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Fix for intended "IRA"


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X had benefits in a former employer’s 401k plan. X wanted to direct the benefits to make loans to local construction contractors (no familial, no other business relationship), with promissory notes with stated interest rate and with collateral to secure repayment. X sets up an account at a local bank to roll the $$$ into the account. Between X, the bank and his accountant, there was a miscommunication; rather than an IRA, the bank simply opened a regular business account for X. The 401k plan sent the $$$ to the bank and reported it as a direct rollover distribution from the 401k plan. The bank placed the $$$ in the account (not an IRA). Now that the problem has been discovered, X has sought my assistance to remedy the situation. Any suggestions will be appreciated

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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I've seen a few places that do IRA/LLC structures that do things like this.  The "checkbook" IRA to invest.  Of course the bank accounts in those instances are in the name of an LLC.  I don't suppose it's been less than 60 days? 

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This is an easy fix. If you talk to someone at the bank that works with IRAs, they should be able to fix it quickly and easily. Depending on who you connect with, it can get hairy- but it shouldn't if you get to the right person.

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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