture investments

• Limited partnership interests

• Real estate holding entities

• Promissory notes or private debt instruments

Publicly traded stocks and mutual funds typically do not require an appraisal because market pricing is readily observable.

Why is an independent third-party appraisal necessary?

The taxable income generated by a Roth conversion is based on the Fair Market Value of the asset on the conversion date.

When no observable market price exists, custodians and tax advisors generally require a valuation prepared by an independent, qualified professional to ensure the reported value is reasonable and supportable.

Valuations prepared by the account holder or related parties are typically not accepted.

What standard of value is used?

IRA conversion appraisals are performed using the Fair Market Value standard.

Fair Market Value is defined as the price at which property would change hands between a hypothetical willing buyer and willing seller, neither under compulsion to transact and both having reasonable knowledge of relevant facts.

The valuation date is typically the effective date of the conversion.

Do discounts for lack of control or lack of marketability apply?

In certain circumstances, yes.

Minority interests in privately held companies or LLCs may lack control over operations and may not be readily marketable. When supported by ownership rights, transfer restrictions, and market evidence, appropriate valuation adjustments — including discounts for lack of control (DLOC) and lack of marketability (DLOM) — may be considered.

Any such adjustments must be fact-specific, well-supported, and clearly documented within the report.

Is it better for the valuation to be lower or higher?

The objective of an IRA conversion appraisal is not to reach a target number. It is to determine Fair Market Value.

From a tax perspective, the conversion value directly impacts the amount of income recognized. However, overstating or understating value can both create risk.

The appropriate approach is a reasonable, defensible valuation supported by recognized methodologies and documentation.

Who performs the appraisal?

IRA conversion appraisals should be prepared by an independent, qualified valuation professional with experience in privately held and alternative assets.

Our firm works with credentialed valuation professionals, including appraisers who are members of the American Society of Appraisers (ASA), with expertise in valuing closely held entities and complex ownership interests.

Are the reports USPAP compliant?

When required by the intended use, appraisals are prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP).

The report clearly discloses scope of work, valuation methodologies applied, assumptions, and supporting analysis. Your CPA or custodian can confirm whether USPAP compliance is necessary for your specific situation.

How long does an IRA conversion appraisal take?

Timing depends on asset complexity and document availability.

Many engagements are completed within several business days after all required information is received. More complex ownership structures may require additional analysis time.

If a conversion deadline is approaching, timing can be discussed at the outset of the engagement.

What is IRS Form 1099-R, and how is it relevant for IRA conversions?

IRS Form 1099-R reports distributions from pensions, annuities, retirement plans (like IRAs or 401(k)s), profit-sharing plans, insurance contracts, and similar sources when the total is $10 or more in a tax year. It's issued by the financial institution or payer by January 31, detailing the gross distribution (Box 1), taxable amount (Box 2a), federal tax withheld (Box 4), and distribution codes (Box 7) to help taxpayers and the IRS track taxable retirement income.

For IRA conversions, such as moving funds from a traditional IRA to a Roth IRA, the converted amount is treated as a taxable distribution from the original IRA and reported on Form 1099-R—typically with the full amount in Box 1 and code "2" in Box 7 (early distribution, exception applies, no 10% penalty). You use this to calculate the taxable portion on Form 8606 (accounting for any nondeductible basis), which flows to your Form 1040 as income; Form 5498 may separately note the Roth contribution.

What is IRS Form 5498?

IRS Form 5498 is an informational tax form issued by IRA custodians or trustees to report contributions (including regular, rollover, catch-up, and Roth conversions), repayments, required minimum distributions (RMDs), and the fair market value (FMV) of your IRA account as of December 31.

It's sent to you and the IRS by May 31 (after the April tax deadline to allow for prior-year contributions), covering traditional, Roth, SEP, and SIMPLE IRAs; you don't file it with your return but keep it for records to verify deductions or track basis.

In the context of IRA conversions, it documents the amount contributed to the Roth IRA (often referencing the related 1099-R distribution), helping confirm nontaxable tracking of conversions alongside Form 8606 reporting.

What information is required to begin?

Information requirements vary depending on the asset type but commonly include:

• Operating agreements or partnership agreements

• Capitalization tables or ownership schedules

• Recent financial statements

• Details regarding transfer restrictions

• Prior valuations, if available

We outline document requirements clearly before work begins.

Will my custodian or CPA accept the appraisal?

Yes, but we cannot guarantee this. All of our appraisals are conducted in compliance with USPAP and IRS standards by a qualified professional. Our reports are extremely robust and include detail on how the final FMV was determined.

Are you affiliated with any larger appraisal firms?

Yes! IRA Conversion Appraisals is a subsidiary of AppraiseItNow Inc., one of the fastest-growing valuation firms in the country.

How do I get started?

You can begin contacting us, and then we will reach out to you for more details and prepare a quote for our service.