Roth IRA Rollover process

[kork13]

Hey everybody, I've got a long, convoluted question...
Before we were married, my wife's father did a short stint as a financial broker, and oh-so-helpfully started a Roth IRA for her....placing her money in a high-expense, loaded mutual fund. ....thanks....

So I've been fighting with that mutual fund company to pry her money from their claws for about the last 2 yrs, punctuated by long periods of giving up due to multiple attempts ending in failure & frustration.... Bottom line, they insist on Medallion Signature Guarantees for anything and everything regarding any changes or transfers of the account, but none of the banks in our area are willing to do that for us (we're both active duty military, and don't have any local accounts). We've tried multiple times with 5+ banks, and each one said "no way".

So I finally made some headway this time, and they said another option to get the money would be to get it distributed as a check to us, then we can roll it over into her Vanguard Roth IRA, as long as we do it within 60 days. AWESOME!!

....but the problem is that they have the account under her maiden name, not her married name. I talked to Vanguard, and if we try to transfer the money directly from the current IRA to Vanguard (either electronically or via disbursement check), they won't accept it because the names won't match. But hey, there's a way around that! ...which involves, yet again, a stupid Medallion stamp. Likewise, the current account holder won't change her name on the account without a Medallion stamp.

So I'm trying to figure out if this plan will work... We can get her IRA transferred to a bank account that's still listed under her married name (it's 3 states away, and that bank won't change the name without her being there, in person). So now we can get it into her maiden name bank account. Progress!

Can I then take that money, transfer it to our joint checking account (which has her married name), and then send Vanguard the money from THAT account? Will all of the interim steps be okay for it to still be considered an IRA rollover as long as we still do it within 60 days? I have to avoid the use of Medallion stamps, as they are not available in any way to us.

I'm highly frustrated with this entire process... So I'm just trying to figure out something that will work to get her money away from where it currently is being squandered away to high fees. Any advice/guidance/reassurance is greatly appreciated.

[scfr]

Can I then take that money, transfer it to our joint checking account (which has her married name), and then send Vanguard the money from THAT account? Will all of the interim steps be okay for it to still be considered an IRA rollover as long as we still do it within 60 days?

I would think that is a question Vanguard could answer for you. It may just be a matter of making sure you document everything correctly.

Why the resistance to having a local bank account in order to get a Medallion Stamp? I have encountered the need to have a Medallion Stamp (for Treasury Direct) and learned that not all banks offer them. When I decided to change my primary local bank, "do you offer Medallion Stamps" was one on the list of questions that I asked.

[creditcardfree]

How close are you to a USAA Financial Service center? Their website says they do them (Assuming that is who you are with ) We do all of our banking online too.

I don't think Vanguard will care whose name is on the check. It will be your wife's name on the check that matches the new account anyway so there will not be a flag there at all. What you are doing is an Indirect Rollover. The sixty days is very strict. And you can only do one rollover every 365 days.

It wouldn't hurt to call Vanguard to confirm.

[Like2Plan]

I have used a USAA Financial Service center (creditcardfree's suggestion) for a gold medallion signature guarantee--so, I can verify that they do indeed offer that service. One thing that you need to bring is the statement of what it is they are guaranteeing. You might want to call ahead and make sure you have everything you need.

Do you have a local credit union that you could join that offers this service?

[kork13]

Why the resistance to having a local bank account in order to get a Medallion Stamp?

If it was merely that simple, I probably would do that. But everywhere we tried, they either didn't offer it, or required us to have accounts with them for at least a year.

I asked vanguard about it when I first considered it as an option. The person said "yes that should be fine", but she didn't seem entirely confident in her response... So I'm mostly trying to confirm it as an option. My concern is that I could do this, then unexpectedly face a huge early-disbursement penalty come tax time, all due to a poorly informed transfer.

[scfr]

But everywhere we tried, they either didn't offer it, or required us to have accounts with them for at least a year.

That is really poor customer service those banks are offering. Part of the reason for having an account at a bank with a local branch is for the service. If you haven't totally given up on the medallion stamp option, and haven't already done so, try a small or medium size truly local bank, not one of the big national chains. You may have better luck.

Otherwise, this may be a time when it's worth the cost to consult a professional. Maybe you could find a knowledgeable CPA who would see you on a one-time basis? My husband and I don't use a CPA or tax preparer on a regular basis, but once when we faced some rather complicated issues we did consult one. She was not cheap, but she was sharp as a tack and worth every single bit of what she charged us.

