Distribution In-Kind

[Gary]

A client wants to receive coins to meet RMD requirement.

My understanding is that a distribution in-kind like the one above is fine, as the plan allows for it.

My impression is that the amouont must be a fair and marketable value of th coins.

Additionally, it would seem like a good idea to have the coins professionally appraised, but if the trustee (who is also the plan participant) wants to determine the value it better be reasonable as this can come back to h aunt trustee in the event of a plan audit.

Are there other views or interpretations on the above situation?

Thanks.

[David MacLennan]

I'm not an expert on this, but here is my 2 cents:

I think the valuation issue is more complicated, because I believe the IRS standard is to use the valuation principles in Rev Rul 59-60. The principles in this Rev Rul I believe would probably yield a value that is considerably less than the typical "professional appraisal" for objects such as coins or jewelry. Again, I am not an expert, but I think Rev Rul 59-60 would yield something closer to a "wholesale" value, due to discounts for liquidity, etc. Something more like what a coin dealer would actually pay for the coins. Maybe someone who has more detailed knowledge and experience with Rev Rul 59-60 can confirm or deny my above impressions. Be sure to transfer all of the risk to the client on this. Because of the risk I would advise the client to not distribute the coins. There is no guaranty any valuation could not be challenged during an audit. I think the audit guidelines do mention Rev Rul 59-60, so it would be best if any valuation referenced principles in this ruling.