My IRA liquidated and stopped being an IRA

[pmer]

I'm not sure what it means or how to properly explain what happened.

It's a low risk style IRA and I get a call from my investor saying that the fund has stopped and or quit being an investment vehicle. It was liquidated and the funds are being held as is and waiting to be moved to another IRA.

Something about the funds management changed abruptly and now everyone that has shares has about 30 days to make changes or face getting a check and creating a taxable event. It was going mediocre and was gaining for several months then this gets dropped hard and fast on my investor. He has a ton in this fund and got a call from east cost yesterday and is kinda hot about how certain people were treated.

This must be kind of odd? Or is this just some of the back room activities that go on more frequently than than I understand.

[cabezaverde]

Be quick about getting that money into another IRA. If you don't, you will be subject to taxes and depending on your age, possibly a penalty.

[Finster101]

Be thankful you got the investment funds back. It is a simple matter to roll it into a new IRA fund but it must be done quickly to avoid any tax penalties.

[MrWolf]

DO NOT HAVE A CHECK WRITTEN TO YOU! The IRS will consider that a withdrawal even if you turn around and deposit it into another retirement vehicle. They will not recognize it as a rollover. I would get the funds out ASAP as something sounds wrong even if you got to your local bank and set up a rollover to one of their retirement funds just to buy you some time to find a different one. (I am not offering financial advice just common sense- I am retired). Good luck.
Ron

[dverna]

DO NOT HAVE A CHECK WRITTEN TO YOU! The IRS will consider that a withdrawal even if you turn around and deposit it into another retirement vehicle. They will not recognize it as a rollover. I would get the funds out ASAP as something sounds wrong even if you got to your local bank and set up a rollover to one of their retirement funds just to buy you some time to find a different one. (I am not offering financial advice just common sense- I am retired). Good luck.
Ron

Very sound advice

[cabezaverde]

DO NOT HAVE A CHECK WRITTEN TO YOU! The IRS will consider that a withdrawal even if you turn around and deposit it into another retirement vehicle. They will not recognize it as a rollover. I would get the funds out ASAP as something sounds wrong even if you got to your local bank and set up a rollover to one of their retirement funds just to buy you some time to find a different one. (I am not offering financial advice just common sense- I am retired). Good luck.
Ron

Good catch.

[Winger Ed.]

Don't put this off.
Be quick getting it rolled over and put into another account without the funds 'coming up for air'.

I'm in the middle of some of this sort of thing myself.
And the hassle will suck your will to live.
The govt. is worse than broke and is looking for any chance they can find to tax and grab your money.

[Tatume]

DO NOT HAVE A CHECK WRITTEN TO YOU! The IRS will consider that a withdrawal even if you turn around and deposit it into another retirement vehicle. They will not recognize it as a rollover. I would get the funds out ASAP as something sounds wrong even if you got to your local bank and set up a rollover to one of their retirement funds just to buy you some time to find a different one. (I am not offering financial advice just common sense- I am retired). Good luck.
Ron

I'm not an expert on these matters, but this statement is not necessarily true. After I retired one of my IRA accounts did exactly this, wrote a check to me. They mailed it to my home, I endorsed it, and my investment guy put it into another IRA. My investment firm negotiated with the old IRA prior to the check being written, explained what we wanted to do, and this is how it was handled. So, a blanket statement "DO NOT HAVE A CHECK WRITTEN TO YOU! The IRS will consider that a withdrawal even if you turn around and deposit it into another retirement vehicle." is not necessarily good advice. Better advice may be available from your investment broker. Talk to him.

[Winger Ed.]

After I retired one of my IRA accounts did exactly this, wrote a check to me. They mailed it to my home, I endorsed it, and my investment guy put it into another IRA.

True.
We're moving various accounts around to sort of bring everything under one umbrella so our heirs won't get tangled up
in the estate when they inherit it. We'd had various retirement accounts sort of scattered around a few institutions.

The financial industry is regulated up one side of the street & back down the other.
EVERYTHING they except take bathroom breaks has to be in according to some law or another.

Some are making the transfers to the one place electronically, some are more 'involved'.
I also got in a check from one of them and it was the only way they could handle that account.
It is-- and had to be addressed to the new institution for direct deposit in our account to comply
with the tax laws to avoid it becoming 'taxable income' in the eyes of the IRS.

Dealing with the new institution couldn't be better. Their customer service and assigned reps. are the best I've seen.
Our guy would walk me through some on line stuff, and start quoting the law they had to obey,, blah, blah,,
I'd cut him off and tell him I was hung over and slept through that class in accounting college.

He'd say, OK, just type this in, and click that button....
It's going as painless as possible...

