IRA rollover
Client opened an IRA for 2010 contribution with a local bank in February this year. Now wishes to move the money to another IRA. Can he do a 60 day rollover with this new of an IRA if the bank ignores a transfer request?
Client opened an IRA for 2010 contribution with a local bank in February this year. Now wishes to move the money to another IRA. Can he do a 60 day rollover with this new of an IRA if the bank ignores a transfer request?
Permalink Submitted by Alan Spross on Wed, 2011-08-10 22:38
Yes, but then client has used up the one indirect rollover allowed per 12 month period. This applies to the IRA that received the rollover as well, so client could not move funds from the latest IRA to yet another IRA indirectly for 12 more months.
Unfortuneately, IRA custodians are not REQUIRED to participate in direct transfers like employer plans are. One possible way around this is to request a check made out to the new custodian, eg “Fidelity Investments FBO rwillliams IRA” and then hand deliver it to the new custodian to open the IRA. Technically, that is also a direct transfer. But it does not mean that the old custodian will not issue a 1099R, so if client wants to do it this way, they also need to get the agreement from the bank that they will consider the check a transfer and therefore a non reportable distribution.
That said, with banks these days, they could still be very prone to messing that up and still issuing a 1099R. But it still is worth the effort, ESPECIALLY if the funds are going to another bank. Mutual fund companies and brokers do not have these problems and do transfers with no problem.