Using an IRA as collateral for a commercial loan
I have a client who is asking if they can use their IRA as collateral for a commercial loan. It is my understanding that using an IRA as collateral is considered the same as making a withdrawal from the IRA thus creating a taxable event.
Is this correct?
Permalink Submitted by Alan - IRA critic on Thu, 2019-06-27 22:28
Yes, that is a prohibited transaction and results in a deemed taxable distribution of the IRA on Jan 1st of that tax year.