[Handloader109]

I'm not an expert on these matters, but this statement is not necessarily true. After I retired one of my IRA accounts did exactly this, wrote a check to me. They mailed it to my home, I endorsed it, and my investment guy put it into another IRA. My investment firm negotiated with the old IRA prior to the check being written, explained what we wanted to do, and this is how it was handled. So, a blanket statement "DO NOT HAVE A CHECK WRITTEN TO YOU! The IRS will consider that a withdrawal even if you turn around and deposit it into another retirement vehicle." is not necessarily good advice. Better advice may be available from your investment broker. Talk to him.You were REAL LUCKY for it not to have been considered a taxable event. In every occasion I've ever heard of, if money is in a standard IRA or 401K and you receive a check, it IS in your hands and is a taxable event. Perhaps it was a Roth IRA... those aren't taxable. But to the OP, yep, have the broker move into another IRA. Easy.

Sent from my SM-S908U using Tapatalk

[Alex_4x4]

Law and justice have little in common, and tax legislation, moreover, is not very friendly with common sense.

In general, since there are many older forum participants here, do not overload yourself with worries and protect your body from cardiovascular problems. Life is more valuable than money.

[Delkal]

You can get a check for an indirect rollover and have it not taxed but it is an unneeded headache since you will need to file additional tax forms and they probably will withhold taxes on the amount they give you. You will get the withheld taxes back but by then you will probably need a tax professional to figure out how to fill out the forms. And you only have a month or two to deposit the check or it is taxed as income.

If it is a direct rollover between companies you just have to fill out a couple of lines on a standard tax return. If the OP has another IRA he can call that company to have it combined or just call up a large brokerage like Vanguard or Fidelity and tell them you want to roll over an IRA. They will do all the work and will be jumping up and down to help you.

Without knowing how solvent to old 401K is I would do this ASAP. Like making some calls tonight or first thing tomorrow.

[Tatume]

You were REAL LUCKY for it not to have been considered a taxable event. In every occasion I've ever heard of, if money is in a standard IRA or 401K and you receive a check, it IS in your I talked to my broker and his office negotiated the transfer. hands and is a taxable event. Perhaps it was a Roth IRA... those aren't taxable. But to the OP, yep, have the broker move into another IRA. Easy.

I was not lucky. I did what I advised others to do, I talked to my broker and his firm negotiated the transfer. My recommendation is to seek professional help.

[MrWolf]

I'm not an expert on these matters, but this statement is not necessarily true. After I retired one of my IRA accounts did exactly this, wrote a check to me. They mailed it to my home, I endorsed it, and my investment guy put it into another IRA. My investment firm negotiated with the old IRA prior to the check being written, explained what we wanted to do, and this is how it was handled. So, a blanket statement "DO NOT HAVE A CHECK WRITTEN TO YOU! The IRS will consider that a withdrawal even if you turn around and deposit it into another retirement vehicle." is not necessarily good advice. Better advice may be available from your investment broker. Talk to him.

Retired CPA with over 30 years experience. I stand by my common sense advice. Why take a chance and end up paying penalties, etc.?

[racepres]

True.
We're moving various accounts around to sort of bring everything under one umbrella so our heirs won't get tangled up
in the estate when they inherit it. We'd had various retirement accounts sort of scattered around a few institutions.


The Reason for a Trust!!!

[Winger Ed.]

The Reason for a Trust!!!

That's what we've done. It's worth the trouble just to keep our estate out of probate court if nothing else.
But setting up accounts, or bringing them into the trust is slightly more involved than otherwise.
No big deal, a trust account just has to be set up a little differently by the financial institution.

[reddog81]

I was not lucky. I did what I advised others to do, I talked to my broker and his firm negotiated the transfer. My recommendation is to seek professional help.

If you were over 59.5 years old it was OK to withdraw. If OP is under 59.5 completely different rules apply.

[Omega]

I've rolled over a couple accounts into one I keep at t.rowe price, highly recommend them and their targeted funds. Mine is 2030, which was the year I thought I would retire at. It did well for me through the 2009 downturn and currently doing pretty good. Give them a call and they will help you get what you need to get it rolled over.

[garandsrus]

The problem with getting a check is that the company will withhold some percentage of the money for taxes, generally 20%. You can still roll over the full amount, you just need to come up with the 20% they withheld and include it in the rollover. You will then get a tax refund of the 20% that was withheld when you file.

[justindad]

If you cannot quickly choose another investment, you can leave it as an IRA in a money market account… which is basically a savings account with zero interest.
*
I don’t know which broker you hold this IRA with; Fidelity, Vanguard, etc. Whoever it is, it seems like they are not acting in your best interest here. The default in this situation should be to move the funds to a money market account, still within your IRA. So, change your broker. I suggest Vanguard.

[Tatume]

The problem with getting a check is that the company will withhold some percentage of the money for taxes, generally 20%. You can still roll over the full amount, you just need to come up with the 20% they withheld and include it in the rollover. You will then get a tax refund of the 20% that was withheld when you file.

Not necessarily true. When I did it the check was for every penny in the account. Again, trust a professional, not Internet advice. Find a company you trust, and an agent you like, and have the agent contact the existing IRA holder and negotiate the transfer into a new IRA for you. You may have to be present; we did mine in a three-way telephone conversation. The agent for the old IRA verified my identity, and asked "do you give permission for the third party to speak for you?" Once I replied in the affirmative, all I had to do was listen. Get professional help.

