Suzanne Barlyn
The accounts of IRA owners, such as stockbrokers and financial advisers, who receive any compensation from trading their own IRA account, are also subject to the unfavorable tax treatment.
Investors often consult with trusted family members, such as stockbrokers, financial planners and insurance agents, to conduct financial transactions on their behalf, according to Mr. Goldberg, who recently submitted a memorandum to staff assistants of two Congressmen, recommending a legislative correction. Is it fair to render an entire account taxable because of a $1 commission, he asks. A mass influx of cash into IRAs during the coming years could also invite more intense IRS scrutiny. Total U.S. retirement accumulations reached $16.4 trillion last year, the highest amount recorded and an 11% increase over 2005, according to the Investment Company Institute, a mutual-fund trade group in Washington, D.C. The statute that applies prohibited-transaction status to IRAs evolved as an afterthought to the Employee Retirement Savings Act of 1974, or ERISA, which sets minimum standards for private sector pension and qualified retirement plans and delineates rules on the tax effects of retirement plan transactions.
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