seTTleMenT silver lining: reTaining TaX deFerred growTH
Securities Section
Chairs: Dominique Heller – Wiand Guerra King, P.A. & Scott Illgenfritz – Johnson, Pope, Bokor, Ruppel & Burns, LLP
I
magine you’ve been
contributing to your
Individual Retirement
Account (IRA) for quite
some time. Your account’s tax
deferred status has allowed
appreciation of its underlying
investments to accumulate tax-free,
highlighting the benefits of this
particular investment vehicle.
Now, lamentably, imagine
this vehicle crashes, and the
investments “sitting in the trunk”
have depreciated to nothing.
To exacerbate your frustration,
you learn that the financial
advisor in charge of driving your
retirement vehicle has caused
this metaphorical crash by
mismanaging your account and
56
making
the year of
unauthorized
receipt, thus
trades. Using
losing all
your securities
tax-deferred
law expertise,
growth that
you seek to
had accrued
recover your
in the
losses from
account. 1 But,
the advisor,
in 2007, the
and a
IRS addressed
settlement is
this quandary
within sight.
through
What will
several Private
the tax
Letter Rulings
consequences
(PLR). These
of the
letter rulings
in doing so, the individual
settlement be?
have allowed
avoids all the tax
Shouldn’t the
individuals
consequences of the
law take into
who have
account the
sustained
settlement and maintains
loss of any
losses in their
the tax-deferred
tax-deferred
IRAs because
growth you
of a breach
growth of the ira.
would have
of fiduciary
enjoyed if
duty, fraud,
the crash had
or federal or
never occurred?
state securities violations (such as
Historically, the Internal
payments made in consonance
Revenue Service would require a
with a court-approved settlement or
defrauded IRA owner to recognize
a settlement amount as income in
Continued on page 57
MAR - APR 2019
|
HCBA LAWYER