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Author: kaffehead One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76398  
Subject: Bad IRA Date: 11/4/1999 11:49 AM
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Several years ago I followed a broker friend's advice and invested though him into a self directed IRA. The first couple of stocks did fairly well and I rolled over my CD's into the account.

My problem is this. Two of the stocks have tanked, Fine Holst (FINE)is in reorganization and is not trading. FirstPlus Financial (FP) is trading at around $0.13. These are the only stocks in this account and it has a yearly maintenance fee. The account has a negative balance since I have not payed this years fee.

My question is what can or should I do with this IRA? At the time I did not have the investing knowlege that I have now nor was I able to access the resorces that I how have available to me. Is this IRA dead? Should I just let it set to see if the stocks come back. Fine Host is still a viable company and servicing their contracts as far as I know. If I just let this sit then the fees will mount up. Can the broker come after me for the fees or can they close my account taking the stocks.

I have posted similar post on the Foolish Question and Investing Beginners Boards with out much of a response. Any help or ideas will be greatly appriciated.
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Author: GrayWulff Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15106 of 76398
Subject: Re: Bad IRA Date: 11/4/1999 1:18 PM
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kaffehead,

Dispite your bad experience, IRA's are still a good thing and you probably want to continue contributing. Why not drop another $2000 into the account as cash, then transfer the whole thing to a deep discount broker who offers free IRA's. That would close the bad account, hang on to the Fine Host stock, and set you up for some Foolish investing.

You probably could put the $2000 directly into the new brokerage account, but its been my experience that having a little real money involved gets these things done more quickly.

Cheers,
GW

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15111 of 76398
Subject: Re: Bad IRA Date: 11/4/1999 4:19 PM
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Greetings, Kaffehead, and welcome. You wrote:

<<Several years ago I followed a broker friend's advice and invested though him into a self directed IRA. The first couple of stocks did fairly well and I rolled over my CD's into the account.

My problem is this. Two of the stocks have tanked, Fine Holst (FINE)is in reorganization and is not trading. FirstPlus Financial (FP) is trading at around $0.13. These are the only stocks in this account and it has a yearly maintenance fee. The account has a negative balance since I have not payed this years fee.

My question is what can or should I do with this IRA? At the time I did not have the investing knowlege that I have now nor was I able to access the resorces that I how have available to me. Is this IRA dead? Should I just let it set to see if the stocks come back. Fine Host is still a viable company and servicing their contracts as far as I know. If I just let this sit then the fees will mount up. Can the broker come after me for the fees or can they close my account taking the stocks.

I have posted similar post on the Foolish Question and Investing Beginners Boards with out much of a response. Any help or ideas will be greatly appriciated.>>


IMHO you would do well to pay the broker what's due and kill this IRA by closing the account. You then may use the loss as a Miscellaneous itemized deduction on Schedule A of your tax return, subject to the 2% limit on such deductions. See page 29 of IRS Publication 590 (Individual Retirement Arrangements) which you may obtain at http://www.irs.ustreas.gov/prod/forms_pubs/index.html for details and an example.

Regards..Pixy

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