Dear Paul:
You will have to apply to the IRS to become an approved nonbank
trustee or custodian. I have provided the following links with
information regarding the qualifications your LLC must meet and the
application process for approval. I hope they are useful to you.
Sincerely,
Wonko
You can permit investments in real estate, and you may even have a
competitive advantage because apparently many IRA trustees do not
allow real estate investing.
"FAQs regarding IRAs" Internal Revenue Service
http://www.irs.gov/retirement/article/0,,id=111413,00.html#19
"Finally, IRA trustees are permitted to impose additional restrictions
on investments. For example, because of administrative burdens, many
IRA trustees do not permit IRA owners to invest IRA funds in real
estate. IRA law does not prohibit investing in real estate but
trustees are not required to offer real estate as an option."
"How Does One Become an HSA Trustee?" Employee Benefits Institute of America
http://www.ebia.com/static/weekly/questions/2004/FB040108.html
"Any other prospective nonbank trustee (an individual cannot be a
trustee) must apply to the IRS and request approval to be a trustee by
demonstrating in detail that it will meet certain requirements as set
out in Treas. Reg. Secs. 1.408-2(e)(2) through (e)(5). The
requirements include:
==> Fiduciary Ability. The ability to act within the accepted rules of
fiduciary conduct, including ensuring that the applicant's fiduciary
duties will not be interrupted by the death or change of its owners;
that it maintains an established place of business; and that it has
fiduciary experience and a high degree of solvency.
==> Capacity to Account. Experience and competence with respect to
accounting for the interests of a large numbers of individuals.
==> Fitness to Handle Funds. Experience and competence with respect to
handling of funds.
==> Rules of Fiduciary Conduct. The ability to follow established
rules of fiduciary conduct, which include bonding, auditing and net
worth requirements."
"There is no prescribed form for the application, but Section 3.09 of
Revenue Procedure 2003-4 (which should be updated soon for 2004)
provides general guidance, including the address to which the
submission should be sent. A user fee of $3,520 (applicable for 2003;
in an advance copy of Rev. Proc. 2004-8 the amount is $3,665) must
accompany the application.
If the application is approved, the IRS will issue a written notice,
which will specify the date that the approval becomes effective. A
copy of this notice must be given to each account beneficiary before
any assets are accepted by the nonbank trustee or custodian. The
approval will remain in effect until revoked by the IRS or withdrawn
by the applicant. Generally, the notice of approval will not be
revoked unless the IRS determines that the applicant has failed to
administer fiduciary accounts in a manner consistent with the
requirements of the regulations, or has administered a fiduciary
account in a grossly negligent manner."
"Revenue Procedure 2004-8" http://www.unclefed.com/Tax-Bulls/2004/rp04-08.pdf
Revenue Procedure 2004-8 as published has the user fee listed as $3665.
Revenue Procedure 2004-4 provides the following information:
http://www.irs.gov/irb/2004-01_IRB/ar09.html#d0e8480 ".09 Nonbank
trustee requests" Internal Revenue Service
"In order to receive approval to act as a nonbank custodian of plans
qualified under § 401(a) or accounts described in § 403(b)(7), and as
a nonbank trustee or nonbank custodian for individual retirement
arrangements (IRAs) established under § 408(a), (b), or (h), or for a
Coverdell educational savings account established under § 530 or an
Archer medical savings account established under § 220, a written
application must be filed that demonstrates how the applicant complies
with the requirements of § 1.408-2(e)(2) through (5) of the Income Tax
Regulations.
The Service must have clear and convincing proof in its files that the
requirements of the regulations are met. If there is a requirement
that the applicant feels is not applicable, the application must
provide clear and convincing proof that such requirement is not
germane to the manner in which the applicant will administer any
trust. See § 1.408-2(e)(6).
The completed application should be sent to:
Internal Revenue Service
Commissioner, TE/GE
Attention: SE:T:EP:RA
P.O. Box 27063
McPherson Station
Washington, DC 20038
Section 6.01(5) of Rev. Proc. 2004-8, page , this Bulletin, imposes a
user?s fee for anyone applying for approval to become a nonbank
trustee or custodian."
"Sec. 1.408-2 Individual retirement accounts." Code of Federal
Regulations, Title 26, Volume 5, Revised as of April 1, 2002, pages
430-440 http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2003/aprqtr/26cfr1.408-2.htm
This link provides access to the full text of the above referenced "§
1.408-2(e)(2) through (5) of the Income Tax Regulations." This is the
full text of the requirements required to be an approved nonbank
trustee or custodian that were summarized in the quotation from the
Employee Benefits Institute of America presented above.
This information was quite tricky to find. The following search terms
were most useful:
approved non-bank trustee
application ira trustee |
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