Direct IRA Transfer Question
I want to do a direct transfer of an IRA CD from my credit union to another bank. I requested a check from the credit union payable to the other bank for my benefit. The credit union refused my request stating that the request must come from the receiving bank. The credit union wants to make the check out in my name. I was unable to convince the credit union that their interpretation was wrong. I made the same request of IndyMac Bank and the check was made out to the receiving bank for my benefit without a problem.
IRS Pub 590 states: A transfer of funds in your traditional IRA from one trustee directly to another, either [u]at your request [/u]or at the trustee’s request, is not a rollover.
Can the credit union refuse my request? Am I interpreting Pub 590 correctly?
Permalink Submitted by Al Fry on Thu, 2008-10-30 20:57
I have always found the best way to handle these transfers id to open the “shell” IRA at the new custodian and have them request the transfer. That way if it gets fouled up its their fault and they’ll have to staighten it out. Bank procedures can be different from bank-to-bank.
Permalink Submitted by Jose Morales on Thu, 2008-10-30 22:30
We have the same policy here and believe it is sound and in the best interest of the IRA owner and all parties involved in any potential transfer. Likewise, we will not accept any deposit put before us as a transfer unless we initiated the transfer.
If a client comes to us and insists on leaving with a check in hand then they have the option to take a reportable distribution which they can then rollover within the allowable 60 day rollover period.