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#35567 - 10/02/02 06:59 PM IRA Certificate of Deposit As Collateral
Ron Justi Offline
Junior Member
Joined: Oct 2001
Posts: 36
Evans City, PA. USA
Someone questioned me on whether we could take an IRA certicate of deposit as collateral for a loan. I have addressed this with lenders in the past and believe it is not allowable, but today I am uncertain about the source of my certainty. Will someone confirm or point me to the source?

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Lending Compliance
#35568 - 10/02/02 07:19 PM Re: IRA Certificate of Deposit As Collateral
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
From Kirchman’s BOB.

Q. May the owner pledge the IRA as collateral for a loan?

A. Not while keeping the IRA’s tax advantages. Pledging an IRA will be treated by the IRS as a distribution of the funds pledged. Those funds will be deemed to be ordinary income to the owner of the IRA in the year of the pledge, and various penalities may apply depending on the age of the owner and other factors. Similarly, neither the IRA owner nor any beneficiary may borrow directly from the IRA.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#35569 - 10/02/02 07:34 PM Re: IRA Certificate of Deposit As Collateral
Ron Justi Offline
Junior Member
Joined: Oct 2001
Posts: 36
Evans City, PA. USA
Thank you!

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