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Question for the Money Doctors

Question submitted on Jan 25, 2013.

Question

Dear Sir/Madam:
I would like to know if there are any IRS rulings pertaining to naming a Trust as the beneficiary of one''s IRA account, NOT for the benefit of survivors, but for the benefit of the IRA owner while he is alive. From what I have heard, this platform gives the IRA account owner checkwriting privileges (on the Trust bank account) allows for investing IRA funds in precious metals and real estate, etc. Lawyers that set up these specialized trusts seem to be few and far between. Please let me know if you are familiar with these specialized trusts, and if the IRS approves of them, etc. Thanks very much.

Answer

From your question I believe you are referring to trust companies that act as custodians for alternative investments such as precious metals and real estate. Keep in mind IRAs have very strict rules regarding what you can invest in, withdrawal/distribution requirements, potential unrelated business income tax (even though it is a tax deferred account) and a set of rules known as prohibited transactions. Running afoul of some of these rules could jeopardize the tax deferred status of your IRA. A couple of companies that you may want to call or research via Google include Millennium Trust Company and Sterling Trust Company.


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