ROTH IRA conversion
Individual with traditional seld-directed IRA comprised of mutual funds and vacant land.
Individual requested that custodian obtain an appraisal of vacant land to facilitate trustee to trustee transfer from traditional IRA to a ROTH IRA.
The advise form custodian is that individual can not convert.
I do not hthink this is correct.
Any thoughts?
Permalink Submitted by Alan Spross on Tue, 2010-08-10 22:50
The only justification for that opinion would be that the custodian does not offer Roth accounts and that is very unlikely. It is possible that the custodian has never processed a Roth conversion including the change of title for the land. But the appraisal should not be a problem because the custodian must report the total IRA value at the end of each year on Form 5498, conversion or not.
I would start with elevating your request to a higher level at the custodian. Note that the IRS is concerned with artificially depressed values assigned to Roth conversions, particularly with RE and annuity conversions. Of course, the market has depressed real estate values and with a proper appraisal there should not be a problem with the IRS.
Permalink Submitted by mk foss on Wed, 2010-08-11 18:45
Some custodians that handle unusual assets request that the IRA owner obtain the appraisal for them. Requesting the appraisal from the custodian could be the reason that you got the negative answer.
I suppose that some custodians with “self-directed” IRAs may not have “self-directed” Roth IRAs but as Alan says, that would be an unusual situation.
Worst case would be that the IRA owner would need to find a new custodian and transfer the IRA assets before the Roth conversion. There’s still time before 12/31 to accomplish a transfer and a conversion but hopefully it won’t come to that.