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How To Beat NEW IRA Rollover Rules

Tuesday, February 18, 2014 - 8:28 AM
2
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
1. Tuesday, February 18, 2014 - 9:02 AM
I had no idea we could put our RMD withdrawal back into the IRA we withdrew it from if we didn't need all of it?  Am I misunderstanding what I read in that link?  Does this apply to RMDs?  Once we are not working any longer and cannot put contributions into an IRA, is this article saying we can still put back unneeded RMD withdrawals which we already paid taxes on?  I must be misunderstanding something here.  Thanks.
1
paoli2paoli21,146 posts since
Aug 10, 2011
Rep Points: 5,113
2. Tuesday, February 18, 2014 - 9:45 AM
  In the spring of 2013 I received a disbursement from my employer where I was laid off. I directed them to transfer the money to an IRA money market I have at Bank of America with the intention of breaking it up and putting into other banks when I saw a good IRA CD rates. During the summer I found two CD rates that I liked and initiated a trustee to trustee transfer to these two banks. BOA charges $50 per transfer. Problem I encountered when checking the account is that more money was removed from MM account than was authorized. BOA made two identical transfers to each of the new banks. They initially stated that Bank A and Bank B requested two separate transfers but they could not produce the second transfer from either bank. They eventually agreed to their mistake and put the money back from the two unauthorized transfers along with the two $50 charges. Took many phone calls to BOA, bank A and bank B to get this squared away.

December 2013 I wanted to transfer more money from the IRA money market at BOA into a 3%  Pen Fed IRA CD. Pen Fed requested the transfer request but after a couple weeks when I noticed the transfer had not been made I contacted Pen Fed and they told me they had not received the funds. I contacted BOA and they indicated they never received the transfer request. Pen Fed was willing to fax a copy of the request but BOA said they needed the original transfer request and it could take 6 weeks transfer the funds.  Instead what I ended up doing was taking the funds out of my MM account in the form of a check and made sure BOA wrote rollover on the check and I mailed to Pen Fed. Luckily I got the check to Pen Fed before they changed the rate. There is no fee to do this so I saved $50.
Needless to say both issues involved time to get squared away and I lost interest payments. Since you are not involved in a trustee to trustee transfer you need to follow up and make certain all was done correctly. I caught both of these issues because I was constantly monitoring my accounts. If you are only allowed one rollover per account every year what happens if you have an IRA CD for less than one year?
1
FARFAR92 posts since
Feb 26, 2013
Rep Points: 329
3. Tuesday, February 18, 2014 - 10:17 AM
You cannot put your RMD into a Roth or put it back into your IRA. You can made a withdrawal and pay taxes on it and convert it into a Roth IRA. If you don't have savings to pay the taxes on the withdrawal don't take it out of the IRA. 

UNDER NO CIRCUMSTANCES CAN YOU PUT THE RMD INTO A ROTH. I DO NOT THINK YOU UNDERSTOOD THE ARTICLE
1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
4. Tuesday, February 18, 2014 - 10:32 AM
TO FAR
You can have transfers (trustee to trustee) but only one rollover per year. 

Most credit unions but not banks I have found will give you interest from the day they get the IRA transfer papers. It can take 3-4 weeks and in your case from the bank 6 weeks. My sister had a transfer done from a credit union 60 miles away to a local credit union and the check sat on the lovsl credit unions desk for 4 weeks before I went in with her. They tried to say they did not receive it. I asked to go to the person who does the IRA work.  The check sat on this girls desk and it was under her to do pile.  The postmark on the envelope was over 4 weeks. I actually recorded the encounter in case they did not backdate the transaction. I am glad I insisted that she look through her pile of work. THIS IS UNACCEPTABLE. A transfer from an IRA must be mailed no wire is allowed. But everyone must make sure that the withdrawal was made from the old institution and that new institution actually did the new transaction. What is scary is as we get older we must mark things down on a calendar to make sure we follow through. 
1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
5. Tuesday, February 18, 2014 - 11:21 AM
Ok, then what money are they referring to in the article that a person who is not working can transfer back into the IRA?? 
1
paoli2paoli21,146 posts since
Aug 10, 2011
Rep Points: 5,113
6. Tuesday, February 18, 2014 - 11:32 AM
You can transfer (trustee to trustee)  to another place for a better rate, transfer to combine IRA's, transfer to convert, any withdrawal at all that is not a RMD. A transfer is trustee to trustee, a rollover is when you get the check yourself and do something with it. 

You can also with in a certain time period after you convert it to a Roth change it back to a traditional IRA. 
1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
7. Tuesday, February 18, 2014 - 11:42 AM
I have done these type of transfers and will be doing it again this year when I have to transfer our IRAs from one institution to another.  We are not allowed to handle the funds.  The article seemed to be indicating other types of money that was not already in an IRA.  Must have misunderstood it.  Thanks.
1
paoli2paoli21,146 posts since
Aug 10, 2011
Rep Points: 5,113
8. Wednesday, February 19, 2014 - 12:34 AM
This is actually a huge issue. The IRS in Publication 590 has always treated separate IRA accounts as distinct and have applied the one rollover per year to each IRA account. So if you did a 60-day rollover from IRA account 1 to IRA account 2 if didn't stop you from doing a 60-day rollover from IRA account 3 to IRA account 4 in the same year. Now they are saying (I think) only one 60-day rollover for all the accounts in a 12-month period.

