Are banks retarded?
I have a client who physically went to a bank to ask that her IRA CD not renew and she wanted a check to deposit into her individual 401k. They MAIL me a cashier’s check for less than $10K which I can’t deposit because of AML. I call them and they tell me that they can only issue cashier’s checks because it was a CD, not a checking account??? What!?! Aren’t they a bank? Can’t they issue a bank check? Also, aren’t they the custodian and should they really be MAILING cashier’s checks? Also, they keep telling me they need a form and I tell them it is not a trutee-to-trustee, it is a rollover. If anything, they should have the client sign a distribution form. I highly doubt that they are even coding it for 1099R.
Am I missing something? Are banks exempt from AML? Are banks exempt from proper custodian and tax reporting on retirement accounts? Has anyone had a problem like this?
Permalink Submitted by Alan Spross on Sat, 2010-03-27 00:01
They are not exempt from tax reporting or AML requirements. But they do seem to be having problems determining what their business model should be following the housing meltdown and after suffering tremendous losses of capital. The only reason left for using a bank for an IRA account is that they still generally offer higher CD rates if that is the desired investment.