Bank wants to send IRA Funds to personal address
We are directing funds at our bank from an IRA Trust held through our selected Trustee of an IRA Trust back to the Administrator, a IRA company. (We’re closing the trust and bank account) The Bank only wants to send the funds made out to the Administrator , to our PO box instead of to Administrator address. They won’t wire the funds. Would that be this Constructive Receipt?
Permalink Submitted by Ben Meyer on Mon, 2018-05-21 15:54
It is not clear from the posting that the funds are currently in an IRA and being transferred to another IRA account. If so, it is fine to send the check to a personal PO box, so long as the sole payee is the custodian of the destination IRA. It would not be constructive receipt since only the new IRA custodian can negotiate the check. This would make the transaction an IRA “transfer”. IRS rules specifically permit this to be done for a transfer from one IRA to another IRA. Anyone can be the mailman or messenger so long as the check is payable solely to the custodian of the destination IRA account. The disbursing bank should also confirm that no 1099 reporting will occur for this transaction as a transfer.
Permalink Submitted by Howard Cook on Tue, 2018-05-22 02:09
The funds are being held in a Self Directed Checkbook Controlled IRA with an Independent Trustee who we appointed. Although this trustee must be the one taking the actions, the power of direction lies with each IRA Trust Beneficiary who directs the Trustee what to do. We are closing the IRA Trust and its Bank Account and simply want the funds sent back to the iRA Administrator, Advanta, which is where they originally came from, under our direction. The Bank will not wire the funds to the Advanta due to a “pollcy change’ since we opened the account at Regions Bank. No one there seems to know what they’re doing in these matters. We had the bank statements directed to our PO Box when we opened the account for ease of bookkeeping. . They want to send the check to our PO Box made out to Advanta IRA FBO of etc etc. Does that create a problem for us? There is no IRA to IRA transfer other than sending the funds back to Advanta. Later, we will direct Advanta where to invest the funds.
Permalink Submitted by Alan - IRA critic on Tue, 2018-05-22 03:34
No, that is not a problem. It sounds like you are eliminating the checkbook IRA and perhaps the trust and will let Advanata, your self directed IRA custodian take directions directly from you. That may well increase your costs and add some time to the transactions you need, but the process as you describe it is not a reportable distribution. As Been indicated, the funds are simply being moved back to Advanta, and then you could start over or even have your IRA transferred back to a regular IRA custodian and just invest in publicly traded securities.
Permalink Submitted by Ben Meyer on Tue, 2018-05-22 04:45
It would be a good idea to check that the current Bank (Regions) will not send form 1099-R next January. The way you described it makes it a transfer, for which no 1099-R is required. It is fine for you to receive the check made out as you describe and then send it to Advanta.