Author Topic: Folio and IRAs  (Read 114834 times)

DanB

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Re: Folio and IRAs
« Reply #105 on: December 01, 2013, 10:06:40 PM »
Core: talk to deep throat again and see what gives.

Deep Throat is unlikely to have additional information as he is not directly mixed up in the LC Plumbers operation.  But keep in mind one man's "soon" is another man's "later".  If I get any other information I will of course report it.  Too bad Tricky 'Peter' is sworn to secrecy, as I'm sure he already has a full article prepared.  Chock full of propaganda about how this is a good thing for P2P, how 99% of investors are not affected, and of course completely dodging the issue of the cover-up.

If you want my conspiratorial guess, I would say LC is planning on conveniently taking advantage of the new year to further their deceit.  Reminds me of Tet back in 'Nam! 

Here's how I think it's going to go down:  On Dec 30th they will announce that due to "changing tax laws", trading in an IRA will not be allowed as of Jan 1 2014.  (Trades will need to be settled before then, thus the advance notice.)  Tax laws are always "changing", so this will not be a direct lie.  They will be hoping investors don't put 2 and 2 together and realize they might be in a pickle for previous years.  If nobody gets tagged by the IRS and gets vocal about it, LC gets off scott free.  They can quietly settle with those that do get snagged.  But by the time the lumbering IRS gets around to going after people, I think the statute of limitations will already be expired for civil matters such as this so you may find it difficult to sue LC.  You will, of course, still be on the hook for the tax bill.


Cover up? Please...............Keep moving, there's nothing to see here.  :)

Also...........Peter has been called many things, but until now he hasn't been called "tricky" before. I can be pretty tricky at times & I'm a bit offended that you are attributing Peter (of all people) with those attributes. Attributes that imo he is not shown to be worthy of, & is possibly not even capable of attaining.  :)

core

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Re: Folio and IRAs
« Reply #106 on: December 01, 2013, 11:09:18 PM »
Do not be offended Dan.  And I agree the adjective doesn't really fit him.  Rob's watergate reference was simply begging for the use of the double meaning.  If it makes you feel any better I will try to work "Tricky DanB" in somewhere, if possible.  It might be a long wait.

And yes, it IS a cover-up.  We have been through this before.  Last time I even cited a definition of the term for you English-challenged folks.  You had better come up with something better than "there's nothing to see here".  That's exactly what people say when there is something to see.

DanB

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Re: Folio and IRAs
« Reply #107 on: December 02, 2013, 01:26:55 AM »
There's no cover up because imo there needs to be a minimum number of interested parties in order for the act of covering up to be even necessary. As far as I can tell, it appears to be just you Core & "several" of your followers.  :) No one else seems to know &/or care. So not really necessary for a "cover up" to be put into motion even if there was something worthy of being covered up. Besides, I'm sure that in the fullness of time, a perfectly acceptable explanation will be manufactured, I mean stated, which will alleviate each & every one of your concerns.  :)

PS............For this post, I am not using the regular definition of several. I'm using what is known as the Renton definition of the word, which is substantially broader.
« Last Edit: December 02, 2013, 01:46:08 AM by DanB »

rlv99

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Re: Folio and IRAs
« Reply #108 on: December 02, 2013, 01:58:42 PM »
Hey Dan

Your girlfriend should put that last post of yours in her book.  It is truly a classic and representative of who you really are!  A champion of the oppressed!!!     8)

DanB

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Re: Folio and IRAs
« Reply #109 on: December 02, 2013, 05:23:01 PM »
Rlv99..........Thank you, but deep down I like to think that I'm more suited to be a champion of all the people, not just the "oppressed".

Let's face it, there are some less tolerant than myself who argue that the whole "oppressed" thing is over blown & mostly just a state of mind anyway. For example, they would state that Core thinks he's being oppressed every time some new rule change complicates his God given right to make obscene profits on Folio. Or that Jesse Jackson often flies around the country on private jets, then steps off the plane & gives speeches about feeling "oppressed" in America,................. despite living more comfortably & being wealthier than 99.5% of the people. Finally, countless thousands (maybe millions) of Arabs throughout the Mid East blame the Israelis for oppression (on a weekly basis) when their lights go out or their water pressure isn't up to snuff. 

