Author Topic: Withdraw some funds from Lending Club IRA account  (Read 3683 times)

Joe6Luck

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Withdraw some funds from Lending Club IRA account
« on: July 22, 2017, 10:12:05 AM »
I am planning to withdraw some fund from one of my lending club IRA accounts, move them to Self Directed IRA, and then to my IRA account in Vanguard. However, I saw the following note on Lending Club website - its "withdraw fund" page:

"Please note: you may incur an early withdrawal tax and/or penalty on withdrawals. Please consult your tax adviser or visit the IRS's FAQ section on IRAs."

I don't know why they show a note like this, because I only transfer funds between IRA accounts (from lending club to Self Directed IRA). Also, I am curious about how to further transfer funds from SelfDirected IRA to vanguard - I didn't find any info when searching its website, and wonder if I can simply request Vanguard to start the transfer process.

Did anyone ever successfully transferr funds from lending club IRA to external IRA?

OleBill

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Re: Withdraw some funds from Lending Club IRA account
« Reply #1 on: July 22, 2017, 10:48:41 AM »
I also use Self Directed IRA services to hold my Lending Club account. I've transferred money from Lending Club to SDIRA a couple of times and then withdrawn the money. I have not transferred to another IRA.

If you go to the sdiraservices.com there is a tab at the top called "Forms". It is a list of the available forms. There should be one there for transferring your IRA money to another IRA. I've also called SDIRA Services and they are quite helpful. Good Luck.

lender90530

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Re: Withdraw some funds from Lending Club IRA account
« Reply #2 on: July 22, 2017, 12:33:33 PM »
I transferred cash from an sdira services ira to a bank ira last year; I was charged $100. This year I transferred to a Vanguard ira; I was charged $50. You want to initiate the transfer from Vanguard's web site which is the destination of your funds.

dbsb3233

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Re: Withdraw some funds from Lending Club IRA account
« Reply #3 on: July 22, 2017, 01:23:11 PM »
My guess is that "Please note: you may incur an early withdrawal tax and/or penalty on withdrawals. Please consult your tax adviser or visit the IRS's FAQ section on IRAs." warning is just the standard boilerplate that we see for ANY IRA withdrawal.  In other words, reminding us that if we're under age 59 1/2, we'll incur the IRA tax penalty if we don't move the money to another qualified IRA (either direct transfer or withdrawal-then-deposit within the allotted 60 days).

Looks like the standard CYA message for the (few) people that think they can just withdrawal and spend money from their IRA at any age with no penalty. 

Rob L

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Re: Withdraw some funds from Lending Club IRA account
« Reply #4 on: July 22, 2017, 02:18:52 PM »
I use the LC Transfer funds feature to move cash to SDIRA periodically. There is no charge for that and I feel the cash is safer sitting in SDIRA than in LC. When enough cash has accumulated in SDIRA I log into Fidelity, fill out a Fidelity TOA form, sign and mail it back to Fidelity. Fidelity signs the form as custodian of my IRA there and mails it to SDIRA instructing them to transfer the funds to my Fidelity IRA. Direct custodial trustee to trustee transfer; no IRS problems. I've only done this once (last October). SDIRA charged me $100 to transfer the funds. It's really a slow process.

Anyone know the minimum value invested in notes for LC to pay the annual SIDRA fee?
Yeah, I could look it up but if someone knows it would save me the bother. TIA.

lender90530

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Re: Withdraw some funds from Lending Club IRA account
« Reply #5 on: July 22, 2017, 03:29:33 PM »
LC pays the fee if over $10000 is invested in notes it says.

Fred93

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Re: Withdraw some funds from Lending Club IRA account
« Reply #6 on: July 22, 2017, 03:46:43 PM »
However, I saw the following note on Lending Club website - its "withdraw fund" page:

"Please note: you may incur an early withdrawal tax and/or penalty on withdrawals. Please consult your tax adviser or visit the IRS's FAQ section on IRAs."

I don't know why they show a note like this, because I only transfer funds between IRA accounts

Completely standard ordinary boilerplate ... and its completely true.  Some withdrawals from IRA accounts DO incur a tax hit.  You know... the ones where you take the money out and don't put it into another IRA account quickly.

This statement has nothing to do with fees.  Most of the answers above are about fees, not taxes.

Debt Free

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Re: Withdraw some funds from Lending Club IRA account
« Reply #7 on: July 22, 2017, 04:24:19 PM »
$10,000 avoids the annual fee.

