Did I Mess Up My Traditional IRA Transfer? - YMYW podcast - YouTube

Let's go to Debra from Missouri.

"Al- " What the?

No, we're not going to Debra from Missouri.

(laughs) She's asking me a question.

All right.

"I decided after I turned 59 and a half to move some of my money held in a traditional

IRA with a fee-based financial planner to Vanguard.

I moved $30,000.

Then I converted $27,000 of that into a Roth, so I know I have to pay taxes on that.

But then I moved another amount, $90,000, from a traditional to Vanguard traditional.

On both of those moves I drafted a letter and endorsed it over to Vanguard as trustee

to trustee, because we live in the sticks, so could not get the gold medallion transfer

unless I opened up another investment account and I was not interested in that."

OK.

"I never put money in my personal bank account."

(laughs) Deborah!

She's got gold medallions, she doesn't want to put money in her bank account, she digs

it behind her house... kidding.

Why wouldn't she put money in a bank account?

Because she didn't want to foil the 60 day rule, maybe?

Yeah keep reading.

Okay.

"Both transfers were done within-" Oh, she didn't put the rollover...

I though she said, "I don't believe in bank accounts!

I got gold medallions and I got a treasure chest!" (laughs) "Both transfers were done-"

See Deborah, you didn't put my name in this email so this is what you get.

"Both transfers were done within days of receipt and well within the 60 day rule."

So here's the question.

"Did I mess up the IRA one rollover per year rule, or am I okay for both under 26 USC section

408(d)(3)? if I deposit 15K into my SEP from my business, will that help reduce the tax?"

(laughs) Okay we gotta unpack a little bit here.

So let's let's start with, I'll just kind of go through these things point by point.

You moved $30,000 from a fee-based financial planner to Vanguard.

So that depends on how she did that.

Right.

So if it is a trustee to trustee, it's not a rollover.

No problem.

You never got the cash, right.

You can do as many of those as you want.

"Then I converted $27,000 to Roth, so I know I have to pay taxes on that."

So that's true.

So she rolled 30 from one account to another.

She transferred.

Transfer is a better name.

Yes.

Because you just screwed it all up if she rolled it.

(laughs)

Okay, she transferred it.

Thank you.

She transferred, so that's cool.

And then she converted $27,000, so she will pay tax on that.

Agreed.

So we're in sync.

"But then I moved another $90,000 from a traditional to Vanguard traditional.

Both of these moves, I've drafted a letter, endorsed it over to Vanguard as trustee to

trustee."

So it sounds like she tried to do a trustee to trustee but maybe it didn't work because

she ended up with a check?

I'm guessing - that's what I'm guessing.

So she got two checks, maybe, because she's talking about two different receipts, and

she got them both within the 60 day rule.

Oh!

See, I read this all wrong.

I'm sorry Deborah.

Because she coudn't get the gold medallion - I mean, that's like...

Some kind of thing you get at Vanguard maybe?

No, it's like a notary but a super-powered notary.

Oh, so...

She couldn't do the...

Not actual gold medallions.

No, I thought she was buying gold.

Got it.

Yeah.

So she had to get a notary, she couldn't do it cause she lives in the sticks.

So it wasn't the trustee to trustee...

So she just wrote her own trustee to trustee kind of form and said, "Vanguard, do this,

I live in the sticks and I can't get a gold medallion or else I'm going-" I mean, it's

going to cost her 90 grand probably to travel to get it.

Yeah.

But so she probably got two different checks, I guess, that were in her name and she never

put it into her account.

She probably just put it into a retirement account.

Is that how you read that?

What I'm reading here is that, yeah, so she's got 90 grand from Vanguard, she said, "as

a trustee to trustee transfer."

That's what she wanted to do.

Or maybe she got one check but she did $30,00, that was one check because she couldn't do

that...

Well there's two different places, right?

One was $30,000 from a fee-based planner and the other was $90,000 from another account.

