Q&A | Disposed assets - cash into retirement accounts?
Sep 02, 2025
Question
"We have a couple that contributed over $25,000 in cash between them over the last two years into Roth IRAs. This has resulted in a significant reduction in net family assets recently, since IRAs are excluded assets. Are these funds "disposed assets" under affordable housing rules?"
Answer
Summary: No. Contributions to retirement accounts are not disposed of under HOTMA guidance.
It is easy to understand why this situation could look like it is creating disposed assets. Assets that were counted recently are "disappearing" into assets that are now excluded under HOTMA. However, according to HUD HOTMA Notice 2023-10 (A.3.c and F.4.a), "an asset moved to a retirement account held by a member of the family is not considered an asset disposed of for less than fair market value." This is similar to when a person uses assets that are counted in net family assets to buy necessary personal property, and the value of net family assets decreases without the removed assets being considered disposed of.
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