How to Prospect for Client Assets in IRAs
- 1). Find out if your client owns any real estate inside an IRA. There are custodians that allow clients to do this. If they do, then they may need to liquidate their property if they are in need of cash. This may be the case if they are converting their IRAs to Roth IRAs this year.
- 2). Find out if your client has any income-producing properties inside an IRA, such as an oil and gas interest. If they do, then it may be time to sell this interest and generate cash. Again, this may be prudent if your client wants to convert an IRA to a Roth IRA.
- 3). Look at your clients' IRA assets and see if they have stock for which you can write covered calls. If they have hundreds or thousands of shares of stock that you can write covered calls on, then you may be able to generate substantial ongoing cash revenue for them until they sell their shares. If they have substantially appreciated shares of stock, then encourage them to sell, since there will not be any tangible tax consequences.
- 4). See if your client has any assets inside a limited or general partnership of any kind. If this is the case, then they will have money coming in that's reported on Form 1099-Misc. This money may be IRA income, depending upon how it's titled. If so, consider having your client sell this interest, especially if he owns an oil and gas partnership, as oil and gas prices are expected to remain high for the foreseeable future.
- 5). Convince your client to sell profitable long-term holdings if the markets look like they may turn around. Even though they will pay taxes on these gains at ordinary income rates, they will still lock them in as opposed to possibly losing them from market declines. This is a sensible strategy only during bull markets when stock prices are overvalued and sellers can get a price for their stock that could not otherwise be obtained.
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