As for myself, I just want to make the world a better place, & I truly appreciate your confidence & unflinching support. :)

viking

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Re: Folio and IRAs
« Reply #110 on: December 08, 2013, 02:58:27 AM »
It is difficult to try to draw any conclusions from this thread; Does the sell of notes in the IRA account result in a distribution (and do the proceeds constitute a contribution)?

Did I miss it, or did anyone with an IRA trade on Folio last year? If so, did they get any distribution and/or contribution tax forms?

I would be surprised if no one here with an IRA account traded on Folio?

core

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Re: Folio and IRAs
« Reply #111 on: December 08, 2013, 05:42:32 AM »
Did I miss it, or did anyone with an IRA trade on Folio last year? If so, did they get any distribution and/or contribution tax forms?

Nobody would have gotten any forms such as that or would have been alerted to anything nasty because LC didn't think anything was amiss at the time.  If they knew that was the situation in 2012 they wouldn't have allowed it in the first place, and certainly would have done something before now.


Inflationhawk

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Re: Folio and IRAs
« Reply #112 on: December 08, 2013, 08:10:44 AM »
I suspect they are dealing with the IRS as we speak on a resolution.  I seriously doubt anyone that traded on an IRA account will have it treated as a distribution this year.  LC probably convinced the IRS it would be a quicker resolution (i.e. by tax year 2014) to set up IRA LC accounts to be linked to IRA folio accounts than to systematically restrict the current LC IRA accounts from trading with nonIRA Folio accounts, and the IRS allowed them to just put a restriction notice on their website as an interim solution.  I believe we'll see a resolution before the new year.  I'd also guess that in 2014 any trading on non IRA folio accounts would be treated as a distribution by the IRS.

Randawl

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Re: Folio and IRAs
« Reply #113 on: December 08, 2013, 11:49:31 AM »
I opened a new Roth for my wife last month, "applied" for a Folio account and was "approved."  First trades settled successfully on Friday.

They are not placing any restrictions on new IRA accounts that attempt to use Folio.

Rob L

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Re: Folio and IRAs
« Reply #114 on: December 08, 2013, 12:33:56 PM »
I opened a new Roth for my wife last month, "applied" for a Folio account and was "approved."  First trades settled successfully on Friday.
They are not placing any restrictions on new IRA accounts that attempt to use Folio.

The only restriction is a very clear and unambiguous notification on the LC website that it isn't permitted.
At this point LC and the IRS can claim you were warned.

I am still puzzled by why LC continues to electronically permit IRA account / Folio trades. That's a question I'd love to see asked and answered.
Currently I would never consider trading notes on Folio from my IRA. Call me a wimp, but it's liable to be quite a mess.

When I checked out LC as a potential investment this past April there was no such prohibition (at least not one known to LC with notification provided to its customers). I decided at that time that an LC investment was appropriate for some of my IRA. This decision was in no small part due to the liquidity provided by Folio should I decide to liquidate my account. Only months later after I'm my first round of funding is fully invested did I learn (not from LC but via a forum post here) that I have no option to liquidate and must hold all notes to maturity in 3-5 years.  Kind of an important point to omit from the prospectus don't you think? Gee, I hate it when the rules are changed in the middle of the game.

Eventually LC will provide an IRS compliant mechanism (Prosper already provides one I understand). Until then I'll hold back on adding funds to to my LC IRA account to see the details.


core

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Re: Folio and IRAs
« Reply #115 on: December 08, 2013, 01:00:25 PM »
Gee, I hate it when the rules are changed in the middle of the game.

You should be used to it by now, Rob.  That's the only way LC knows how to play the game.

I have lost count of the number of times LC has made major changes that weren't part of the deal from the beginning and obviously not disclosed in the prospectus.  Issues that would have affected my decision to invest in certain notes had I known the information in the first place.  Some of those other items alone might be grounds for lawsuits.  To say nothing of this deal.  I hope they get their rear ends handed to them on this one.

