I was charged a $75 fee to transfer an expired IRA CD to another bank! Because of the new banking laws, it is difficult to just take a check from one bank for an expired CD and take it to a new bank to open a new IRA CD. Only once per year are you allowed to take a check to a new bank. After the first rollover, You must now request the new bank request the old bank mail a check directly to them,. Are we now at the mercy of the banks to pay transfer fees because of the new banking laws, or is there a way around this?
Answers
You are able to do a bank to bank transfer with your CD... Contact both banks and ok it with a walk over... That means you take a check over to the other bank and just open a I R A with them accepting it... Their should be no charge... You have 3 mo to get it done however do it quick.... NO taxes will be taken out of it...
What is the purpose of this law, and does anyone know whtat the penalty is for exceeding the 1/year limit?
The following is from a very good article explaining the new once-per-year 60 day Rollover rules. https://www.kitces.com/blog/understanding-the-new-once-per-year-60-day-rollover-rules-for-iras-and-the-exclusion-for-trustee-to-trustee-transfers/
"When funds are withdrawn from an IRA to be spent, they become taxable as ordinary income (with a possible early withdrawal penalty to apply as well). However, in some cases – especially in the early days of IRAs – the account owner might take a withdrawal from the IRA, not with an intent to spend the money, but simply because the owner was in the process of transferring the account to another financial institution. Alternatively, in other cases, the funds were withdrawn as a mistake (e.g., the ‘wrong’ account was liquidated where the account owner had an IRA and another bank or investment account).
To facilitate correcting such mistakes, and allowing for transfers between institutions, Congress included IRC Section 408(d)(3), which allows for an IRA distribution to be treated as a “rollover” that is contributed to a new account. Under the relatively straightforward rules, any distribution taken from an IRA would not be treated as taxable, as long as the funds were re-contributed to (the same or) another IRA within 60 days of receipt. Technically, it didn’t matter whether the purpose of the distribution was to facilitate a transfer, because it was taken as a mistake, or simply out of a desire to use the funds as a personal short-term loan; as long as the rollover contribution was made within 60 days, the distribution would not be taxed.
However, the caveat to this rollover rule is that it created the potential for abuse. An individual with a larger IRA could potentially chain together a series of smaller rollovers, allowing for an extended period of personal loans far beyond the 60-day period. For instance, an individual with a $100,000 IRA could take a $20,000 distribution, and then 59 days later take a second $20,000 distribution to repay first, and then another 59 days later take a third $20,000 distribution to repay the second, etc., ultimately stretching out a $20,000 60-day rollover into series that spans more than 9 months before the final $20,000 replacement must be made."
What if the check was made payable to the new financial institution?
Seven days would thwart gaming the rules, because it would not be worth much at all and additionally would take far more effort than it would be worth. And seven days would be long enough if you were simply planning to move your funds to a new IRA, as in going to a better CD elsewhere. A simple solution that leaves everyone happy.
Yes as it now stands, they are forcing you into the fee system rather than letting you do it yourself.
And consider that when you move funds to a new IRA -- look at the disclosure in advice to see about any fees involved later when you want to close it and move funds from it. $75 is the highest fee for that I've heard of -- and there is no justification for that much.
NYCB started as a community bank, but now I think they only want to be a large instituional bank. I've been closing my personal and business accounts as they come due, or leaving a minimal deposit.
