Lend Academy Network Forum

Lending Club Discussion => Investors - LC => Topic started by: dr.everett on May 31, 2018, 06:32:04 PM

Title: IRA Notes sold- what next?
Post by: dr.everett on May 31, 2018, 06:32:04 PM
Hoping there are others still around that have closed out their IRA accounts. Here's my question:

My notes that can sell are now sold- there's three notes that are BK that should go away very soon. I still see recoveries coming in- in the last few days it's been $25-100.

How long did you, or did you, leave the account open to catch these remaining recoveries? I'd like to transfer out from Strata the last of my IRA funds, but given the last batch of recoveries, I'm inclined to wait a bit.

To give a frame of reference, at my high point I had $150K in notes, and about $40K in BK/CO.

Is it worth while to wait a bit for more recoveries before I transfer out and close up shop, or should I just go ahead and pull the trigger?

I know from others that once I transfer out the last step is to contact LC and have them close the account, at which point any funds that come in are forfeited. Looking to see based on others how much that might be based on their experiences, so I can decide what's right for me. If waiting another month gets me a significant chunk of change back I'm willing to wait.
Title: Re: IRA Notes sold- what next?
Post by: AnilG on May 31, 2018, 07:12:55 PM
Just leave the account open until you are due to be assessed with fee for not maintaining minimum balance. Then just close the account.
Title: Re: IRA Notes sold- what next?
Post by: dr.everett on July 21, 2018, 07:47:16 PM
Just leave the account open until you are due to be assessed with fee for not maintaining minimum balance. Then just close the account.

So for those interested, LC was nice enough to send me an email last week warning me that my IRA account was below the minimum, and when the maintenance fee would be assessed. In my case I have until October to tell them to close it down. Will be interesting to see how many recoveries I get by then, and if it will be enough to cover one last transfer.
Title: Re: IRA Notes sold- what next?
Post by: lascott on July 23, 2018, 09:03:06 PM
Just leave the account open until you are due to be assessed with fee for not maintaining minimum balance. Then just close the account.

So for those interested, LC was nice enough to send me an email last week warning me that my IRA account was below the minimum, and when the maintenance fee would be assessed. In my case I have until October to tell them to close it down. Will be interesting to see how many recoveries I get by then, and if it will be enough to cover one last transfer.
That is interesting. I'm in a similar situation.
In the last 30 days I obtained
$49.56 in recoveries and 'spent'
$10.02 in recovery fees.

Title: Re: IRA Notes sold- what next?
Post by: lender90530 on July 25, 2018, 02:34:08 PM
I got an email from LC that my maintenance fee of $100 will be coming due in August and if I don't pay, I will accumulate a maximum of $30 in late fees. If it is not paid by Dec 31, my Strata Ira will be closed and the Ira account automatically converted to a taxable LC account. It will be treated as an IRA distribution and will be taxable. Since I am over 59.5 years old, and I only have a few thousand in the IRA, this seems like a great way to close the Ira and wait for the outstanding notes to be paid off without selling them at fire sale prices.
Title: Re: IRA Notes sold- what next?
Post by: Rob L on July 25, 2018, 07:06:48 PM
I got an email from LC that my maintenance fee of $100 will be coming due in August and if I don't pay, I will accumulate a maximum of $30 in late fees. If it is not paid by Dec 31, my Strata Ira will be closed and the Ira account automatically converted to a taxable LC account. It will be treated as an IRA distribution and will be taxable. Since I am over 59.5 years old, and I only have a few thousand in the IRA, this seems like a great way to close the Ira and wait for the outstanding notes to be paid off without selling them at fire sale prices.

Interesting. How can you not pay the $100? Won't they just take the money from your account?
Title: Re: IRA Notes sold- what next?
Post by: lender90530 on July 25, 2018, 07:32:43 PM
By default if you have $100 in your LC account they will deduct it. The email says to contact them if you want to pay by credit card or check instead.
Title: Re: IRA Notes sold- what next?
Post by: BruiserB on July 25, 2018, 09:09:55 PM
I got an email from LC that my maintenance fee of $100 will be coming due in August and if I don't pay, I will accumulate a maximum of $30 in late fees. If it is not paid by Dec 31, my Strata Ira will be closed and the Ira account automatically converted to a taxable LC account. It will be treated as an IRA distribution and will be taxable. Since I am over 59.5 years old, and I only have a few thousand in the IRA, this seems like a great way to close the Ira and wait for the outstanding notes to be paid off without selling them at fire sale prices.