Randawl

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Re: Folio and IRAs
« Reply #116 on: December 08, 2013, 01:27:19 PM »
I opened a new Roth for my wife last month, "applied" for a Folio account and was "approved."  First trades settled successfully on Friday.
They are not placing any restrictions on new IRA accounts that attempt to use Folio.

The only restriction is a very clear and unambiguous notification on the LC website that it isn't permitted.
At this point LC and the IRS can claim you were warned.

I am still puzzled by why LC continues to electronically permit IRA account / Folio trades. That's a question I'd love to see asked and answered.
Currently I would never consider trading notes on Folio from my IRA. Call me a wimp, but it's liable to be quite a mess.

When I checked out LC as a potential investment this past April there was no such prohibition (at least not one known to LC with notification provided to its customers). I decided at that time that an LC investment was appropriate for some of my IRA. This decision was in no small part due to the liquidity provided by Folio should I decide to liquidate my account. Only months later after I'm my first round of funding is fully invested did I learn (not from LC but via a forum post here) that I have no option to liquidate and must hold all notes to maturity in 3-5 years.  Kind of an important point to omit from the prospectus don't you think? Gee, I hate it when the rules are changed in the middle of the game.

Eventually LC will provide an IRS compliant mechanism (Prosper already provides one I understand). Until then I'll hold back on adding funds to to my LC IRA account to see the details.

Yea I know - there's an obvious disconnection between what they are "saying" and what's actually happening.  They could easily have flipped a switch so that IRA accounts (especially new ones) didn't have the option to "apply" for Folio access.  Even worse is that they individually "approve" IRA access to Folio on a daily basis. 

I'm not particularly interested in the liquidity aspect of Folio for my IRA's. I just like it because it makes me a lot more money.

Rob L

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Re: Folio and IRAs
« Reply #117 on: December 08, 2013, 02:36:36 PM »
A couple more random thoughts:

1) I believe LC was blissfully ignorant of this situation until they posted the notice sometime mid-year. It does strain credibility to imagine this of a financial industry company with literally a who's who list of board members, but the ball does sometimes get dropped (ask Stevan Ridley). So, in prior years IRA investors that traded Folio did not receive a 1099-R for distributions (for LC notes or cash transferred to their non-IRA Folio account), nor a form 5498 for IRA contributions (notes or cash transferred from their Folio account into their LC IRA account). Now that LC is well aware of the situation I can't see how they could possibly avoid sending them to investors in 2013. Surprise!

2) To remedy the situation your Folio account must be an IRA compatible with your LC IRA account, and the transfers custodian to custodian. Presently it seems the basis of the problem is that LC investor Folio accounts are not IRA. LC IRA investors will most probably be required to open new IRA Folio accounts if they want to trade notes. More book keeping work will be required of Folio as well as annual distribution of the required IRS forms to investors. Doubtful this will be free; Folio fees may rise for LC IRA investors.

core

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Re: Folio and IRAs
« Reply #118 on: December 08, 2013, 03:47:28 PM »
More book keeping work will be required of Folio as well as annual distribution of the required IRS forms to investors. Doubtful this will be free; Folio fees may rise for LC IRA investors.

I highly doubt fees would rise just because of that.  It seems like the IRA paperwork is far less work for them than the 1099-B's that they already have to distribute for taxable accounts.

Inflationhawk

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Re: Folio and IRAs
« Reply #119 on: December 08, 2013, 08:41:10 PM »
I don't see any investors getting "screwed" on this that traded during tax year 2013, however I certainly wouldn't test the waters now that its known there is an issue trading on Folio from an LC IRA account.  I have no proof, but my guess would be that the IRS came knocking on LC's door and said you have this set up incorrectly and get your act in gear. They gave them a deadline to fix it and told them to stop allowing trading.  LC probably negotiated to add a strongly worded statement to their site for now so they didn't have to spend resource time blocking trading systematically and committed to get it all fixed by tax year 2014.  Since at the end of the day trading will not be an issue with IRAs once its set up properly, I really doubt the IRS is going to come after anyone individually.  There very well may be a fee/penalty behind the scenes that LC has to pay the IRS though.