Check a collectible acquired by an individually directed retirement account

Key facts

Human involvement

Yellow · Close supervision

How AI is used

From the account record, list the asset, the date the individually directed account acquired it, the cost to the account, and whether the record describes it as art, a rug or antique, a metal or gem, a stamp or coin, an alcoholic beverage, or other tangible personal property. Note any statement that a trustee holds bullion. Do not decide that the asset is a collectible, and do not prepare a Form 1099-R.

What the lawyer must review

The lawyer decides whether IRC section 408(m) treats the acquisition as a distribution. The section applies to an individual retirement account and to an individually directed account under a plan described in section 401(a). The amount is the cost of the collectible to the account. A collectible is a work of art, a rug or antique, a metal or gem, a stamp or coin, an alcoholic beverage, or other tangible personal property the Secretary specifies. The stated coins, and gold, silver, platinum or palladium bullion of the required fineness in the physical possession of a trustee described in section 408(a), are not collectibles. The IRS snapshot says a plan's qualification under section 401(a) is not affected unless the plan's own terms forbid the investment, that collectibles acquired before 1 January 1982 are outside the section, that the cost is reported on Form 1099-R, and that the 10 percent additional tax under section 72(t) may apply if the participant is under age 59 and a half. The same snapshot says personal use by a disqualified person, such as artwork or a rug used in the participant's home, may be a prohibited transaction under section 4975(c). The snapshot says a full account of the IRA rules is outside its scope. The lawyer does not use a self-managed-fund storage or display rule.

Written for / version

United States versionUS