Erroneous IRA ACATS transfer between brokers

Submitted by Perry Piazza on Thu, 2017-06-01 01:00

I recently opened an IRA and a non-IRA account for a client and had them initiate an ACATS (there were securities and cash – Traditional IRA) between their broker and mine. The wrong account was specified and the ACAT was processed anyway dumping whole account into a non-IRA vehicle. Apparently there is a way to reverse this with something called a ACATS reclaim but I’m having trouble convincing broker 1 to do this without being indemnified by broker 2. I’m hoping this happens and the transfer gets reversed. If not, however, can I simply have the client transfer the assets back to broker one within 60 days into the still open IRA account?



Submitted by Alan - IRA critic on Thu, 2017-06-01 02:12

I would work through the receiving broker as they have a current interest in resolving this in client’s favor. Back office people need to get involved in this situation. Client may need to indemify broker 2 before broker indemnifies broker 1. I guess you want the transfer to be reversed and then redone correctly? 

Submitted by Perry Piazza on Thu, 2017-06-01 02:18

I agree and thanks for your opinion. I made some progress late today in getting the receiving broker’s back office to agree to call the sending broker’s BO tomorrow morning. Hopefully that will do it but I want to have a backup plan in place for the client.

Submitted by Perry Piazza on Thu, 2017-06-01 17:48

I did some research on ACATS transfers and as I expected the transferring firm should match account types. Does anyone else have any suggestions in case I can’t get this resolved. Would a rollover be allowed from the individual account into a new Trad IRA?

Submitted by Alan - IRA critic on Thu, 2017-06-01 18:36

As long as you have a rollover allowed under the one 60 day rollover within a 12 month period, you could do a 60 day rollover. However, when property is distributed from an IRA the rollover must be of the same property distributed, so whatever number of x, y, and z shares were ACATed to the taxable account will have to be contributed to an IRA within 60 days.

Submitted by Perry Piazza on Thu, 2017-06-01 19:19

Thanks for your response Alan – I’ve been a fan of your knowledge on this and another forum over the years. That’s basically what I thought. The client has not done any rollovers within the past 12 months. The shares and cash have not been touched since the erroneous transfer happended. I’ll see what comes of the broker to broker back office discussions to reverse the ACAT, but if nothing comes of that I’ll plan on recommending that the client do a rollover into a new IRA.

Submitted by ROCKNEY HOWARD on Tue, 2017-06-06 11:47

The writer lost his job Februay 2017 and in an effort to avoid collecting Unemployment executed a disbursement of of IRA funds of approximately $34,000.  This money was then credited to into an ira account within the 60 day guideline April 2017.  Concurrently and still in need of funds to support personal expenses the tax payer then executed a second disbursement $230,000 with intentions of rolling over the unused portion back into a qualified plan within 60 days.  At this time he had no knowledge of the tax law change to IRA Disburse Rule inacted in 2014.  30 days into the second rollover the writer realized the mistake he had made after reviewing the IRA rollover code.  In all honesty, the tax payer suffers from PTSD realizes the code should prior to execution of these two transactions however, having lost two very young children in the past three years, I many times find myself functioning in an undescribable state of numbness.  I say this not in search of empathy, rather it is simply the state i find myself in. Taxpayer is willing to do whatever is necessary to correct this error including imediately crediting second disbursement less the amount needed to support personal living expenses less than 30 days into most recent disbursement. Would this action or anyother recommended action correct my mistake.

Submitted by Alan - IRA critic on Tue, 2017-06-06 16:11

What was the date the second disbursement was received?

Submitted by Chuck 2009x on Sun, 2017-06-11 15:11

Do not give up on getting the transaction reversed, no matter how long it takes.  If all else fails, send certified letters to the CEO or COO of the brokers (or transfer agents) involved, with the situation (smilar to what you’ve written here), but without going into the tick tock about how it hasn’t been resolved (just say it’s taken X amount of time) and you will get action.Doing more transactions to “fix” the first one is a poor solution.  I sympathize with your situation, ACATS can be a rabbit hole when things go sideways and transfer agents can seem impenetrable.

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