IRC Subsection 408(n)
408(n) Bank. -For purposes of subsection (a)(2), the term “bank” means -
408(n)(1) any bank (as defined in section 581),
408(n)(2) an insured credit union (within the meaning of paragraph (6) or (7) of section 101 of the Federal Credit Union Act), and
408(n)(3) a corporation which, under the laws of the State of its incorporation, is subject to supervision and examination by the Commissioner of Banking or other officer of such State in charge of the administration of the banking laws of such State
First IRA's Interpretation:
All First IRA Mortgage, Inc. loan documents will be signed by an authorized officer of a trust company or "custodian" (as defined under Subsection 408(n)) that has sufficiently demonstrated that their company falls into one of the following classifications.
o Bank: Under authority of the Comptroller of the Currency
o Credit Union: Under the authority of Federal Credit Union Act
o Corporation: Proof that they are in good standing under the laws of the State of its
incorporation, and proof that they are subject to supervision and examination by the
Commissioner of Banking
We will only accept signed loan documents from non Custodian Administrators that:
1) provide written proof that they have demonstrated to the satisfaction of the Secretary of the Internal Revenue Service, that the manner in which they administer the IRA trust will be consistent with the requirements of Section 408 (a)(2), or
2) provide a signed Power of Attorney from an approved trust company or "custodian" that satisfies Subsection 408(n)).
The reasons for this are simple. Any firm operating outside the above standards is, in First IRA's interpretation of the IRS codes, NOT deemed to be a trustee, and thus is in violation of Section 408, the IRS code which pertains to Individual Retirement Accounts.
SEC. 408. INDIVIDUAL RETIREMENT ACCOUNTS.
408(a) Individual Retirement Account.
For purposes of this section, the term “individual retirement account” means a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries, but only if the written governing instrument creating the trust meets the following requirements:
408(a)(2) The trustee can fall under the following 2 categories and is either a:
1) Bank (as defined in subsection 408(n)) or
2) Any such other person who demonstrates to the satisfaction of the Secretary of the Internal Revenue Service that the manner in which such other person will administer the trust will be consistent with the requirements of this section.
Subsection 408(n) {However there are 3 categories under the term "BANK"}
o Bank. -For purposes of subsection (a)(2), the term “bank” means -
408(n)(1) any bank (as defined in section 581),
So,
o Sec. 581. Definition of bank For purposes of due diligence, the term ''bank'' means a bank or trust company incorporated and doing business under the laws of the United States (including laws relating to the District of Columbia) or of any State, a substantial part of the business of which consists of receiving
deposits and making loans and discounts, or of exercising fiduciary powers similar to those permitted to national banks under authority of the Comptroller of the Currency, and which is subject by law to supervision and examination by State, Territorial, or Federal authority having supervision over banking
institutions. Such term also means a domestic building and loan association.
o 408(n)(2) an insured credit union (within the meaning of paragraph (6) or (7) of
section 101 of the Federal Credit Union Act), and
o 408(n)(3) a corporation which, under the laws of the State of its incorporation, is
subject to supervision and examination by the Commissioner of Banking or other
officer of such State in charge of the administration of the banking laws of such State.
If there are any companies that wish to provide First IRA with a legal opinion that clarifies this matter, we would be glad to discuss this. We believe that the "spirit" of the IRC code is in line with our reasoning above.
|
