I just read this today. It sucks for anyone caught unaware even though it sounds like the IRS won't enforce it for a year except for the people who lost their case in court.
Why can't our politicians pass a law allowing you to rollover any Ira to another Ira regardless if you already did it for another account?
This is just socking it to the American public. Banks screw up Ira to Ira transfers all the time in my opinion or a lot of the time.
I remember a clerk at Bank of America was told my relative wanted to transfer money from an Ira to another bank Ira and the clerk did it with a rollover even though no check or money was received. Then Bank of America sent a distribution notice for the entire amount. Real nice. This kind of screw up by a clerk could cost megabucks in the future. The banks need to train everyone handling Ira transfers or face thousands of potential lawsuits for screwing up and costing taxpayers megabucks. One rollover per year but if the clerk screws up two transfers and calls them rollovers, you lose your life savings or possibly 16% or more of it.
I'm thankful my relative no longer has an Ira at Bank of America.
Now I'm wondering if my relative dies and has 7 beneficiaries if all of them will owe tax on that one Ira. Sooner or later I'll probably find out.
Wow, that makes zero sense. The IRS is getting crazy aggressive on many things these days.
I heard a similar horror story from a co-worker who did a 401k rollover - with the distribution made out to him. Took him a couple years to finally resolve it with the IRS.
mjx's advice here is good.
@shark: all your points (including the PM) are right on... it's ridiculous that the employees of these banks don't know how to do they job.... maybe it's because the banks have lobbied very hard to not be liable for anything they do wrong.
I'm not trying to imply that trustee-to-trustee is foolproof... it's really just fewer opportunities and apparently better rules to work with.
Yeah, so clerks at the banks don't know how to do their job and do a rollover transaction that should have been a transfer and screw you or anyone they do this to out of potentially many thousands of dollars you had saved for years for retirement because the IRS has rules that inexperienced 20 something year old bank clerks must follow to the letter or it gets called a rollover. If the banks screw this up twice, the banks don't lose a penny, the senior citizen living on social security and retirement funds or whomever may be involved gets screwed big time.
I will write to my congressmen. It's about time someone sends them emails after all the campaign calls they left on my phone the last few years. I have been assisting an older relative which is why I'm aware of how the banks a d then the IRS are set to screw thousands of Americans. The banks will screw up the transfers like they have already been doing, then the IRS will send out tax notification letters.
It is not just the rich who end up with multiple Ira accounts. If you change jobs, your former 401k gets rolled over into an Ira. When you retire or change jobs again, your newer Ira gets rolled over into another Ira. If you can also set up a Roth ira. I guess separate rules apply to these iras. If an older relative doesn't want all their money at one bank, then they could have another Ira. After the financial crisis in 2008, I can't possibly imagine why someone might want their money at more than one bank, (sarcasm) Some people were storing their money in a mattress I heard. That sounds almost safer than letting the. banks and the IRS screw you over.
All the rules are there to make you completely dependent on the government in later years. Keeping cash is also now dangerous. New IRS rule now state that all cash transactions and deposits above a very small amount are supposed to be tracked and reported for "anti terrorism" reasons. Horseshit!! These are the same thieving cocksuckers that have been trying to make cash illegal for decades to tax the smallest transaction. They want to tax teenagers for mowing lawns or babysitting. Property rights are a myth today with property taxes so draconian you merely rent the land from the government. You should be able to live without government interference. I have a very hard time naming one thing the government does that I could not be done better and cheaper by a contractor. When you look up incompetence in the dictionary it says "see government"
Why did I have to find this out on a strip club board and not news outlets?
Unlike the news media we discuss important topics on this board - money, taxes, whores.
The news outlets are a joke. I find more real news reading a conspiracy web site. You are lucky if the news outlet even mentions what is going on. However I have found financial news sites such as marketwatch.com has some interesting stories. I linked it above when I started the thread.
Money, taxes, girls, yep. Important stuff.
Almost forgot. We love to discuss guns too. So it's pretty easy to remember
Gold, guns, girls.
another reason to hate the IRS.
although... the article doesn't say WHY they didn't do a trustee-to-trustee transfer in the first place and avoid any chance of something going wrong in the trustee-to-owner-to-trustee scenario. There is a lot more room for error when IRA funds touch the owners hands in the process.