Temporary Relief for IRA Owners for Entering Into Certain Collateralization Agreements

Announcement 2011-81 provides temporary relief for entering into what is viewed as fairly common cross collateralization agreements but not for the actual enforcement by collection on the account.

Document Excerpt 

The DOL has advised the Internal Revenue Service (IRS) that DOL is considering further action with respect to the issues described above, including consideration of a class exemption request expected to be submitted to the DOL. Pending further action by the DOL and until issuance of further guidance from the IRS superseding this announcement, the IRS will determine the tax consequences relating to an IRA without taking into account the consequences that might otherwise result from a prohibited transaction under § 4975 resulting from entering into any indemnification agreement or any cross-collateralization agreement similar to the agreements described in DOL Advisory Opinions 2009-03A and 2011-09A, provided there has been no execution or other enforcement pursuant to the agreement against the assets of an IRA account of the individual granting the security interest or entering into the cross-collateralization agreement. No inference with respect to the application of

Link http://www.irs.gov/pub/irs-drop/a-11-81.pdf

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