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Petitioner was informed that if he wanted Sterling Trust to
transfer the assets and cash directly into another IRA, he would
have to forward to them the appropriate forms of a successor
trustee before April 30, 2000. Sterling Trust explained that a
direct transfer of the IRA’s assets and cash to another IRA
account on or before April 30, 2000, would not be reported to the
Internal Revenue Service. Sterling Trust further explained that
if petitioner did not initiate a direct transfer into a successor
IRA, they would be forced to distribute the assets to him
directly, resulting in a reportable, taxable event that would
subject him to a “10% premature penalty” if he did not then
transfer the assets and cash into another IRA within 60 days of
the distribution.
Petitioner also received a letter regarding Sterling Trust’s
resignation as trustee from Mr. Butler. Mr. Butler suggested JW
Genesis Securities, Inc. (Genesis) as a successor trustee and
told petitioner to contact him for the appropriate forms.
Petitioner did not contact Sterling Trust before their
resignation as his IRA trustee. On May 31, 2000, Sterling Trust
distributed all of the assets in the IRA directly to petitioner.
Ownership of the OppenheimerFunds investment and the Allen’s
Creek note was transferred to petitioner, and Sterling Trust
issued petitioner a check for the cash balance. Petitioner
eventually cashed out the OppenheimerFunds investment and used
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Last modified: May 25, 2011