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Transfered IRA from one place to another, they took out a "fee"


Guest bnewcol

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Guest bnewcol

BofA took out a $50 fee from the funds in my Roth IRA when I had it transferred to a Vanguard Roth IRA. I called BofA as they did not tell me beforehand they would be doing that (in 3 phone calls to them to go over the procedure beforehand, I had asked them if there were any fees, to which they said no.) BofA is refunding the whole amount into my checking account as my Roth with them is already closed.

My question is this, does the IRS look at that $50 as a dispersment of funds? Does BofA report it to them? Do I have to deposit the $50 from my checking into the Vanguard Roth IRA or can I just let it be?

Thank you.

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It appears (from your post) that BofA dropped the ball, and they are attempting to fix it by dropping the ball again. Why would they make a decision to fund $50 to your checking account, and not just directly roll it over to the other Roth Account. At any rate, You should be able to directly roll it over to your Roth IRA as it would be a distribution. The issue would be whether they would produce a 1099R at year end showing you received a distribution. Also, this would disallow any additional (indirect rollovers) from your new account during the next 12 months.

An (indirect rollover) is where you receive the cash prior to depositing into a new account.

Good Luck!

CPC, QPA, QKA, TGPC, ERPA

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Guest bnewcol

It appears (from your post) that BofA dropped the ball, and they are attempting to fix it by dropping the ball again. Why would they make a decision to fund $50 to your checking account, and not just directly roll it over to the other Roth Account. At any rate, You should be able to directly roll it over to your Roth IRA as it would be a distribution. The issue would be whether they would produce a 1099R at year end showing you received a distribution. Also, this would disallow any additional (indirect rollovers) from your new account during the next 12 months.

An (indirect rollover) is where you receive the cash prior to depositing into a new account.

Good Luck!

Thank you so much for this. I will call them and see what they can do/are going to do.

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  • 2 weeks later...

Interesting problem.

B of A has been nickling and diming on fees for a couple of years to make up for lower profits in other areas. They were careless in how they handled this.

I have frequently seen banks and brokerages send a second check after a bulk transfer, and sometimes this is only a few dollars. This often comes up when the assets are transferred and either a dividend or interest deposit occurs later. Its no big deal, and if the direct transfer occurs a second time, your future 12 month IRS rights for additional transfers is not affected.

If you have a well documented situation and BofA actually put money into your account, you can probably simple deposit the $50 and treat it as a rollover. If you are not planning to do any further transfers, that should not present a problem. A letter of explaination to the IRS might be needed at some future date. I don't see anyone going nuclear over $50 when it looks like this happened due to events beyond your control. The $50 sure looks like a fee. The IRS might be annoyed about the transaction, but this is not the first time they have seen this happen and putting a few hours into generating letters is not going to provide real value for the government.

This is not the "legal" procedure, but just a suggestion of a practical one. If there were thousands of dollars involved, you need to dot the I's and cross the T's.

Something to also consider: many brokerages will make you whole for these account closure fees. For example, you send $10K to Schwab from a bank Roth. Schwab has in previous years paid up to $125 for any account closure fees. I don't have a list of which brokerages do this.

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