Several posts on recent threads got me to thinking. In the era of ACH transfers and such, is our system of IRA Custodian-to-Custodian transfers (IRA CDs and otherwise) hopelessly outdated?
Background: As many posters have noted, the process of transferring an IRA CD is cumbersome and time-consuming. Some folks have noted from four to six weeks to accomplish a transfer.
Analysis: The process is convoluted. To effect a transfer, one must first contact the receiving institution, obtain a transfer request, fill it out, then undergo various eligibility checks (Patriot Act, credit union membership, etc.).
Comment: Let's start with the Patriot Act. The concept that everybody must "pass muster" every time an account moves is idiotic. Moving right along to paperwork. Why a C-to-C IRA CD transfer must be "in writing" and the funds provided by snail-mail is truly beyond me. Credit union membership is often available with the click of a mouse. Wire transfers are ubiquitous.
Impact: The current system effectively creates several baffles preventing the efficient flow of deposit accounts in retail IRA CDs. For example, contrast someone with a brokerage account in a Schwab SEP-IRA who wants to buy or sell a security. You push a button, it's done. If you want to buy a new brokered IRA CD, no problem. No Patriot Act, no lag time; it's done with the click of a mouse. Why should retail IRA CDs be disfavored?
Solution: I wish I had one. Any suggestions? This anomaly would not appear to be a 'Hot-button" issue in the 2018 midterms.