Prohibited Transaction?
All,
Can an account owner use their traditional IRA as collateral for a bank loan? The bank has blessed this strategy.
This transaction seems like it would consitute a PT.
Any information and/or DoL ruling are appeciated.
All,
Can an account owner use their traditional IRA as collateral for a bank loan? The bank has blessed this strategy.
This transaction seems like it would consitute a PT.
Any information and/or DoL ruling are appeciated.
Permalink Submitted by Alan Spross on Wed, 2012-02-01 23:10
It would be a prohibited transaction, using the IRA for the benefit of securing a loan for non IRA assets. The bank should know better. The general term for this is “self dealing”, and the specific wording is in Sec 4975 of the tax code. The following also includes a general discussion on prohibited transactions:
http://www.aba.com/NR/rdonlyres/D8BE9599-E5ED-4994-91CB-BF8B23A2AE7C/429…