Real Estate purchase with IRA
I just found out that my other half purchased a home with our largest IRA account.
Can he do this without my knowledge or signature?
Any response will be greatly appreciated.
I just found out that my other half purchased a home with our largest IRA account.
Can he do this without my knowledge or signature?
Any response will be greatly appreciated.
Permalink Submitted by Alan Spross on Wed, 2008-09-10 01:18
Actually the IRA account is his, as their are no joint IRA accounts. The “I” in IRA stands for individual. If you live in a community property state and his IRA was funded during the marriage, you have a 50% community property interest in it in the event of a divorce action. But he does have the authority to make investment decisions in his IRA. I assume you have not given him investment powers with YOUR IRA, or he has the authority to make the decision there also.
The home had better not be for personal use or there is a prohibited transaction that could cause a taxable distribution from the IRA. A strictly rental unit is OK, but there are pitfalls there too. Hopefully, he is using a self directed IRA custodian that specializes in real estate investments in IRA accounts. They have a good idea how to structure the investment to avoid pitfalls.
Permalink Submitted by Julia gulia on Wed, 2008-09-10 01:28
Thank you so much for your reply.
We have been married for thirty years. He decided that he wanted a divorce and bought the real estate with the IRA money in order to hide the account from me. His name does not appear on the deed….the IRA account number does.
We do live in a community property state.
Permalink Submitted by Julia gulia on Wed, 2008-09-10 01:31
Just wanted to add that he has moved his mistress into the home and informs me that she is renting it from him 😯
Permalink Submitted by Alan Spross on Wed, 2008-09-10 02:51
Believe it or not, disqualified persons with respect to IRA owners include all sorts of relatives, but not unrelated “friends”. So renting it to her does not constitute a prohibited transaction, however if he stays there for any length of time, it would be. That would render the entire IRA account as taxably distributed.
Permalink Submitted by Bruce Steiner on Wed, 2008-09-10 03:15
The prohibited transaction rules are far too complicated for a forum such as this. But note the words “or indirect” in the definition of a prohibited transaction in the flush language of Section 4975(c)(1).
Permalink Submitted by Julia gulia on Wed, 2008-09-10 11:11
Thank you so much for your help with this. It’s greatly appreciated.
I am listed as the beneficiary on this account but my other half changed me as beneficiary. I have been told that my signature would have been required on the change of beneficiary form 😕
Permalink Submitted by Jose Morales on Wed, 2008-09-10 15:47
In a community property state it would be pretty easy for you to stake your claim as the beneficiary if you are the spouse, regardless of who he named as beneficiary, unless you signed your rights as a beneficiary away. After a divorce he can name anyone else as beneficiary of his IRA that he wishes. Of course if he divorces you then you will be entitled to half of the IRA assets so he will most likely have to sell the property anyway to give you what you are owed.
Your best course of action seems to be to start interviewing lawyers at this point.