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#1999806 - 03/04/15 07:58 PM IRA Check Issues
Questions Offline
Member
Joined: Jun 2009
Posts: 88
My bank closed an IRA for a customer and, per her request, issued a check payable to an investment firm for a trustee-to-trustee transfer. In today's mail, I receive a check for the same amount payable to my bank from a second investment company. Apparently this second investment company received our IRA transfer check and negotiated the funds even though the check was not payable to them. After realizing their error, they turned around and issued a check payable to us, and wrote us a letter asking us to cut a second check payable to the correct investment firm. Since we no longer have an account for our customer, we are struggling with how to negotiate this check. What is the correct way to rectify this situation? We feel like we should have been contacted earlier so that the check could be returned for a missing endorsement. Now that we have a check payable to our bank FBO the member we are limited to what we can do with it. Suggestions are appreciated!

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#1999814 - 03/04/15 08:15 PM Re: IRA Check Issues Questions
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Quote:
What is the correct way to rectify this situation?


There is no textbook response. Whatever you and your attorney decide to do, you will be making it up.

Go back and look at the original check you issued. Verify where it was sent and whose endorsement it carries. It seems likely that the two firms must be located in the same place or even be affiliates. (It was an internal error on their part.)

If your check was delivered per the former customer's instructions, my suggestion would be that you return the item to the party who is offering you instructions and offer them some instructions of their own; e.g. "You converted the item when you had no right to, you need to fix the problem you created. We suggest you follow your own instructions and issue the check as ours was issued and deliver it to the correct party." CC the former customer.
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#1999859 - 03/04/15 10:53 PM Re: IRA Check Issues Questions
el guapo Offline
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el guapo
Joined: Jul 2004
Posts: 345
They should have replaced the check they wrongly negotiated themselves and forwarded to the correct custodian.

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#2009130 - 04/20/15 09:02 PM Re: IRA Check Issues Questions
Mary G Offline
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Joined: Nov 2014
Posts: 5
Brklyn, NY
A man had an IRA with his wife as a beneficiary. He died and the branch closed the IRA and opened an account in her name as an Individual IRA in her name alone. I know this is incorrect. If we issue a check how would the payee read? Would it be the wife's name as beneficiary of her husband?

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#2009133 - 04/20/15 09:20 PM Re: IRA Check Issues Mary G
el guapo Offline
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el guapo
Joined: Jul 2004
Posts: 345
Originally Posted By Mary G
A man had an IRA with his wife as a beneficiary. He died and the branch closed the IRA and opened an account in her name as an Individual IRA in her name alone. I know this is incorrect. If we issue a check how would the payee read? Would it be the wife's name as beneficiary of her husband?


A spouse beneficiary has the option of taking the funds in an IRA left to them and treating them as their own by placing them into their own IRA (new or currently existing). They can also accomplish this by taking a distribution and rolling the funds over. If the wife did not choose to do this, then yes they made a mistake. If she had chosen to take a full distribution then the check would have been made payable to herself (many IRA custodians will add "beneficiary for the IRA of" to the check or some similar verbiage). What did the wife/beneficiary request?

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#2009175 - 04/21/15 01:43 PM Re: IRA Check Issues el guapo
Mary G Offline
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Joined: Nov 2014
Posts: 5
Brklyn, NY
She did not want to take the money. She wants to roll the money over as to an account in her name. Since she wants an IRA here, is there an issue if the account is opened as an individual IRA and not as a Beneficiary account?

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#2009257 - 04/21/15 04:49 PM Re: IRA Check Issues Mary G
el guapo Offline
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el guapo
Joined: Jul 2004
Posts: 345
Originally Posted By Mary G
She did not want to take the money. She wants to roll the money over as to an account in her name. Since she wants an IRA here, is there an issue if the account is opened as an individual IRA and not as a Beneficiary account?


Maybe I'm not following along correctly, but in your first post was I wrong to believe that the funds were placed into an IRA in the wife's name already?

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