Horace Heffner wrote:
> Thanks all for the advice, especially the above. This appears to be
> crucial information to anyone taking distributions from an IRA under
> section 72(t), as it can materially change the balance and thus
> subject the account to full tax and penalties.
HH- I posted something a couple days ago, but it didn't seem to go
through...you should verify that the specific investment you plan to buy
is OK for tax purposes. You mentioned a gold ETF I believe and there was
a private letter ruling about a couple of those last year. A "PLR" is
IRS guidance regarding a specific set of facts and has limited
applicability beyond those facts, but tax geeks look to them to see what
the IRS says about narrow issues.
Anyway -- in addition to UBTI (which can come up with a number of
different securities that look like "stocks") there's also the
prohibition on owning "collectibles" in an IRA, including precious
metals if held a certain way. The PLR was requested by one of the
gold/silver ETF providers. The IRS stated that the ETF in question would
be acceptable, that it wouldn't violate the prohibition on collectibles.
I would suggest asking for similar guidance from a product provider
because if you fail the "collectibles" prohibition, the purchase is
considered a distribution of the amount invested.
-Tad
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