Senate Finance Committee Chairman Ron Wyden has placed self directed IRA’s in his committees cross hairs. Mr. Wyden issued a statement this morning (November 19) following 3 letters he sent to the Treasury Secretary, IRS Commissioner and the General Accounting Office. (Download the Letter to IRS and or the GAO Letter with these links.)
These letters are in response to a Finance Committee hearing held on this and other retirement savings issues in September wherein it was found:
“The state of retirement savings in the U.S. is completely out of whack. On one hand you’ve got people sheltering millions of dollars in mega IRAs, while at the same time nearly a third of Americans have nothing set aside for retirement. It’s abundantly clear that America needs a better system and tax code that supports retirement planning for all Americans,” Wyden said. “I’m committed to working with Treasury and the IRS to implement GAO’s recommendations and help prevent additional abuse and fraud in the tax code.”
The letters request the IRS to move forward on implementing the GAO’s recommendations to audit self directed IRAs to identify prohibited transactions, improper valuations and unreported tax issues. The letter to the GAO requests they begin a review of self-directed IRAs, “checkbook control accounts”, abusive IRA schemes, and prohibited transactions. The GAO is to report back to the Senate finance committee on their findings.
I have blogged about IRA scrutiny several times this year and it appears this issue it not going to go away. Another recommendation by Wyden is to increase the statute of limitations for IRA transactions from 3 years to a longer period of time to catch past prohibited transactions.
If you have a self directed IRA your may want to consider moving to a self directed pension plan before this issue really begins to gain momentum and you are caught in the expected storm surge.