I happen to have a number of IRA accounts at different banks so it is an issue I will have to pay attention to. What a pain in the as*.
3
loulou521 posts since
Aug 3, 2010
Rep Points: 3,239
9. Wednesday, February 19, 2014 - 7:08 AM
Lou, please remember that a rollover is when YOU pick up the check and take it someplace, a transfer is when you request the receiving institution to request the check be sent to them. There evidently is no limit on the transfers just on the rollovers. It does take longer when you do a transfer but those are still possible. I did several transfers last year and 3 in the last week of Dec. I have in the past done rollovers and overnighted checks to the new institutions. The article states that Publication 590 contradicts the tax courts so we shall see what happens. IRS has in the past told me I could do several rollovers as long as it was in a different account. That sometimes can be an issues because in credit unions all IRA CD's go through an IRA savings account before the CD is made. The issue is was that CD a different account or is it like the credit union states all IRA are in the same member account and therefore all are in the same account? I believe that when rollovers are done they are not always completed within the 60 days and there is a 50% penalty. Too many people are requesting a reversal in the tax courts with excuses of why the rollover was not completed. 
1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
10. Wednesday, February 19, 2014 - 9:32 AM
I am talking about having separate IRA accounts in multiple credit unions or banks. My example was considered permissible as illustrated in Pub 590; however, this court case says otherwise. Transfers are sometimes too slow and a 60-day rollover is preferable if the advertised CD rate will continue for only a short period. Doing more than one 60-day rollover in a 12-month period was not a problem as long as they originated from separate IRA accounts. Now one has to wonder.

According to the example in my previous post, it was also okay to initiate a rollover from IRA account # 3 to IRA account 2. Now, not so sure.

BTW, your penalty is wrong. If you do a 60-day rollover incorrectly or exceed the 60 days, the amount subject to the rollover is considered taxable income and if your not 591/2 years old, a 10% penalty is applied.
2
loulou521 posts since
Aug 3, 2010
Rep Points: 3,239
11. Wednesday, February 19, 2014 - 2:50 PM
Most credit unions will honor that rate if you have filled out the transfer form and gotten it back to them before the deal was over. Ask them.  Most places will accept a fax. You can fax the form to them and they can fax the form to the credit union that has your CD. I have done that also. Pen Fed has given us great service doing this. 
1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
12. Wednesday, February 19, 2014 - 2:59 PM
I might have had several rollovers in 2012. I will have to check it out. I know I also did some conversions. I do know that the conversion was from one CD in 2012 but I think it was from more than one CD in 2010 or  2011 and I know that one was from a rollover and part of that rollover I over nighted to another state and part of it I converted.  
IRS has told me in the past that this was permissible. I am with you. But I can do a transfer by fax with Pen Fed which is actually faster than the mail. Navy Credit union has accepted a fax in the past also. What makes it worse is that it is not calendar year as IRS has stated to me but 365 days which can be more of a problem to keep track of. We need some kind of spreadsheet that shows everything and also includes  how much is in each institution, interest rate, due date, amount earned each year, when it was rolled over, when it was converted etc and this spreadsheet should be able to have the columns sorted. KEN YOU COULD MAKE A MILLION IF YOU COULD DESIGN AND SELL THIS!!!
1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
13. Wednesday, February 19, 2014 - 4:06 PM
I don't mind Ken making a million off of anything he can come up with but what makes you think many people don't already make their own spreadsheets.  I have been doing them for years and not just for IRAs.  They are a tremendous help in keeping track quickly of everything going on in my accounts.  I even keep them on every interest check we get whether via mail or to bank.  I went into Staples recently and found a tremendous bargain.  They had marked down these giant spreadsheets I had always wanted but never found them for a decent price.  They were marked down to fifty cents a pad!  They said it was because they were not a good seller.  People prefered the smaller pads.  I grabbed them all because now I can put so much on just one sheet!  I like to put my own info in the sorted columns so if Ken is going to make a fortune with these, he has to figure out what would be the most useful way to sort the columns so the general public would want them. 
1
paoli2paoli21,146 posts since
Aug 10, 2011
Rep Points: 5,113
14. Wednesday, February 19, 2014 - 4:32 PM
Ally, most institutions will not hold the rate until they receive the money. Both Penfed and Navy will NOT guarantee the IRA rate until they receive the money. Some banks/credit unions will send faxes and there are many that won't accept a fax. It all depends on the particular bank. Fidelity will not send faxes. I have always found it to be much easier to do a rollover than ****ing around with transfers. The transfers are a lot more work. Over the years I can't tell you how many posters have come here complaining that their transfer is taking weeks and sometimes longer.
3
loulou521 posts since
Aug 3, 2010
Rep Points: 3,239
15. Wednesday, February 19, 2014 - 5:05 PM
I have paper ledger sheets. 40 rows down and 12 (8 space) columns across and printed on both sides. But they do not keep track of how much is in every bank the way I have it done. I can track every IRA from 1978 until 2012 when my husband passed. Did not do good that year. I bought 20 of these at the $1 store many years ago. I used these when I was township treasurer also. There were $30 apiece at Office Depot and Office Max and at our local office supply store. 

I would like a computer program that would sort each row. Similar to what programs used to do before Windows when we had DOS. Somewhat like the TEXAS rating thing that Ken posts. You can sort those columns and actually you can sort Ken's columns also. It is the design thing that is an issue. Can't figure out how to do it. The Macros I think I might be able to do if I still remember, at least I could do them with DOS not sure with the Apple computer. 
2
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
17. Friday, February 21, 2014 - 9:38 AM
Note this is about IRA-to-IRA indirect rollovers, when you take money out of an IRA into your personal account before you re-deposit the money to another IRA within 60 days. It doesn’t apply to merely forwarding a check made out to the new custodian FBO your name. It doesn’t affect rollovers between two qualified plans, between a qualified plan and an IRA, or IRA-to-IRA direct rollovers (technically called transfers)
1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
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