Folio and IRAs

[lender_john]

I just got off the phone with Lending Club again.  This time the guy was more explanatory than the gal I spoke to previously.  He said they were aware of the problem and were working on a fix to allow trading in notes from the IRA accounts.  He said it may be complete within a matter of months but could not give an exact date!

Of course this sounds exactly like what they told me a few months ago... so it should be taken with a very large grain of salt.

Without reinvesting and selling late notes, my IRA is starting to lose money... 

You mean your returns are dropping or do you actually have negative returns?  Big difference.

Negative in the short term, decreasing overall.

[Boatguy]

I just got off the phone with Lending Club again.  This time the guy was more explanatory than the gal I spoke to previously.  He said they were aware of the problem and were working on a fix to allow trading in notes from the IRA accounts.  He said it may be complete within a matter of months but could not give an exact date!

Makes no sense to me.  I've sold notes in both my IRA and my wife's IRA as recently as 3 days ago.

[core]

Makes no sense to me.  I've sold notes in both my IRA and my wife's IRA as recently as 3 days ago.

Yes, everyone "can", if they are willing to ignore the restriction, press the buttons, and face any possible future consequences.  I think all parties involved know this.  I took twigster's post to mean that LC claimed to be working on a "fix" meaning working on a way that they can remove that language from the investor agreement and work out whatever legal issues are the cause of this whole mess.

But they have been saying this since day 1 and nothing has happened with it, so I wouldn't trust anything they say.  Reminds me of The Money Pit... How long until the house is done?  "Two weeks" is always the answer, with a chuckle.

[twigster]

I took twigster's post to mean that LC claimed to be working on a "fix" meaning working on a way that they can remove that language from the investor agreement and work out whatever legal issues are the cause of this whole mess.

Actually what happened to me is that when I applied for a folio account I was able to apply for it but then there was a screen message saying account was in the process of being approved, please wait 4 business days (the standard message, same one I got with my personal account).  It took longer than 4 business days to approve.  When I called LC (because of the long delay in approving the account) they said it would not be approved because of it being associated with an IRA (called twice, told the same thing both times).  After a while though it was finally approved automatically and seems to be working.

However, agree it would be nice for them to work out whatever issues they are working on!  The second guy did state that they were working on a permanent solution, maybe the have resolved the issue, explaining the delay in account approval and then it finally being approved? 

[Rob L]

Nothing seems to have changed. All the "thy shalt not" messages regarding IRA accounts and Folio trading are still present on the LC web site.

[Kowser]

Well that's a shame. Here I was thinking I would sell notes from my IRA to my regular account for absurd markups and fund my tax-free IRA that way. Not to mention the tax write off on the losing side making such bad investment decisions. Shucks! 

[ggnoob1337]

Well that's a shame. Here I was thinking I would sell notes from my IRA to my regular account for absurd markups and fund my tax-free IRA that way. Not to mention the tax write off on the losing side making such bad investment decisions. Shucks! 

That sounds like a good idea...hmm...

lol

[core]

Yes it was a "good idea" years ago before people were blabbing about it.  Now you would be rather foolish to openly do anything like this if both accounts are tied to you personally.

If you're going to try it, it's best to find an unrelated third party's account to use for a short time.  The safest thing to do is "borrow" someone's identity who is not involved with LC and create a fresh account that you retain control of.  That way your friend can't change his/her mind in the middle of the operation and decide to keep the temporary profits.  As for legal sources of throwaway identities, I find cocktail waitresses are good for these types of schemes as the girls are often game for an extra $100 here and there, and you can snag a high-resolution copy of their ID right there over drinks.  The waitresses are of course good for other things too.

[yojoakak]

Well that's a shame. Here I was thinking I would sell notes from my IRA to my regular account for absurd markups and fund my tax-free IRA that way. Not to mention the tax write off on the losing side making such bad investment decisions. Shucks! 

That sounds like a good idea...hmm...

lol

They worst they'd probably do is make you stop and pay (some of) it back. I'm not even sure they'd give you a fine.

"Respondent Moondra employed a fraudulent trading scheme designed to create artificial tax losses by executing wash sales between taxable and tax-sheltered accounts. Between November 24 and December 10, 1999, Moondra executed 56 wash sales in the securities of 12 different issuers between taxable and tax-sheltered accounts in which he had trading authority. These trades resulted in no change in beneficial ownership but created artificial losses of approximately $161,695 in the taxable accounts and artificial gains of approximately $161,695 in the tax-sheltered accounts."
https://www.sec.gov/litigation/admin/34-48432.htm