Private Custodian
I have a client who worked with an organization in the state of Idaho to become the actual custodian of his IRA. There is no financial institution involved with his IRA and the company who helped him establish what he has no longer exist.
The client is the custodian of his IRA. He has $200,000 in cash and invested another $300,000 of so into a business. He is feeling uneasy about the situation. He has no IRA “statements” because he does not generate any for himself.
He would like to unwind what he has done and rollover the assets into a traditional IRA. So, the question is how do you do that?
Permalink Submitted by Alan - IRA critic on Mon, 2018-10-29 18:35
You can be your own custodian for a solo 401k, but not for any form of IRA. Are you sure the client does not have a solo K?
Permalink Submitted by Josh Harmon on Tue, 2018-10-30 16:11
Good question he states it is an IRA. But perhaps It is a solo 401(k). I will pursue an answer to that question. I assume if it is an IRA it is not legal. Would there be a way out of the mess?
Permalink Submitted by Alan - IRA critic on Tue, 2018-10-30 19:05
Certain associations can qualify as approved IRA custodians under the tax code, so it is possible that this was a valid IRA custodian when established. If such association then dissolved, they should have advised their clients to roll over these IRAs at the time and there would not be a problem. However, once there was NO functional approved IRA custodian of these funds, the account would cease being an IRA. In that case, the IRA would be deemed distributed on Jan 1 of the year this occurred, and the entire balance would be subject to tax and penalty if under 59.5. I know no way to avoid this if he has actually became his own custodian, but perhaps he actually has a solo K plan. Many people confuse the two types of accounts.