ANTHONY DAVIDE
v.
AD CAPITAL COLLECTIONS, LLC
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Davide appeals summary judgments of garnishment against two self-directed IRAs. The trial court found Davide engaged in prohibited transactions under IRC § 4975(c) that disqualified both IRAs from creditor protection: the first account lost exempt status in 2016 due to self-dealing benefiting his wife and children, and the second account lost protection because it was funded with money from the first account after it was disqualified.
The court affirmed that both IRAs lost their exemption from creditor claims. The first IRA ceased to be an individual retirement account as of the first day of the taxable year in which the prohibited transactions occurred (2016), thereby losing its statutory protection. The second IRA also lost exempt status because it was funded with money from the first account after the first account had already lost its exemption.
[1] A self-directed individual retirement account ceases to be an individual retirement account and loses its exemption from creditor claims when the owner engages in prohibi…
[2] Funds transferred from an individual retirement account that has lost its exempt status to another account will cause the second account to also lose its exempt status.
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Join FLexlaw to unlock all legal intelligence“cease[d] to be an individual retirement account as of the first day of such taxable year”
Establishes that IRAs lose their status and protection when prohibited transactions occur under IRC § 408(e)(2)(A)
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Join FLexlaw to unlock all legal intelligenceDavide owned two self-directed individual retirement accounts. In 2016, he engaged in prohibited transactions that benefited disqualified persons—his …
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Third District Court of Appeal State of Florida
Opinion filed May 7, 2025. Not final until disposition of timely filed motion for rehearing.
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Nos. 3D23-0595; 3D23-1463; 3D24-0667 & 3D24-1531 Lower Tribunal No. 12-32510 ________________
Anthony Davide, Appellant,
vs.
AD Capital Collections, LLC, Appellee.
Appeals from the Circuit Court for Miami-Dade County, Carlos Guzman and Mavel Ruiz, Judges.
Moreno Perdomo, PLLC, and Gino Moreno and Arlenys Perdomo, for appellant.
Sequor Law P.A., and Gregory S. Grossman and Jennifer Mosquera, for appellee.
Before LOGUE, C.J., and SCALES and LOBREE, JJ.
LOGUE, C.J.
Therefore, in 2016, due to the “prohibited transactions,” this account lost its exemption from creditor claims afforded by section 222.21(2)(a), Florida Statutes. As to Davide’s second account, the trial court found Davide funded the second account with funds from the first account after the first account lost its exempt status in 2016, and therefore, the second account also lost its exempt status. We have carefully reviewed the arguments raised by Davide and find no error warranting reversal. See In re Moore, 640 B.R. 397, 406 (Bankr. S.D. Ohio 2022) (“IRA owners run afoul of § 4975 when they attempt to circumvent taxes or otherwise engage in some form of self-dealing, whether through a direct or indirect transfer.”).
Affirmed.