An overview of the features of the Unchained IRA relevant for tax compliance
As required by Internal Revenue Code Section 408(a)(2), all Unchained IRAs have a licensed financial institution as IRA custodian. Unchained has selected Solera National Bank as its partner to fill this role. To ensure strict compliance with the statute, all IRA coins are stored in a secure multi-signature vault in which legal title vests to the IRA custodian.
Unchained clients typically demand the strictest security, and as such, do not want the IRA custodian or any other third party holding a quorum of private keys. To address this concern, under a tri-party agreement with each individual Unchained client, the IRA custodian agrees to delegate private key holding. Two keys (a quorum in the Unchained 2-of-3 vault) are delegated to the client, with the third key delegated to Unchained. To comply with sections 408(a)(2), (h), and (i) of the Internal Revenue Code, as well as prevent a constructive receipt of IRA assets that would potentially cause a loss of tax-advantaged status, the tri-party agreement makes clear three key points. First, all keyholders act in the role of conduit for the IRA custodian. Second, Unchained will monitor all IRA vaults as an agent of the IRA custodian and will report all vault transaction data to the custodian for further reporting by the custodian to the IRS. Third, any movement of coins from the vault detected during such monitoring will be reported by the custodian to the IRS as an IRA distribution unless it occurs as part of a prearranged rollover transaction.
Note: No contents of this blog may be relied upon as tax, legal, or financial advice, as they have not been tailored to you and have not been reviewed by any attorney, financial advisor, or tax professional. For any questions related to your own specific situation, please consult with your own attorney, tax professional, and/or licensed financial advisor.