By Alisha Bennett
It’s that time of year again… it’s distribution time for many of our clients.
If you’re new to the IRA-LLC process and want to understand the general theory of distributing cash from your new Check Book IRA make sure to read this article.
But what if you aren’t distributing cash? What if you want to distribute say a property (or a property in stages if its value exceeds your RMD – Required Minimum Distribution) or an asset such as coinage.
Essentially, the process is the same; however here a a few items you’ll need to ask your Custodian:
1 – Is the In-Kind Asset Distributable. Although most self-directed Custodians allow non-cash (also known as in-kind) distributions; they may have additional specifications on which types of in-kind assets can be distributed (for example, they may allow property, but not coin).
2 – Does the In-Kind Asset Have Additional Requirements. For example, if you want to distribute coin; does your Custodian require you to physically ship the metals to them or will a paperwork trail of transferred ownership suffice.
3 – What Forms are Required. It’s a good bet that any in-kind asset will need to be valued by a third party. However, you will also need to ask what additional forms your Custodian requires (many have a special distribution form for in-kind requests).
4 – Set Aside Some Time. For most Custodians, December and January are some of their busiest months of the year; this is especially true of Self-Directed Custodians who may handle property statements in addition to the day to day. And of course, year end matters such as contributions, distributions and reporting deadlines are looming as well.
All in all, distributing in-kind assets isn’t a complicated process but it does require a bit more legwork on the part of the client. If you’re distributing part of an asset, such as a home, make sure to check out this article as well.