This is a general question for those of you who are selling IRA accounts to liquidate. Were you trying to clear out your entire IRA so you could do a one lump sum transfer of all idle cash from the IRA custodian (Millennial Trust) to another institution?
I looked at the fee schedule and, as best I can tell, it is a $150 fee to transfer out assets to a new custodian. I have a local credit union IRA in 5-year term deposits at 3.2% that I want to move my money too. The problem is that I have about $7k in idle cash in one of my Lending Club IRA accounts and I have about 400 other notes (approximately $4k) with some time to go before the notes will mature.
The dilemma I face is that I think I've already bitten the bullet for the worst of any defaults. So if I want to sell notes to get a clean IRA exit in one fell swoop, I'll probably have to discount those notes on Folio, some heavily. But I am reluctant to do this though because my reasoning is that I think what remains is has made it this far and the yields are pretty good (survivorship bias- most of the bad stuff is already charged off). However, if I keep pulling out money every so often out of the IRA, then I'll get nickel and dimmed by the IRA custodian for each asset transfer as far as I understand. So essentially I'm trying to figure out which will be less painful:
1) Do nothing: let idle cash sit in my LC account earning no interest while I'm waiting for the portfolio to wind down
2) Transfer out IRA money periodically without selling notes on Folio and get hit with IRA transfer fees each time
3) Take the losses that will occur by liquidating notes on Folio and get out in a one-and-done fashion
Any insight as to what you did and why would be appreciated.
Were you trying to clear out your entire IRA so you could do a one lump sum transfer of all idle cash from the IRA custodian (Millennial Trust) to another institution?
Yes- that was my thought initially but the amount of time it took to sell significant amounts of notes changed this idea- I waited until I had 100K to transfer and then initiated it. Was only charged $25 and it took 2 weeks to complete. After that I decided I would do a smaller transfer (40K), same results, and now recently a 10K transfer. At the rate I'm going, I anticipate one more depending on how quickly I can sell any remaining notes in the IRA.
Answers to your other questions:
1. This is why I've done the transfers that I have. I was missing out on 8% over at Fundrise- given the minimal transfer costs this made sense for me.
2. I've only spent $100 on transfer fees- 90% of my transfers are done. Just have to remember to write the fees off next year on taxes.
3. Easier said than done. I've been at this for a year. As said earlier- trying to do this in a way that minimizes loss and effort. I've managed to lose about $30K according to Folio and their "whatever" method of accounting they use, but I'm still up according to what I've transferred. Losses get deducted and life goes on. Moving the discount on the notes on daily basis as others have suggested seems to work, again not as fast as I would like, but it is still working.
Ask away if you'd like to know anything else.