Winding down on Lending Club

[BruiserB]

I've decided to most likely completely wind down my Lending Club accounts.  I've been doing so on my taxable account for a couple of years now.  But today I think I've decided to finally wind down my ROTH IRA as well.  I had been using NSR's managed investing to keep that account going, but now it seems to be having trouble keeping my money invested.  Lately it's been investing $50-100 per note and still cash has been piling up.  Now I see the news of LC acquiring Radius Bank and it seems that the whole retail aspect of LC is fading away.

My IRA is with STRATA.  I see that LC now has a new preferred custodian in IRA Services Trust Company.  That custodian seems to have lower fees.  Does anyone know if LC can simply facilitate a change in custodians?  I've written them to ask.  Not sure if it would be worth doing....I'll need to compare transfer out fees, etc. more closely.  But STRATA will have a $100/year fee once I drop below $10,000 in notes and it appears ISTC's fee is only $40 per year and only assessed if the balance drops below $5500. 

I'm going to be evaluating a few different ways to wind down, since there are fees for withdrawls.  Would be interested in any feedback on pros/cons of the following?

A) Just let account wind down on it's own.  Let cash build up and do periodic (yearly?) transfers of cash to my other ROTH account?

B) Try to sell notes on secondary market to get a lot of cash out now.  I'm thinking to sell whatever I can above or at par value.  I have zero experience selling notes on the secondary market and would appreciate any pointers on best way to do.  Manual?  Automated?  Who has a good automated selling tool recommendation?  Then transfer a bunch of cash out now and let the rest wind down slowly.

C) Keep aggressively lowering prices below par and try to completely liquidate and just get out ASAP.  Would take losses, but avoid aggravation of waiting around and fees for multiple cash transfers and yearly custodial fees.

Or anyone have any other strategy recommendations?

Thanks for any and all advice.  It was a good run with LC, but just doesn't seem to be worth it any more.

[Lovinglifestyle]

I chose "C" when I did it in 2018.  Manually was not hard.  For 2019 taxes, the $8 in recoveries took me an hour to do right on TaxAct.  For a do-over, I'd rather have let LC keep it!

[dr.everett]

I went with B first and when that completed went with C for the remaining notes. I feel like I got rid of notes in as quick and efficient fashion as I could without taking unnecessary losses.

[Debt Free]

When you get down to $10,000 value remaining and approaching your renewal date, contact LC and request that they continue to cover the annual $100 fee.  Explain that you are winding the account down.  They're VERY familiar with people doing this (evacuation of the retail side).  They'll gladly cover it.  Took me two waivers on my one SEP IRA to accomplish it.

B.  I just finished winding down my $16,000 SEP IRA a month ago.  Did a direct trustee-to-trustee transfer of $15,000 cash awhile back at a fee of $25.  Ran into issues liquidating my last 30 some odd notes due to platform issues.  Finally sold those off and did a rollover of the remaining $1,000 of cash at a fee of $50.  (Total costs of $75 vs the $250 indicated on their site.)

Leaving only paid off and charged off notes.  Working now on getting those transferred over to one of my taxable accounts.  Big issue with that now is they no longer support linked accounts under one login/email.  So now they're working on separating my four taxable accounts by breaking the link.

Just finished winding my wife's Traditional IRA with one annual fee waiver as well.

[BruiserB]

When you get down to $10,000 value remaining and approaching your renewal date, contact LC and request that they continue to cover the annual $100 fee.  Explain that you are winding the account down.  They're VERY familiar with people doing this (evacuation of the retail side).  They'll gladly cover it.  Took me two waivers on my one SEP IRA to accomplish it.

B.  I just finished winding down my $16,000 SEP IRA a month ago.  Did a direct trustee-to-trustee transfer of $15,000 cash awhile back at a fee of $25.  Ran into issues liquidating my last 30 some odd notes due to platform issues.  Finally sold those off and did a rollover of the remaining $1,000 of cash at a fee of $50.  (Total costs of $75 vs the $250 indicated on their site.)