[Outer Rondacker]

If you cannot quickly choose another investment, you can leave it as an IRA in a money market account… which is basically a savings account with zero interest.
*
I don’t know which broker you hold this IRA with; Fidelity, Vanguard, etc. Whoever it is, it seems like they are not acting in your best interest here. The default in this situation should be to move the funds to a money market account, still within your IRA. So, change your broker. I suggest Vanguard.

This is what we had to do two years ago. The IRA was losing money fast so they did a early forced payout. We rolled it over to one of the big names and since The BIG GUY was in office and nothing was making any money I left it as IRA CASH. So it basically makes nothing and can loose nothing. FDIC approved. This is ok until you figure out what to do but do it asap. Good luck and sorry to hear this happened to you.

[garandsrus]

Not necessarily true. When I did it the check was for every penny in the account. Again, trust a professional, not Internet advice. Find a company you trust, and an agent you like, and have the agent contact the existing IRA holder and negotiate the transfer into a new IRA for you. You may have to be present; we did mine in a three-way telephone conversation. The agent for the old IRA verified my identity, and asked "do you give permission for the third party to speak for you?" Once I replied in the affirmative, all I had to do was listen. Get professional help.

I agree with you, don’t listen to internet advice. I would listen to the IRS though :
https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions

Will taxes be withheld from my distribution?
IRAs: An IRA distribution paid to you is subject to 10% withholding unless you elect out of withholding or choose to have a different amount withheld. You can avoid withholding taxes if you choose to do a trustee-to-trustee transfer to another IRA.

Retirement plans: A retirement plan distribution paid to you is subject to mandatory withholding of 20%, even if you intend to roll it over later. Withholding does not apply if you roll over the amount directly to another retirement plan or to an IRA. A distribution sent to you in the form of a check payable to the receiving plan or IRA is not subject to withholding.
How much can I roll over if taxes were withheld from my distribution?
If you have not elected a direct rollover, in the case of a distribution from a retirement plan, or you have not elected out of withholding in the case of a distribution from an IRA, your plan administrator or IRA trustee will withhold taxes from your distribution. If you later roll the distribution over within 60 days, you must use other funds to make up for the amount withheld.

Example: Jordan, age 42, received a $10,000 eligible rollover distribution from her 401(k) plan. Her employer withheld $2,000 from her distribution.

If Jordan later decides to roll over the $8,000, but not the $2,000 withheld, she will report $2,000 as taxable income, $8,000 as a nontaxable rollover, and $2,000 as taxes paid. Jordan must also pay the 10% additional tax on early distributions on the $2,000 unless she qualifies for an exception.
If Jordan decides to roll over the full $10,000, she must contribute $2,000 from other sources. Jordan will report $10,000 as a nontaxable rollover and $2,000 as taxes paid.

[1006]

If you call Fidelity, Schwab, Vanguard, or any of the other big names in the IRA business, they will send you a link with forms to fill out. The forms will authorize them to open an IRA account for you, and authorize them to go and get your money from the current account in which the money is invested.

As stated: act quickly.

[Tatume]

I agree with you, don’t listen to internet advice. I would listen to the IRS though:

The IRS used to post a notice to the effect that they may be wrong, but that doesn't excuse you if you follow their incorrect advice. :-)

[MrWolf]

Just remember, each taxpayers situation could be very different. It will cost more that just taxes and penalties if a mistake is made. You will be paying a professional to make your appeal to the IRS which could also cost you quite a bit. Issues such as constructive receipt (you are cash basis) when a check is sent to you at calendar year end could be fun. Just like with our hobby, what works in one firearm does not necessarily make it gospel in every firearm.

[pmer]

Thanks for all the input! I'm signing a roll over tonight after work, I'm 58 years old and understand i could've been taxed extra hard if this would be income.

In post #23, I got to see how that played out because my daughter got a 1099-R for last year and she had to pay an extra 10%. She switched jobs and luckily the amount was only $161.00 and the 10% = $16.

About 10 years ago, I got a check from an IRA that was the full amount (for a roll over) and it seemed to have went easier than what members are saying now but it still had some stress. I'm glad this is a direct roll over with no checks in the mail this time.

[bosterr]

To the OP, what's the name of your investment firm?

[MT Gianni]

I have rolled money over to different accounts several times. In each case, the company would withhold taxes unless I supplied them with the name and number of the account that the money was going to. The check came to me to be deposited in that account the first time. On the later ones they wanted a direct rollover electronic deposit.

[pmer]

To the OP, what's the name of your investment firm?

I'm in an small cap independent brokerage that looks for value stocks. No big name companies like Fidelity etc. My investor isn't looking for new business but likes to help young couples get started, I got in there about 20 years ago through my dad when they did the 401K for the place where he worked. It was a medium risk fund with about 30 holdings, it took 2 big hits during covid but came out of that with 20% gains before it was liquidated. So overall it ended with a mediocre gain while I had it.