IRA in Ponzi: RMD?
I have a tax client who stumped me with a RMD queston.
He invested about $100k of his IRA with T. Cook – the ponzi scheme out of Minneapolis.
Since he’s beyond his RBD, does this $100k have to be included in his RMD calculation? He has no access to it and probably will only get pennies back on the dollar at best.
Thanks in advance.
Permalink Submitted by Alan Spross on Thu, 2010-08-12 23:01
I noticed that this particular scheme is just now being flushed out, so the 12/31/2009 5498 value of the account is likely bogus. Further, several IRA related issues from the earlier Madoff scheme have yet to be fully resolved. Most of the issues discussed relate to itemized deduction losses and return of any damages as restorative payment contributions to the IRA. Not much of anything useful on actual RMD issues.
Therefore, unless he needs money and assuming this is his ONLY IRA, he should probably not take out any RMD until the IRS clarifies the situation. Under the circumstances the IRS is almost certain to waive any excess accumulation penalty for not taking the RMDs following the ultimate rulings. And he would only complicate matters if he took an RMD that was later ruled unnecessary and would then have to consider restoring the funds to the IRA in a rollover procedure with the 60 days extended by the IRS under prior revenue rulings. Fortuneately, the 2009 RMDs were waived.
This sounds like a case that is similar enough to Madoff to assume that IRA related rulings re Madoff would also apply to Cook.