You Are Not Stuck

By Peter Rizzo

Life Settlements in a Retirement Account? Think Again.

You can transfer assets from one IRA or 401k to another without tax consequences.

With the cratering of the stock market in the past week many people are reticent to liquidate their current plan and move to a more self-managed plan that gives them more control and a wider scope of investments. Well, good news! You can transfer assets in-kind from one plan to another if the receiving custodian allows it. That last little sentence probably brings a, “Whoa, what do you mean if the receiving custodian allows it?”  Custodians come in all shapes and sizes – banks, financial institutions, and special-purpose custodians that specialize in one type of account of investment. It is important to find one that can take your investments without having to liquidate and only move cash.

Here are a few things to look for in your new custodian:

  1. What types of investments can I transfer in kind?
  2. Can the Investment be held by a CheckBook IRA LLC or Solo 401(k)?
  3. Will the custodian holding investment release it (there are times with certain limited partnerships or direct investments where the custodian is participating that it must be held by the originating custodian)?
  4. What is the process for the transfer?
  5. If transferring Cryptocurrency, what chain of ownership will I need to provide? (Cryptocurrency has been used in many illicit activities and custodians are demanding to know at least the last transfer to your possession).
  6. If you are transferring Real Estate, what is the process and who will draft the transfer documents?
  7. Who initiates the transfer (different among all custodians)?
  8. What is the timeline?

The last thing you need to remember is that you need to have an account set up in the name of the LLC (if you are using the Checkbook IRA) or the Solo 401k, if that is the system you have.

The best news in all this is you aren’t stuck but can move your assets where you like for full control without having to liquidate.

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