Hope you can get it sorted out and put the frustration behind you.

[Like2Plan]

This is a long shot, but are you very far from Stillwater, OK?
How about this one:

MEDALLION SIGNATURE GUARANTEE

University & Community Federal Credit Union provides free of charge Medallion Signature Guarantees for our members.


Who is eligible to be a member?
University & Community Federal Credit Union membership is open to anyone who lives, works, worships or attends school in Payne County. Any relative of a member is also eligible for membership.

https://home.cuintouch.com/

[Like2Plan]

Have your tried True Sky FCU? It has several branches in the Oklahoma City area. The web site doesn't specifically mention medallion signature guarantees. Maybe it would be worth a phone call?

https://www.faaecu.org/about-us/about-faa

[Like2Plan]

One other thought--
It looks like University & Community Federal Credit Union mentioned above is part of the Co-Op of shared CU branches. Maybe you are already a member of another CU that they share services with?

[disneysteve]

I don't think Vanguard will care whose name is on the check. It will be your wife's name on the check that matches the new account anyway so there will not be a flag there at all. What you are doing is an Indirect Rollover. The sixty days is very strict. And you can only do one rollover every 365 days.

I agree. The name on the check is irrelevant. When you file taxes, it goes by your SSN anyway and that's going to match because it's all the same person.

One thing though. If they release the money directly to you, I think they're required to withhold 20% for taxes but you need to roll over 100% to avoid penalties. So you need to be prepared to make up that missing 20% out of your own funds. In other words, if the account holds $10,000, they will send you a check for $8,000 but you need to send Vanguard the full $10,000.

[kork13]

I agree. The name on the check is irrelevant. When you file taxes, it goes by your SSN anyway and that's going to match because it's all the same person.

One thing though. If they release the money directly to you, I think they're required to withhold 20% for taxes but you need to roll over 100% to avoid penalties. So you need to be prepared to make up that missing 20% out of your own funds. In other words, if the account holds $10,000, they will send you a check for $8,000 but you need to send Vanguard the full $10,000.

So I ended up going ahead with taking the disbursement. They'll be able to send it to my wife's account by EFT (since it was linked to the account at creation), which eliminates one part of the problem. From there, I'll proceed as planned, and just hope it all goes smoothly...

I did think about the automatic tax withholding, but it turns out that the disbursement form they use had an option to opt out of them holding back the taxes.... So we **should** get the entire amount.

It's a good point that the IRS handles everything via SSN, which is reassuring. As long as Vanguard doesn't have any issues with accepting the rollover, we should be set. As a couple folks have mentioned, the biggest thing will be making sure that I get it finished within the 60 day limit, and ensuring the amounts line up to the penny.

[disneysteve]

As long as Vanguard doesn't have any issues with accepting the rollover

Vanguard won't care. It isn't up to them to determine if the transaction is handled properly for tax purposes. That's entirely on you. All you need to do is tell them it's a rollover IRA and that's how they'll set it up. You'll be fine as long as you do it within the 60-day window.

[Like2Plan]

It's a good point that the IRS handles everything via SSN, which is reassuring. As long as Vanguard doesn't have any issues with accepting the rollover, we should be set. As a couple folks have mentioned, the biggest thing will be making sure that I get it finished within the 60 day limit, and ensuring the amounts line up to the penny.

I don't see the Vanguard part being a problem. As soon as your wife receives the funds into her account, you can do the rollover. It is immaterial whether it comes from your wife's account that is in her name only or your joint checking account.

You can do it electronically on Vanguard account--under the buy option-the first question is:
1. Is this a rollover from an employer-sponsored plan or IRA?
click-yes
Then select
This rollover is: From another Roth IRA.

Next,
Where is the money coming from?
select your joint account and continue

Now, I don't know if the name mismatch (from the 1099 from the old Roth account) and the Vanguard rollover will cause a problem. The SS should be the same. I am not an expert on this, but I would think if it did cause a problem (like the IRS sends you letter)--perhaps you can send a letter of explanation to clear it up.

[LivingAlmostLarge]

Dumb question is a medallion stamp different from a notary?

[Like2Plan]

Dumb question is a medallion stamp different from a notary?

Yes.

Here are a couple of links which explain:

https://en.wikipedia.org/wiki/Medallion_signature_guarantee

https://www.sec.gov/answers/sigguar.htm