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Opinion Letter

Because the law in the area of investments by self-directed retirement plans (IRAs, SEPs, 401ks) is relatively new, and due to the risks involved in a prospective transaction, many self-directed retirement plan clients desire to have a formal opinion letter issued before undertaking such transactions.

An opinion letter is essentially a lawyer’s determination that certain legal features of the subject deal actually work, or not. A good opinion letter will disclose and evaluate the legal risks involved in a proposed or existing transaction (or series of transactions). It essentially involves the lawyer’s “Good Housekeeping” seal of approval for the transaction if it meets the legal standards that govern or have an impact on the transaction.

A legal opinion may be useful in the following circumstances:

  1. The transaction or series of transactions involves a highly sophisticated investment strategy or business activity;
  2. The area of law that governs the transaction is uncertain, there is not much legal precedent, or there is conflicting legal authority on the issue;
  3. The amount to be invested is sufficiently large that the client desires near certainty that the transaction will not be invalidated or put at risk due to legal or regulatory issues; and
  4. To present in a possible IRS audit to minimize the penalties in case of tax law violation.

We can provide an opinion letter at a reasonable cost for any self-directed IRA client who can benefit from our expert analysis.