Rather than wait till August, couldn’t you just ask them to convert your account to a taxable account now?  Then you’d avoid even the $30 fee.


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Title: Re: IRA Notes sold- what next?
Post by: dr.everett on July 26, 2018, 02:57:16 AM
I got an email from LC that my maintenance fee of $100 will be coming due in August and if I don't pay, I will accumulate a maximum of $30 in late fees. If it is not paid by Dec 31, my Strata Ira will be closed and the Ira account automatically converted to a taxable LC account. It will be treated as an IRA distribution and will be taxable. Since I am over 59.5 years old, and I only have a few thousand in the IRA, this seems like a great way to close the Ira and wait for the outstanding notes to be paid off without selling them at fire sale prices.

Rather than wait till August, couldn’t you just ask them to convert your account to a taxable account now?  Then you’d avoid even the $30 fee.


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That's an interesting thought- the 10% early withdrawal penalty would be less than the fees. Didn't think of it that way. I'll try it when I talk to them and see what they say.
Title: Re: IRA Notes sold- what next?
Post by: BruiserB on July 26, 2018, 06:52:47 AM

That's an interesting thought- the 10% early withdrawal penalty would be less than the fees. Didn't think of it that way. I'll try it when I talk to them and see what they say.

If it is possible to do this then it would be the way to preserve your right to future recoveries.  Liquidate all notes with value and withdraw funds and transfer to a different IRA. Then convert your zero or very low value account to taxable. Pay 10% penalty on 0 or other low number. Then receive recoveries over time.


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Title: Re: IRA Notes sold- what next?
Post by: pplinvestor on August 06, 2018, 01:01:00 AM
@dr.everett and @lascott,
May I ask when was last Charged off note?  Any way to find out recovery from which charged off note?  Wonder whether you're getting recovery notes from notes charged off many months ago.
Thanks.
Title: Re: IRA Notes sold- what next?
Post by: lascott on September 03, 2018, 12:56:49 AM
@dr.everett and @lascott,
May I ask when was last Charged off note?  Any way to find out recovery from which charged off note?  Wonder whether you're getting recovery notes from notes charged off many months ago.
Thanks.
Sorry for the delay. Maybe I'm misunderstanding your question. Does this graphic help?
(https://i.imgur.com/HCcuwpu.jpg)
Title: Re: IRA Notes sold- what next?
Post by: dr.everett on September 03, 2018, 01:35:10 AM
@dr.everett and @lascott,
May I ask when was last Charged off note?  Any way to find out recovery from which charged off note?  Wonder whether you're getting recovery notes from notes charged off many months ago.
Thanks.

I seem to be getting in the area of $75-100 a month in recoveries- for August it was about $90. My account has been closed now for the better part of a year- meaning only selling- no new buying. At the height of my account, it had $165K invested in about 10K notes. The last of them sold in June '18.

I don't plan to keep the IRA open past October as that is when my "fee" is due. After that it'll be interesting to see what happens. Sounds like if money is trickling in it may be a tax headache tracking and reporting the misc. deposits, especially depending on how they are reported. That'll be a question I'll ask of LC and see if they are willing to answer it, or if they hide behind the "..we are not tax advisors." excuse.
Title: Re: IRA Notes sold- what next?
Post by: BruiserB on September 19, 2018, 12:32:58 PM
I am not a tax advisor but:   8)

It seems like if you just had LC convert your IRA account with 0 balance (but notes that may lead to future recoveries) to a taxable account then:

1) There would be no tax implication of the conversion as you effectively withdrew 0 from your IRA.

2) Future recoveries would be treated just like recoveries are now in taxable accounts.  They will be reported as a "sale" for the value of the recovery with a basis of 0.

The net effect would be you would pay tax on 100% of the recovered amount, but that's better than just closing the account and giving all of the recovered money to Lending Club.
Title: Re: IRA Notes sold- what next?
Post by: dr.everett on September 19, 2018, 09:10:48 PM
Well we'll see what happens- I turned in the paperwork last week- the STRATA side of things is closed already- I checked. I had transferred out the last remaining money prior to the close. On their forms I listed my taxable account as the "receiver" of any recoveries.

Now we'll see what kind of tax forms I get at the end of the year from all this. ;)