Credit Union IRA Transfers

Anon456 | Mar 24, 2021 | 249 posts since 2011

OK .... just looking for feedback from this group.

I have several IRA's at several Credit Union. The smaller ones do not have their forms, but use CONENSUS for their forms.

Most of the forms I am OK with .... but they have one, #6107 and #107 that wants transfers reported on the form as contributions, AND also with contribution dates and amounts listed as contributions. They do have a block for the transaction type as transfer, but insist that all the other contribution field contain the transfer transaction information be completed as contributions.

I have always been instructed that TRANSFERS are NOT contributions, and the IRS guidelines seems to back that up. But CONSENSUS continues to track them as CONTRIBUTIONS. For tax purposes, I have a problem with that language.

Shy of going to war over this issue, or just just agreeing to that language and moving on, I am at a loss. The credit unions still want the forms used (un-altered), but I am still reluctant to sign based on them still labeling the transaction a CONTRIBUTION.

Anybody else hit this issue? I know I can just do it, and then cross my fingers that it gets coded correctly as a transfer, but still hate to have these terms commingled. I have NOT seen these terms commingled any where else, and certainly never in IRS publications or Code.

Assuming I have a point, how would you recommend I proceed. I have both the credit unions and Ascensus standing firm that these terms may be used together and the contribution fields still completed with TRANSFER data.

4

alan1 | Mar 24, 2021 | 880 posts since 2015

It might be helpful if you posted a link to the form and any instructions. Or quote them. Or even let us know who your are dealing with. In the space of a few paragraphs, you write about "CONENSUS", "CONSENSUS", and "Ascensus".

4

Choice | Mar 24, 2021 | 937 posts since 2020

I agree with Alan’s input. Just to be clear you are concerned about a transfer of an Ira from one trustee to another trustee...accordingly, I’m reading that transferee trustee wants to label a transfer as a contribution...ask them whether a 1099 will be issued...I never receive a 1099 for a direct transfer to another IRA...I surmise you may be asking them to receive/take an Ira check physically from you but payable to Ira trustee...I had to educate NFCU on the process...aside from educating an Ira institution ...do your one time 60 day distribution or find another Ira trustee
PS. I always modify the forms or don’t sign them!

4

Anon456 | Mar 25, 2021 | 249 posts since 2011

thank you, alan1 - you are correct. It should only have referred to Ascensus as the form designer.

I did not provide an attachment because I don't think this post allow for attachments, but here is a link that should pull up a sample ( credit union is NOT involved but is only shown to provide the sample)
https://www.redwoodcu.org/docs/default-source/investment-retirement-forms/roth-contrib.pdf?sfvrsn=db...

Part 3 is particularly problem sum to me when the amount is populated and the date, which makes it potentially appear to actually be a contribution

Assuming the credit union does get it coded correctly, then no 5498 or other IRS reporting should happen. My concern is that something could get coded incorrectly and I might be held responsible with the IRS because I am signing a form that wants to earmark these funds as a CONTRIBUTION

3

RickZ | Mar 24, 2021 | 218 posts since 2010

I seem to recall having run into this issue before and it worked out fine. I think the problem is that whoever drafted the form carelessly used the word contribution to cover all kinds of additions, whether actual reportable contributions or merely additions made by transfer. However, the fact that there’s a box to check indicating that it’s a transfer should give you considerable comfort.

The operative question is whether the receiving institution will issue a Form 5498 to the IRS and they would have to tell you that they won’t since it’s a transfer and not a reportable “contribution”. If they tell you in writing by email that no 5498 will be issued I think you can rely on that. If you get that in writing and, worst case they do mess-up, you will have documentation to have them issue a corrected Form 5498 showing $0.

5

Ally6770 | Mar 31, 2021 | 4,309 posts since 2010

Consensus is not the easiest people to work with. I had an issue with them several years ago and called NCUA. I am not sure if it is the same one but this was a company that did things for credit unions and they were based in Wisconsin. NCUA straightened it out me. If NCUA does not like the form they will make them change it to make it more understandable.

2

Anon456 | Apr 2, 2021 | 249 posts since 2011

My apology about Consensus. My issue is with the FORMS company Ascensus. I think I was handling two or three things at once and did not catch my OOOOPS. Thanks again, ALAN1 for pointing it out to me. Must be having SENIOR moments going on.

1

Choice | Mar 31, 2021 | 937 posts since 2020

And as a friendly reminder some CUs allow add on or transfers to IRAs (up to any NTE for the account) until tax due date...which has now been extended by feds into May

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