Leaving only paid off and charged off notes.  Working now on getting those transferred over to one of my taxable accounts.  Big issue with that now is they no longer support linked accounts under one login/email.  So now they're working on separating my four taxable accounts by breaking the link.

Just finished winding my wife's Traditional IRA with one annual fee waiver as well.

How did you do the trustee to trustee transfer for $25?  Did you fill out a form with the trustee you transferred to and authorize them to pull the money from STRATA?  Or did you fill out a form with STRATA and ask them to send the money to your new trustee?  I'm moving mine to E*Trade.  I did find their form to pull money from another trustee, but was wondering if it would be faster and more trouble free to ask STRATA to send it to E*Trade.  Also do you "withdraw" from Lending Club first so that they move the money from the Lending Club account and into STRATA?  Did STRATA take the $25 fee from your account, or are you able to pay for it with your own funds to keep the most possible in the IRA?

[Debt Free]

How did you do the trustee to trustee transfer for $25?  Did you fill out a form with the trustee you transferred to and authorize them to pull the money from STRATA?

Yes.  I moved it over to my SEP IRA at Interactive Brokers.  On IBKR's site, I initiated a "Direct Trustee-to-Trustee" transfer, downloaded and filled out the form, and either emailed or faxed (I don't recall) the form to Strata.  IBKR's form required a Medallion Signature Guarantee which I got from my bank with no problem.  I don't know about E-Trade.  One thing to note is that LC / Strata does not utilize ACATS, so they had to send a check or wire to IBKR.

Or did you fill out a form with STRATA and ask them to send the money to your new trustee?  I'm moving mine to E*Trade.  I did find their form to pull money from another trustee, but was wondering if it would be faster and more trouble free to ask STRATA to send it to E*Trade.

I directed Strata utilizing IBKR's form.  I am not a fan of Strata's form, mainly due to the fact that they don't acknowledge or allow you to specify "Known Exception" for doing a "60-day Rollover".  They actually say that it will be classified as an early distribution and that I'd have to work it out with my taxes later which is total bunk.  This doesn't apply to a "Direct Transfer" however.  When I did my "Rollover", LC sent me their "revised" Strata form that DOES allow you to specify "Known Exception".

Also do you "withdraw" from Lending Club first so that they move the money from the Lending Club account and into STRATA?

Yes.  You must initiate a withdrawal on LC's site first and wait for the funds to arrive in your account at Strata.

Did STRATA take the $25 fee from your account, or are you able to pay for it with your own funds to keep the most possible in the IRA?

Yes and Yes.  Here's where Strata stood up.  When I did my large Direct Transfer, they took the $25 out of the funds being transferred.  Not a big deal I thought considering I was going to be able to better invest my funds elsewhere.  I later talked to them when I had finished liquidating the last few remaining notes.  I asked if the $50 fee could be paid with outside funds (AKA credit card).  They said yes, I could.  I then asked if that were the case, could they reallocate the earlier fee of $25 and charge me $75 which they agreed to do, and did.  That way 100% of the funds did in fact get transferred, although $75 represented only 0.5% of the cash involved.  So I used LC's form for the Rollover, specified in a cover sheet and on the transfer form in the margin that any and all fees were to be paid with outside funds.  Well, they ended up taking $50 out of my funds like before.  I called Strata and long story short, they took my credit card over the phone, charged $75 to it, and sent $75 to IBKR which finalized my exit from LC for this IRA.

All said and done, from submission of the form to Strata to receiving the funds at Interactive Brokers, it took approximately 2-3 weeks if I remember correctly.

I now need to transfer my wife's which had fully liquidated a couple months ago, but wanted to get through my SEP IRA first to see how it went.  Especially now with the market in this correction.

[lctz]

You don't have to wait 3-5yr to get majority of your money back.  Because LC loans are amortizing, each payment contains a portion of principal.  Depending on average age of your loans, you could get cash quicker.  I did an experiment on one of my accounts; in one year, I wind down 2/3 of my portfolio value.  You can use LC API to withdraw money daily.

[jameslend]

Didn't know LC had a new preferred custodian. I wonder if they would cover the fees to transfer to IRA Services Trust Company from STRATA. It seems like they'd still pay less fees in the long run.