IRA RMD from bankrupt corporation
client has approx. 200k invested with life settlements IRA’s about 10yrs ago. She is now over 71 and is taking RMD’s from her IRA’s outside of the life settlement IRA money.
The life settlement company as of 2015 (life partners – a life settlement company) is under receivership now and the owner of the company under indictment. The attorney who is handling the receivership stated they are trying to make the payments on the life settlement cases from the sale of the owner assets but feels most people will lose all their money unless they start to pay more into the program as the owner embezzled 10’s of millions.
Due to the above legal matter, Does she still have to include the money from these life settlements into her RMD totals even though she may never see another dime from these investments?
Thank you,
Douglas
Permalink Submitted by Joe Luby on Fri, 2016-03-18 19:57
Her RMDs should be calculated using the fair market value (FMV) of all of her IRA assets, including the life settlement investments. She should work with her IRA trustee/custodian to ensure that these assets are valued properly, and not at the original investment amount of $200,000 given the circumstances described. She may end up needing to retain a qualified appraiser to provide a qualified appraisal reflecting the current FMV for use by the IRA trustee/custodian for reporting purposes. Such an appraisal would take into account all of the current issues and risk factors surrounding the investment(s) and would likely come it at zero or some other very minimal amount, although that is for an appraiser to determine.