Understand how IES administers exchange funds
In an IES exchange, the agreement defines the Qualified Intermediary's responsibilities. IES coordinates receipt of exchange proceeds, provides an exchange-credit balance statement, and releases funds under the exchange agreement and closing instructions.
Read the IES exchange process and discuss the current account and authorization arrangements before engagement. A description of exchange administration is not a guarantee against banking, fraud, or other loss.
The written exchange agreement
The exchange agreement must limit the taxpayer's rights to receive, pledge, borrow, or use the exchange funds. These limits support the federal tax structure.
The agreement must also explain the permitted funds process. Review the agreement with your tax and legal advisors.
Questions to ask before you select a Qualified Intermediary
Bring these questions to your conversation with IES. Ask for the answers that apply to your proposed exchange, including any conditions or exclusions:
- Which institution holds the exchange funds?
- What name appears on the account?
- Who can authorize a funds transfer?
- How do you confirm new wire instructions?
- Which insurance or bond applies to the service?
- Which person reviews account activity?
- How will I receive account and transaction records?
- What happens after a suspected fraud or security event?
Get the important answers in writing. Ask your attorney and financial advisor to review the answers.
Do federal tax rules require one specific bank structure?
The federal rules describe tax safe harbors and limits on the taxpayer's control. They do not approve one company security program.
Does a qualified escrow account remove all risk?
No. A tax safe harbor does not remove operational, bank, cyber, fraud, or counterparty risk.
Can the taxpayer control the exchange funds?
The written exchange agreement must limit the taxpayer's rights to receive, pledge, borrow, or use the funds before the permitted time.
Review the controls before you sign
Discuss the funds process with the exchange team. Ask which written account, authorization, and coverage information can be provided for your due diligence. Review those details and the exchange agreement with your advisors.
See the financial-administration role on our team and the fee-scope questions to resolve before engagement.
This page gives general information. It does not give tax, legal, banking, cybersecurity, insurance, investment, or financial advice.