Transfer of Closely Held StockProhibited Transactions

[Guest gaham]

We have a situation where an IRA owner has a large amount of closely held bank stock in his IRA and the bank wants to make a Sub S election. This requires the transfer of the stock from the IRA. If the transfer is to the IRA owner (which is what is desired) this constitutes a pt. I have found a couple of individual pt exemptions that have recently been issued under this scenario but the exemptions footnote a troubling issue--that is that if the owner iswas a director or officer of the bank the acquisition or holding of the stock could be a pt depending on the circumstances. The footnote says to the extent these prior transactions constituted pts, no relief is granted. Query whether all of this might be avoided by the IRA owner taking a distribution of the stock from the IRA, exchanging the stock for equivalent amount of cash and putting the cash back into the IRA within 60 days of the initial distribution of stock. Comments appreciated.