Author Topic: Folio and IRAs  (Read 113713 times)

core

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Re: Folio and IRAs
« Reply #195 on: March 13, 2014, 10:24:20 AM »
Keltset-  Folio does not "hold" cash or notes according to the site.  You see this message every time you log in.  But take a look at your statements and you can see that they are going out of their way to make the point that cash is being "transferred" to your "Folio account".  Why this is, I have no idea.  They went through a lot of trouble to give this appearance so logic dictates there must have been a reason from the beginning.

GS

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Re: Folio and IRAs
« Reply #196 on: March 13, 2014, 04:09:41 PM »
Someone pointed out that LC apparently does not have a securities brokerage license.  I assume that's why they have to make it clear that  Folio is handling the trades, it also appears to be the "catch".  LC can't claim the money and notes are staying within the IRAs for tax purposes, while also claiming the money and notes are being transferred in and out of IRA accounts for SEC compliance purposes ... I guess.

It's kinda frustrating that I have to guess ...
« Last Edit: March 13, 2014, 04:12:22 PM by GS »

NorseBoric

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Re: Folio and IRAs
« Reply #197 on: March 13, 2014, 06:34:19 PM »
Okay, it makes sense to me that your Folio account is not an IRA. Selling a note is therefore equivalent to withdrawing money and putting money back in?

Rob L

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Re: Folio and IRAs
« Reply #198 on: March 13, 2014, 06:41:37 PM »
It's kinda frustrating that I have to guess ...

Yes it is frustrating, but that does sound like a very good guess.
I do wonder how it will turn out in the end, and whether it will be definitively resolved before IPO time.

yojoakak

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Re: Folio and IRAs
« Reply #199 on: March 13, 2014, 07:42:41 PM »
equivalent to withdrawing money and putting money back in?

If you withdraw money from an IRA you have 60 days to redeposit it. So redepositing it a few seconds later should be no problem, right?

RaymondG

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Re: Folio and IRAs
« Reply #200 on: March 13, 2014, 10:53:47 PM »
But the amount *withdrawed* is likely not equal to what will be redeposited back after the sale/purchase.
« Last Edit: March 14, 2014, 12:22:45 AM by RaymondG »

yojoakak

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Re: Folio and IRAs
« Reply #201 on: March 13, 2014, 11:08:23 PM »
But the amount *withdrawed* is likely not equal to what was redeposited back after the sale/purchase.

Oh I see.

So like if my IRA uses $2,000 to purchase a platinum coin with a face value of $100 then I'll get dinged for a $1,900 "withdrawal".

Interesting! I did not know that.

Thanks!

Rob L

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Re: Folio and IRAs
« Reply #202 on: March 13, 2014, 11:55:13 PM »
It appears that if you take an asset out you have 60 days to put it back or put into another IRA. However, from the IRS pub 590 guidelines:

Quote
The same property must be rolled over.   If property is distributed to you from an IRA and you complete the rollover by contributing property to an IRA, your rollover is tax free only if the property you contribute is the same property that was distributed to you.

Complicated, but I think this is on point. Note out  / cash in (or the reverse) doesn't seem to cut it.

It also appears that you could only do this once a year for any single traditional IRA (if it were permitted in the first place).

Quote
Waiting period between rollovers.   Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover.

I dunno, maybe I'm talking apples and oranges. I'm an engineer, not an accountant. Still just guessing.

core

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Re: Folio and IRAs
« Reply #203 on: March 14, 2014, 12:13:09 AM »
It appears that if you take an asset out you have 60 days to put it back or put into another IRA.

If you're going to go down that road, then you would need to have documented all of that on your tax return.  You cannot just quietly redeposit in another IRA within 60 days; that is not enough.  Also there's that pesky 20% withholding requirement that applies when it is not a trustee-to-trustee transfer.

Boatguy

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Re: Folio and IRAs
« Reply #204 on: March 14, 2014, 05:54:15 PM »
But the amount *withdrawed* is likely not equal to what was redeposited back after the sale/purchase.

Oh I see.

So like if my IRA uses $2,000 to purchase a platinum coin with a face value of $100 then I'll get dinged for a $1,900 "withdrawal".

Interesting! I did not know that.

Thanks!

I don't think so.  Buying at bond at a premium (e.g., $105K for $100K face value) is not a taxable event.

GS

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Re: Folio and IRAs
« Reply #205 on: March 14, 2014, 09:03:39 PM »
I don't think it has to be a trustee to trustee direct transfer.  I was just reading an article that said you are legally allowed to "loan" yourself IRA money for up to 60 days, for any purpose, as long as you put back into an IRA before the 60 days is up.  I don't think that was the intent for the 60 day grace period, but apparently it's a legal way to give yourself a "bridge" loan.  I wouldn't want to try it, though. 

One of the real limiting factors is that you can only roll over an IRA once every 12 months, so I guess that means you can't trade more than your account value ... in theory.  There are plenty of ways to play this if the IRS wants it's pound of flesh.  I used a Roth IRA and legally I'm allowed to withdraw up to want I put in without penalty or interest, so there is that angle, as well.

I don't think anything will come of this, tax wise.  Tax year 2013 is upon us and Folio is not sending me any IRA distribution filings ... seems like it was now or never.

Rob L

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Re: Folio and IRAs
« Reply #206 on: March 15, 2014, 12:25:32 PM »
I used a Roth IRA and legally I'm allowed to withdraw up to want I put in without penalty or interest, so there is that angle, as well.
Yes, and I don't think that point has been made strongly enough.
The main problem is with traditional IRA's.
Likely most folks who traded Folio from their Roth IRA did not exceed the total amount of their contribution(s).
If they didn't I can't see a problem either. If they did, well that's a different matter.

RaymondG

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Re: Folio and IRAs
« Reply #207 on: March 16, 2014, 05:05:15 PM »
I used a Roth IRA and legally I'm allowed to withdraw up to want I put in without penalty or interest, so there is that angle, as well.
Yes, and I don't think that point has been made strongly enough.
The main problem is with traditional IRA's.
Likely most folks who traded Folio from their Roth IRA did not exceed the total amount of their contribution(s).
If they didn't I can't see a problem either. If they did, well that's a different matter.

For Roth IRA, though what we put in is allowed to withdraw, it's very likely not allowed to move it back after withdrawal and not be treated as new contribution.

Rob L

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Re: Folio and IRAs
« Reply #208 on: March 16, 2014, 06:29:12 PM »
For Roth IRA, though what we put in is allowed to withdraw, it's very likely not allowed to move it back after withdrawal and not be treated as new contribution.

Very good; that's one good reason I shouldn't post on something I know little about. I hadn't thought of that.
Mine is all traditional IRA so I'm hosed anyway. Maybe the Roth's are too.

core

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Re: Folio and IRAs
« Reply #209 on: March 16, 2014, 06:42:32 PM »
I don't think anything will come of this, tax wise.  Tax year 2013 is upon us and Folio is not sending me any IRA distribution filings ... seems like it was now or never.

Lending Club is not going to just send out tax documents in a big envelope labeled "Surprise!".  They will eventually get their legal ducks in a row.  Even after that happens, Lending Club will likely not say anything about previous years; they will just hope things slide by quietly.  Unless the IRS gets real interested in technicalities (to what end?) and starts asking questions, LC has no motivation to say anything which would be a PR nightmare.