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Whether a loan app expressing intent to dip into an IRA to pay the mortgage jeopardizes the IRA exemption?
This is a difficult question to answer. Under 704.115 an Ira had to be designed and used for retirement. Under 522, I don't believe there is any such restriction, but have not done the research.
D
Sent from my iPhone
On Apr 20, 2011, at 8:28 AM, "David A. Tilem" wrote:
> Is the W/D from the IRA subject to tax penalty?
>
>
> David A. Tilem
> Certified Bankruptcy Specialist*
> Law Offices of David A. Tilem (a debt relief agency)
> 206 N. Jackson Street, #201, Glendale, CA 91206
> Tel: 818-507-6000 Fax: 818-507-6800
>
> * Bankruptcy specialist cert. by State Bar of CA Bd of Legal Specialization.
> Business bankruptcy specialist cert. by Amer. Bd. of Certification
>
>
> -----Original Message-----
Alik Segal
> Sent: Tuesday, April 19, 2011 10:25 PM
> To: CDCBAA Listserv; bk; bootcamp-attorneys
> Subject: [cdcbaa] Whether a loan app expressing intent to dip into an IRA to pay the mortgage jeopardizes the IRA exemption?
>
>
> Listmates,
>
> The procedural posture of this question is unusual. Client has no plans to file BK. Rather, she is buying a condo and asked whether it is "OK" to sign a letter requested by the mortgage broker.
>
> The client is semi-retired, has limited income ($2K/mo) and a large IRA ($1M). To compensate for her low income, she was told that she needs to say that she intends to dip into the IRA at the rate of $6.5K/mo. The broker asked her to write a letter expressing this intention. Also the loan application shows IRA withdrawal of $6.5K/mo as income.
>
> (1) Would such statements (A) in the loan application and (B) in the letter jeopardize the IRA exemption in the event this client needs to file BK?
>
> (2) This is a California purchase-money 1st mortgage, so the lender would not be entitled to a deficiency after a foreclosure. However, in a jurisdiction that allows a deficiency judgment post-foreclosure, would the IRA exemption be compromised as a result of the above statements re: intent to dip into the IRA to pay the mortgage?
>
> --
> Alik Segal
> Alik.Segal@gmail.com
> 310-362-6157
> Cal. CD, Los Angeles
>
>
This is a difficult question to answer. Under 704.115 an Ira had to be designed and used for retirement. Under 522, I don't believe there is any such restriction, but have not done the research. DSent from my iPhoneOn Apr 20, 2011, at 8:28 AM, "David A. Tilem" <
Is the W/D from the IRA
subject to tax penalty?
David A.
Tilem
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