Horror story - self directed IRA. Any advice?

Question

All,

I am baffled beyond belief about a continuing critical issue with a self directed IRA I've opened.  I won't share the name of the company in this post, but you can contact me directly if you would like to know the name.

Here's the overview - two separate deposits into my SDIRA and they will not release any funds for me to purchase property.

Details:

Did one transfer of my pension plan (company pension plan - not IRA or 401K), to the SDIRA (self directed IRA). Sent then the actual check I received and emailed the accompanying description of the check that included the category of distribution, indication that taxable amount was $0, the distribution amount etc. etc.

Did a second transfer from an IRA held by a world renowned Investment company that was a direct wire transfer. Wire transfer had all pertinent information about the type of funds.  Also sent the SDIRA a copy of my IRA statement that showed type of funds, etc.

Currently:

SDIRA will not release funds.  Now - they've taken out their "fee" - for receiving both of these deposits - but indicate that the won't release them for purchase due to needing more documentation beyond the statements I've sent.

I have sent them everything I have received.  The SDIRA wants "custodian" statements but neither company has ever had to provided anything but the type of statements they've already provided.   Both my previous pension plan company and IRA funds from the world renowned investment company, are completely perplexed about what possible information could be needed as they have provided everything every other SDIRA company that they have dealt with in the past has requested

The SDIRA refuses to contact either company about the funds.  Now a company that has over a "billion" in assets can't reach out to my previous employer to verify the type of funds?  But I see that they already took out their "fee" for processing my deposits.

Plus when I indicated that if they can't execute the deal, I'd have to remove my funds from their company as I can't keep my money tied up - the managing sales rep told me that it wouldn't matter to them since they have over a billion dollars in assets.  I told him I would have to withdraw my funds and that's when he said that as soon as I do that, they will forward a 1099 to the IRS - and verbatim - "Did I want the IRS to come after me with a 1099"?  This company is a nightmare.   Nothing short of it.

Any advice from anyone that has encountered anything like this?   Have I just completely blown my retirement savings with this company?

-Carol

Brian Eastman · Answer

@Carol,

I agree with the other posters that you should publish the name of the company so the marketplace can punish them for their ineptness by not doing business with them.

What you are describing has a foundation in actual compliance, but sounds quite out of line, and their unwillingness to work closely with you to resolve the problem is entirely unacceptable.

A pension rollover should not require a statement.  Your word this came from a pension, and the fact that the check was issued from the pension to XYZ custodian is sufficient.

As for the IRA, a statement that lists you as the account holder, the name of the institution, the type of IRA and the account number is sufficient.  Some "account summary" documents may not have all this information, but I'll assume from what you communicated above the document you have provided contains all of this information.

A billion in assets under management is actually not that significant.  This is a smaller firm.

The concerns stated by @Jeff Rabinowitz are something to be aware of, but likely not a concern.  If both checks were issued to the receiving institution and not to you, then these are not an indirect rollover (aka 60-day rollover), which is something you can only do once per 12 months.  It will, however, be somewhat tricky to get those funds to another institution if this institution will not accept them in the first place, and you may just need to have this firm reject the transfers and send them back to the originating accounts.

Is the firm a member of RITA - the Retirement Industry Trust Association?  You may be able to contact RITA http://www.ritaus.org/ and see if there is some mechanism that can be applied or receive some legitimate guidance from that organization.

Carol Donaldson · Answer

All,   Thank you for all of the information.   I will definitely check into the Retirement Industry Trust Association.   I understand that you are all interested in my publishing the name of the SDIRA, however until this matter is resolved, I would prefer not to post it.  However, I will message you all directly with the name.

The general consensus is that there is no reason why they should be holding the deposits.  This definitely gives more to go back to them with.

Thank God that there is this community.

Sincerely,

-Carol

Jeff Rabinowitz · Answer

@Carol Donaldson, if you have to remove the funds and can't put them back into the previous plans you could get hit with penalties and taxes (if you are under 59 1/2 years of age). The severity of this will, of course, depend on the amount of money you transferred. If this is a large sum it may be advisable to hire a lawyer quickly so you may still be able to resolve this before the penalties and taxes become due. Best wishes.I would encourage you to post the name of the company as a warning for others though there are only a couple that could make the claim that they manage a billion in assets.

Mark Nolan · Answer

@Carol Donaldson

Thank you for sharing your experience. Luckily the seal-directed retirement industry is quite large so you have plenty of companies to choose form.

Dmitriy Fomichenko · Answer

@Carol Donaldson, sorry to hear about your trouble.

After being treated so poorly I suggest you look for another company to help you with self-directed IRA and transfer your IRA to the new company.

The representative at the company  that you were speaking with is either very ignorant or intentionally misleading you (lying). You can move your retirement funds from one custodian to another custodian via transfer (moving of IRA funds from trustee-to-trustee), which is not a taxable event and you can do it as many times as you wish (there is a limit on one 60-day rollover in 12-month period, you should not do that).

I understand that you don't want to release the name of the company because you are concerned for them not releasing your funds, however this is not a valid reason. You should let everyone know the name of the company. This is a free forum available to everyone and anyone representing that company is able to come and submit their comments and provide their side of the story.

You should disclose their name and that perhaps may lead to other people coming out with their complains. By providing their name you would be providing good to the community. They absolutely can not hold your fund or hinder you in any way because you have a complain. The management of the company would not allow that. My guess is that you experiencing this because you are dealing with certain individuals who make the whole company look bad and needs to be removed (I hope that is the case).

David Dachtera · Answer

@Carol Donaldson,

You should have your attorney engaged at this point. This smacks of potential fraud.

David J Dachtera

"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."- DJ Benedict

Horror story - self directed IRA. Any advice?

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