Roth Rollover musing

[Mulligan]

I had a Roth CD mature locally and wanted to consolidate it in my Vanguard account. No wonder Feds do not allow you more than one rollover a year. It is too easy to do with no paperwork. I just had bank on Friday cut me a check in care of my Vanguard, typed with Roth rollover, and slapped my account number on check. Paid the $3 for registered mail Friday afternoon, tossed it in the bin and Vanguard had my money in my account ready to trade before noon today. No paperwork involved.
When I considered transferring last year I saw a demoralizing amount of paperwork to print write, sign and to send off and then rely on them not screwing it up. And that happens almost anytime I send paperwork to any financial institution transferring anything.



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[kaneohe]

sometimes cheaper as well.........Schwab charges $30+ for a direct transfer of IRA assets; same for a direct rollover where they make check out to new custodian and you mail the check yourself. However if they make the check out to you,it is free.

 

[Mulligan]

sometimes cheaper as well.........Schwab charges $30+ for a direct transfer of IRA assets; same for a direct rollover where they make check out to new custodian and you mail the check yourself. However if they make the check out to you,it is free.

Interesting, they didn't charge sent to you. I did not want check issued to me but through vanguard and "FBO" me. Those poor bank clerks weren't the sharpest tools in the shed. Lady I dealt with said I couldn't do it that way and either had to get forms for a transfer request, or take the cash. I told her that was not correct and assured her I knew what I was doing because I had done it before. She asked her supervisor who concurred with her, but I insisted I was correct. So she called corporate office and they told her, I was correct.


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[kaneohe]

You may want to investigate whether your way is limited by the 1 per 12mos restriction. Since you don't have access to the funds, I would not classify it as an indirect rollover which is the one I had thought was restricted .......the kind where the check is made out to you.

 

[Mulligan]

You may want to investigate whether your way is limited by the 1 per 12mos restriction. Since you don't have access to the funds, I would not classify it as an indirect rollover which is the one I had thought was restricted .......the kind where the check is made out to you.

I never quite 100% understood that part, so I just played it safe as I did one previously within a 12 month rolling window. So I just renewed to a 12 month CD, took my .34% medicine and waited for it to renew again. It was the last and smallest of my various consolidations I did, so I am through with it now.


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[gauss]

So this was a trustee-to-trustee transfer in which case 12 month restriction would not apply and no 1099-R's or 5498s should be issued?

Not to be a party pooper, but I wouldn't rest too easy until you see what type, if any, of 1099-R is issued by the bank and 5498 by Vanguard in 2016. I know that this can go wrong in multiple ways.

I have had issues on multiple occasions where Vanguard codes my rollovers incorrectly, even though I filled out their forms correctly. I needed them to fix it so that the 5498's match the 1099-Rs.

-gauss

 

[Mulligan]

Hey, Gauss, ignorance is bliss in my house!
It worked the last time I did it a couple years ago. If Vanguard follows what is on the check, like the last time, hopefully I will be 2 for 2....


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[jazz4cash]

So this was a trustee-to-trustee transfer in which case 12 month restriction would not apply and no 1099-R's or 5498s should be issued?

-gauss

Whenever I have Fidelity send me a check using the FBO notation, they do send a 1099R. The check says direct transfer and the 1099 gets coded various ways, but you are correct it is a transfer, not a rollover even though my tax software puts "ROLLOVER" on my 1040.

 

[gauss]

Hey, Gauss, ignorance is bliss in my house!
It worked the last time I did it a couple years ago. If Vanguard follows what is on the check, like the last time, hopefully I will be 2 for 2....

Looks like you are doing something right!

 

[gauss]

Whenever I have Fidelity send me a check using the FBO notation, they do send a 1099R. The check says direct transfer and the 1099 gets coded various ways, but you are correct it is a transfer, not a rollover even though my tax software puts "ROLLOVER" on my 1040.

Was your Fidelity account an IRA or some type of employer plans such as a 401k etc? I think the reporting requirements for Fidelity may be different depending on the type of account.


-gauss

 

[Mulligan]

Looks like you are doing something right!

What you and Jazz are saying is correct... A few months ago we had a thread that fleshed out the technicalities of the details. I still can not let go of the term "Rollover", because I was taught if you "touched it" it was a Rollover. But I have learned that is not the case. The bank did classify it as a transfer. If fact they did not even have a box to even check for a rollover. But my incorrect "Rollover" term I had to use with bank people to get them to understand I could take the check and have it addressed the "FBO" method.
As Jazz mentioned, ultimately I bet this thing is classified as a transfer. Whatever the term I hope like last time it meant my original purpose... To do no paperwork!


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[jazz4cash]

Was your Fidelity account an IRA or some type of employer plans such as a 401k etc? I think the reporting requirements for Fidelity may be different depending on the type of account.


-gauss

I've done [-]rollovers[/-]er transfers from both IRA and 401k's at Fido. Sometimes it gets coded as "exemption applies" and sometimes not. When it is coded as no known exemption, the tax software will ask if it was "rolled over" and if you check the right boxes, the penalty is not imposed and the transaction is marked rollover on the return. I expect future 1099's will get coded correctly since I turned 59.5 last year.