Roth Convert
Case:
Married man has $175k in an IRA invested in some kind of diversified hedge funds who in turn invest in startups.
Since these are not publicly traded yet, statements show $175k but “hedge fund analysis” shows he’s up to $225k
Been told he can convert to a roth at $175k and after all these fabulous companies go public will increase in value by 10 fold.
Sounds like some of those old annuity roth conversion scams where they used huge withdrawal penalties as an excuse to reduce the tax hit of a conversion.
Heard anything?
Permalink Submitted by Jose Morales on Wed, 2015-03-18 21:30
It could be considered an abusive Roth IRA Transaction, or listed transaction. The changes to forms 1099-R and 5498 which can now list the type of investment involved in IRA transactions will most likely be used by the IRS to uncover these types of tax avoidance schemes.