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#1692440 - 04/25/12 04:41 PM CIP on a Self Directed IRA
Getting_Grayer Offline
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Joined: Oct 2007
Posts: 192
USA
I am having a problem determining who the customer is on this loan for CIP purposes. This is a self directed IRA and title on the property is XXX Custodian for FBO XXX IRA; the custodian’s TIN is being used as well. I know normally on an IRA opened at my bank the bank is the custodian and we CIP the customer using the customer’s TIN.

The IRA is a Real Estate Investment IRA and the custodian is acting on behalf of the customer, but I do not understand why the custodian’s TIN is being used and exactly who CIP is performed on.

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#1692463 - 04/25/12 05:12 PM Re: CIP on a Self Directed IRA Getting_Grayer
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,912
Galveston, TX
I would not touch a loan like this with a ten-foot pole. This would be considered collateral lending as these would have to be non-recourse loans.
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#1692514 - 04/25/12 06:24 PM Re: CIP on a Self Directed IRA Getting_Grayer
Retread Offline
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Retread
Joined: Oct 2003
Posts: 2,548
Southeast
This does not have anything to do with your loan, but it is worth reading about self-directed IRAs

http://www.sec.gov/investor/alerts/sdira.pdf
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#1692663 - 04/26/12 02:03 AM Re: CIP on a Self Directed IRA Getting_Grayer
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
An IRA custodian, self-directed or otherwise, is only empowered to hold the assets, not borrow money. By no stretch of the imagination could the custodian pledge assets as collateral.

This is quicksand.
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#1693249 - 04/27/12 01:09 PM Re: CIP on a Self Directed IRA Getting_Grayer
AidaR Offline
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Joined: Apr 2012
Posts: 1
New Jersey
As being part of the self-directed IRA community, I thought I'd step in and clarify this topic.

Part of the confusion is that there are not two, but instead three seperate entities involved in this type of transaction: the custodian, the beneficial owner and the IRA. The TIN being used is not that of the custodian, but instead that of the IRA trust, itself.

The custodian isn't pledging any type of collateral--the IRA is. So, if John Smith is looking to purchase 123 Main Street in his IRA, the loan is in the name of the IRA, XXXX FBO John Smith IRA XXXX, and it is non-recourse, meaning that the IRA owned property is the only collateral available.

Hope this clarifies. smile

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#1693453 - 04/27/12 05:37 PM Re: CIP on a Self Directed IRA AidaR
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Five years as the legal counsel to a trust department...we had lots of self directed IRAs.

Naaaah....
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

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#1696898 - 05/08/12 03:52 PM Re: CIP on a Self Directed IRA Getting_Grayer
el guapo Offline
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el guapo
Joined: Jul 2004
Posts: 345
The biggest problem with self directed IRAs seems to be the lack of any ability on the part of the IRA owner to actually self direct anything. They seem to always need hand holding from beginning to end and in fact demand that their IRA Custodian reassure them at every step that what they are doing is okay. Of course, if the IRA Custodian expresses any concern over an action taken with the IRA the reaction is always anger and a demand that the IRA Custodian "approve" of the action taken by the IRA owner.

No thanks...and: http://online.wsj.com/article/SB10001424052702304818404577350202576759664.html?mod=googlenews_wsj

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