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Bank stock owned by IRA

Client has some local bank stock he directed his IRA to buy (some years ago). He had sent the stock certificate to his Schwab IRA for them to hold. Schwab is telling him they are going to start charging him $250 a year to hold that one piece of paper.

I don't see any taxable transaction for him holding that one piece of paper. The IRA still owns the bank stock. No cash is changing hands, no change in ownership of that stock, etc. I have no clue as to what, if anything, that Schwab will do in reporting, or if they have to report, that they mailed the one piece of paper to the taxpayer.

I don't believe that there are any issues with him holding the stock certificate, no more than if there was an IRA that bought a CD and the certificate was held in the file cabinet at home.

Am I off-base here? Am I missing anything? Schwab can't/won't advise him, and the bankers aren't any help either.

$250? I'm thinking I'm not charging enough for storage.

Reply to
paulthomascpa
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I know it's not what you asked, but I'm curious...

Why doesn't your client just deposit the certificate and have it held in street name rather than in certificated form?

Does it? Is Schwab sending him a certificate registered to "IRA of Joe Client"? Or is Schwab getting it reregistered to "Joe Client" before sending it to him?

Reply to
Rich Carreiro

"Rich Carreiro" wrote

Beats me, but I believe he said he doesn't have any more IRA investmentess through Schwab. Maybe the $250 is a minimum annual account fee?

There's no true public market for the bank stock. It's not listed anywhere according to the client. I don't know what Schwab will do. The intent is to not have an annual $250 fee for the mere act of keeping one piece of paper in a file cabinet. There is no intent to change ownership out of the IRA.

Reply to
paulthomascpa

I don't see any taxable transaction for him holding that one piece of paper. The IRA still owns the bank stock. No cash is changing hands, no change in ownership of that stock, etc. I have no clue as to what, if anything, that Schwab will do in reporting, or if they have to report, that they mailed the one piece of paper to the taxpayer.

I don't believe that there are any issues with him holding the stock certificate, no more than if there was an IRA that bought a CD and the certificate was held in the file cabinet at home.

Am I off-base here? Am I missing anything? Schwab can't/won't advise him, and the bankers aren't any help either.

$250? I'm thinking I'm not charging enough for storage. =============== What I don't understand about this is why there would be a charge in the first place.

As for him personally holding the certificate, not the IRA custodian, I have a problem: Would that be a distribution? Granted, the certificate says the IRA is the owner and that hasn't changed, but the document would not be in the possession of the custodian and therefore not counted in the annual reporting of account value, so could it somehow be deemed a[n incomplete] distribution?

What does his IRA contract say about actual certificates?

Maybe it's time for a new custodian?

Reply to
D. Stussy

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