Category: Individual; Compensation & Employee Benefits
Subject: Individual Retirement Account
Title: Domestic Requirement
IRC Sections: 408(a); 7701(a)(9); 72(t)
Filename: 1077.html
Date Produced: 8/97 Copyright 1998, The Tax Resource Group. All rights reserved. Telephone
800-578-3498. Internet: www.taxresourcegroup.com Facts
Taxpayer is U.S. resident and has money in an Individual Retirement Account
(IRA) located in New York. Taxpayer wishes to roll the IRA money into an
IRA located outside the U.S. Issue
Is it possible to roll an IRA over into a non-U.S. account? Answer
The rollover is not possible. Discussion
An individual retirement account must be created or organized in the United
States. Section 408(a). Regs. Section 1.408-2(b). The term "United
States" includes only the states and the District of Columbia. Section
7701(a)(9). In addition, the IRA must be maintained at all times as a domestic
trust or custodianship. Regs. Section 1.408-2(b). Given that a qualified IRA must at all times
be a domestic entity, it is not possible to have a qualified IRA located
outside the United States into which an existing IRA balance can be rolled.
Accordingly, there is no qualified destination for these IRA funds. If the
taxpayers wish to get the money outside the U.S., they must simply take
a taxable distribution subject to normal income taxes and possible the early
withdrawal penalty tax of Section 72(t). | 