Ironically, SDIRA's form does not include the 60-day rollover option.  In theory, you should be able to take a distribution (one per year) via ACH (no charge for ACH), deposit those funds into another IRA within 60 days, and you will not be taxed.

Their form does not list roll-over as a distribution type.  I will be attempting this method later next year, and will challenge their form and the fee.

Rob L

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Re: Withdraw some funds from Lending Club IRA account
« Reply #8 on: July 22, 2017, 05:34:16 PM »
Well, I decided to bother and looked up the SDIRA schedule of fees (it was dated 2014):



Except for "Fees subject to change without notice", why was I charged $100 and not $5??
"Distribution/Withdrawal by Check". They mailed the check to Fidelity.
Guess I'll be giving them a call.
« Last Edit: July 22, 2017, 05:38:05 PM by Rob L »

Debt Free

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Re: Withdraw some funds from Lending Club IRA account
« Reply #9 on: July 22, 2017, 06:57:38 PM »
On SDIRA's website (dated 2016)...     Partial termination.... $100
I believe by omission of the rollover option, sheep are led to the direct transfer of partial assets and the $100 fee.  The unknowing will just fill out the form and not question the custodian who is not necessarily looking out for your best interest.

You are entitled to perform your own transfer of distribution (rollover) once a year.  It is not SDIRA's business how or what you do with your distribution in as far as "doing the work".  You should be able to request a distribution, decline the 10% withholding, and receive the cash via ACH (or at least the $5.00 check).  Then within 60 days, deposit the funds into whichever appropriate IRA you desire.  Notice they only have forms for IRA transfer and Direct transfer?

This is solely based on my own research of public, published IRS guidelines found on the internet.  I am not an attorney.
« Last Edit: July 22, 2017, 07:09:24 PM by Debt Free »

dbsb3233

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Re: Withdraw some funds from Lending Club IRA account
« Reply #10 on: July 22, 2017, 07:57:13 PM »
This thread got me to checking on the fees and options for when I'm ready to make withdrawals after age 59 1/2.  It does appear I can request free transfers from the LC IRA acct to the SDIRA holding account at any time (simple TRANSFER request while logged into LC).  I'd have to specify whatever amount I wanted (whatever cash that I choose not to reinvest).  It's a manual process I'd have to do every month rather than schedule automatically.

Then it appears I can submit a form to SDIRA to set up monthly ACH withdrawals to my bank account from SDIRA, specifying "All available cash".  Also free, from the looks of it (yay).

That's good, if I read it all right.  I was concerned that there might be some large fees involved, which would be bad because I'd plan to make frequent withdrawals as the note proceeds trickle in.  I wouldn't want to leave a bunch of cash sitting uninvested for a year or something just to avoid multiple withdrawal fees. 

avid investor

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Re: Withdraw some funds from Lending Club IRA account
« Reply #11 on: August 10, 2017, 08:08:14 AM »
I have done this multiple times, and the process is infuriating.  When sending IRA funds back to my Schwab IRA, I complete Schwab's form, and upload it to Schwab, as SDIRA has told me that they can't push the funds, Schwab has to pull them.  Fine.  Then I spend WEEKS waiting for the transfer to complete.  Even though I hound both sides of the transfer, they just point fingers at each other saying it is "their" fault for the delay.

Then, for the "privilege" of such poor service, I get a $50 fee from SDIRA for processing the disbursement.  Nice.

Rob L

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Re: Withdraw some funds from Lending Club IRA account
« Reply #12 on: August 10, 2017, 10:57:44 AM »
I have done this multiple times, and the process is infuriating.  When sending IRA funds back to my Schwab IRA, I complete Schwab's form, and upload it to Schwab, as SDIRA has told me that they can't push the funds, Schwab has to pull them.  Fine.  Then I spend WEEKS waiting for the transfer to complete.  Even though I hound both sides of the transfer, they just point fingers at each other saying it is "their" fault for the delay.

Then, for the "privilege" of such poor service, I get a $50 fee from SDIRA for processing the disbursement.  Nice.

I've had the same bad experience moving IRA funds to/from multiple different companies. Guess it must be a low priority activity and there's lots of manual processing involved. Lots of frustration and it does often take weeks. The organization benefiting from the transaction (receiving the funds transfer) is at the mercy of the organization sending the funds. Not much incentive for speed and convenience on the sending end.

avid investor

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Re: Withdraw some funds from Lending Club IRA account
« Reply #13 on: August 10, 2017, 11:05:02 AM »
Other than customer satisfaction, future business, bad reviews/recommendations, etc.?