She doesn't necessarily say it's another account.

It does say, "from traditional to Vanguard traditional."

Well, let me try to answer the question.

And the question is, if you did in fact receive two different checks, you do in fact only

get one 60 day rollover per year.

So the second one would not qualify for that rollover.

That 60 day rollover.

I don't know what Section 408 D3 is off the top my head.

That's a 60 day rollover rule.

"On both of those moves, I drafted a letter, endorsed it over to Vanguard as trustee to

trustee because we live in the sticks, so could not get Gold medallion transfer unless

I opened up another investment account, and I was not interested in that.

I never put the money in my personal bank account, both transfers were done within days

of receipt and well within the 60 day rule.

Did I mess up with the IRA one per year rollover rule?"

I don't think she did.

I'm going to say that.

But we have to figure out who they made the check out to.

The rollover is that they're going to write out the check to you.

So if they wrote it out to you Deborah, if the check was made out to Deborah from Missouri

who lives in the sticks, then you might have an issue.

If they made it out to Vanguard, then you should be fine.

Yeah okay, I agree with that.

I agree with that, because that's normally how you get money out of a 401(k).

They write the check to the custodian that you want to move the money to.

So it'd say "Vanguard for the benefit of Deborah from Missouri."

Yeah, and that doesn't count as that 60 day rollover, I agree with that.

So if the check came to you, you had two checks and the second ones taxable...

She never put it in her bank account, and then so she deposited those checks at Vanguard,

Vanguard took those checks.

The only thing that's confusing is that she didn't want to open up another investment

account.

Well, I don't know what that has to do with anything.

You know what the fact that she says, "I never put money in my personal bank account," makes

me think that it was made out to her.

Yeah, and then they were like, "Well, you open up another investment account, don't

put it in the IRA."

You know, I don't want an investment account, I just want the IRA and I want the Roth IRA.

Well, I think what she was thinking, just trying to read between the lines, if she had

a couple different checks made out to her.

She's thinking, "well maybe if I don't put it in my bank account and just put it directly

into the new account it won't count for the rollover."

So I'm back on, I think she blew it up.

Yeah.

I would agree with that - unless it was made out to Vanguard directly.

Yeah.

So Deborah, without actually looking at what paperwork you filled out, and what the checks

looked like, to me, just kind of figuring out the pieces here?

Even though it took me five minutes to say that you're not buying gold.

(laughs)

(laughs) It's taken you 9 minutes and 48 seconds.

Anyway...

She blew up the 60 day, I think...

I will say it's complicated enough, have your accountant take a very close look at this.

No wonder why she asked Al. (laughs)

Yeah she said she could not get the gold medallion transfer unless she opened - that makes me

think that gold medallion tranfer is a Vanguard-specific thing.

No, there's all sorts of different forms.

The gold medallion is not on the receiving end, it's usually on the transfer end.

So let's say that I had money at XYZ Company.

They want to keep that money.

So they're gonna put all sorts of different kind of roadblocks, right, to say, "All right

well, if you want to move the money to Vanguard, okay, sure no problem, but you've got to get

a gold medallion stamp and the person needs to be, you know, over 65 years and have 15

years experience...

(laughs)

And you have to open another investment account.

Yeah.

So stupid stuff like that, I'm kidding.

But she's like, "I want to jump through all those hoops, just send me the check.

You're making a difficult on me.

I don't want to be difficult here.

I just want my money Vanguard.

I want to put money into the Roth IRA.

Just send me the money."

And then guess what.

I think she might blew it up.

Now if it was the one account, she should have done both amounts on one check, and then

that would have worked.

Yeah I'm guessing that was two different accounts.

I'm guessing that too.

So, I'm sorry Deborah.

I wish...

I should have read this email maybe a little bit before we went on the air.

That would have been good.

Then I would have just been sharp as a tack.

But we worked it out.

It makes it more fun.

It's part of the excitement of the show.

Yes.