P2P Forum

Lending Club Discussion => Investors - LC => Topic started by: core on October 12, 2013, 11:00:00 PM

Title: Folio and IRAs
Post by: core on October 12, 2013, 11:00:00 PM
LC's site says that Folio trading is not allowed in an IRA.  But that snippet didn't appear until some time last year as I recall, and I haven't heard a peep about this from anyone here.  I know you can't open a Folio-only IRA if you live in one of "those" states, but I'm just talking about being able to liquidate notes in a regular LC IRA account if the need arises.

Is this restriction true?  Was this always the case, or is this relatively new?  Can anyone with an IRA confirm that it absolutely won't let you sell a note?  Is anyone grandfathered in?
Title: Folio and IRAs
Post by: edward on October 12, 2013, 11:00:00 PM
I have a traditional IRA, opened in January 2013, and I buy and sell on Folio all the time. I live in a state that allows investors in both new LC and Folio notes, in case that makes a difference.
Title: Folio and IRAs
Post by: yojoakak on October 13, 2013, 11:00:00 PM
from: core on October 13, 2013, 07:21:44 PM
Title: Folio and IRAs
Post by: thezinfan on October 13, 2013, 11:00:00 PM
I trade in my IRA account all the time on Folio.
Title: Folio and IRAs
Post by: TravelingPennies on October 13, 2013, 11:00:00 PM
from: yojoakak on October 14, 2013, 10:02:37 AM
Title: Folio and IRAs
Post by: TravelingPennies on October 13, 2013, 11:00:00 PM
I opened my IRA's in Feb 2012. Activated folio on those accounts immediately.
Title: Folio and IRAs
Post by: TravelingPennies on October 13, 2013, 11:00:00 PM
I'm glad some of you have had luck getting in.  So there is still hope.

It sure would be unfortunate to turn 59-1/2 thinking you were going to retire comfortably cruising your brand new luxury yacht around San Francisco bay, only to find out that they're going to lock your account the second you try to withdraw anything because you didn't adhere to the posted rules.

And before anyone says I'm being overly paranoid, well which is worse:  Blatantly disregarding a very clearly worded rule, or doing something like using automated tools which isn't even expressly forbidden anywhere?  As Rev can attest to, they feel perfectly justified in blocking your IP whenever they feel like it.  I don't think it's too much of a stretch for them to point to their policy in this case and say you were in violation.

This business of making up the rules depending on the phase of the moon is getting a little old.
Title: Folio and IRAs
Post by: DanB on October 13, 2013, 11:00:00 PM
from: core on October 14, 2013, 03:11:13 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 13, 2013, 11:00:00 PM
from: DanB on October 14, 2013, 03:51:46 PM
Title: Folio and IRAs
Post by: cnmor54 on October 13, 2013, 11:00:00 PM
I am siding with you Core

(oh no ... i took a wrong turn in sesame street land)

banks change their rules all the time.
Title: Folio and IRAs
Post by: TravelingPennies on October 13, 2013, 11:00:00 PM
from: cnmor54 on October 14, 2013, 04:24:00 PM
Title: Folio and IRAs
Post by: thezfunk on October 13, 2013, 11:00:00 PM
I didn't know about this.  I opened my Roth IRA in June/July 2013 and applied for Folio only recently and was approved maybe 2-3 weeks ago?  However, I haven't done any trading on FOLIO yet, I have just been buying new notes.  Hey, Core, if you want to arrange some sort of test, I can pick a few 'sweethearts' for you to buy off of me  ;)
Title: Folio and IRAs
Post by: TravelingPennies on October 13, 2013, 11:00:00 PM
from: core on October 14, 2013, 04:21:28 PM
Title: Folio and IRAs
Post by: faeriering on October 14, 2013, 11:00:00 PM
I think we talked about this on the forum before with Sarah.  I could trade on my account (Roth IRA) on folioFN, but she couldn't get a IRA account opened because they said she was in a folio only state and wouldn't be able to trade.

Hope that helps
Title: Folio and IRAs
Post by: Rob L on October 14, 2013, 11:00:00 PM
I live in VA so I can purchase notes direct from LC. I opened my Traditional IRA rollover account in May and soon after set up to trade notes on Folio. I've bought precisely 1 (count em) notes from Folio and sold 2. No objections were raised when I setup up my account for Folio trading, nor when I bought and sold notes on Folio. Maybe I just missed it when doing my initial study of LC, but I had no idea that I was prohibited from Folio trading (a pretty big thing to miss) until I saw this thread. Stunned actually. This is a really big deal. I haven't seen anyone post that they knew about this when they signed up and did so anyway; eyes wide open so to speak. Please speak up if you are out there. Peter; you want to weigh in on this?

Wonder if this is the law or just an LC policy. There are many things that by law you can't do in an IRA brokerage account that are fine in taxable ones. I believe buying securities on margin and selling them short are two examples. Even if you don't know the rules your IRA custodian will (I thought that was a part of their job). They won't let you make trades that break the law. That implies to me that (hopefully) this is a LC policy and not the law. If so when did this policy start and why is it there?
Title: Folio and IRAs
Post by: JDowding on October 14, 2013, 11:00:00 PM

I didn't know that, but I'm not surprised.    It occurred to me that, unless they also block Folio transactions between accounts held by the same person, that you could use Folio to illegal transfer funds between IRA and non-IRA accounts, just post the note at an unreasonably high price on one account, and buy it from the other.
Title: Folio and IRAs
Post by: Vlad on October 14, 2013, 11:00:00 PM
According to the cached version of LC's website on archive.org, that message appeared last month. And yet, I'm still able to make trades in my IRA account.
Title: Folio and IRAs
Post by: ggnoob1337 on October 14, 2013, 11:00:00 PM
I have a Roth IRA for myself and a Roth IRA for my wife. I've been able to sell notes on Folio with both of them. I just opened my account in August and my wife's in September.
Title: Folio and IRAs
Post by: pplinvestor on October 15, 2013, 11:00:00 PM
I wonder whether the rule only apply to those states that can't invest in LC directly.  Then, one can not open Folio account in an IRA account.

If LC does not allow IRA account trades in Folio, the LC shall not approve Folio application.  In contrast, they readily approved my application and allowed me to trade for many months already.  Not every investor will read all LC rules and check this forum.  In fact, a few months ago when I asked how to liquidate IRA account on this forum, the responses were giving on this forum is to sell at folio.
Title: Folio and IRAs
Post by: yojoakak on October 15, 2013, 11:00:00 PM
from: JDowding on October 15, 2013, 12:05:45 PM
Title: Folio and IRAs
Post by: lender_john on October 15, 2013, 11:00:00 PM

This is interesting.. and definitely new..

I've had an IRA for a few years in a folio only state, so not sure what exactly I'm supposed to do now.

The language could be interpreted that it applies only to notes purchased through the normal investment process.. although not sure...

They are certainly well aware of which state I'm in.. and the fact that I actively use foiliofn and haven't seen any notice or received any communication from them regarding it.
Title: Folio and IRAs
Post by: Rob L on October 15, 2013, 11:00:00 PM
from: yojoakak on October 16, 2013, 10:28:38 AM
Title: Folio and IRAs
Post by: TravelingPennies on October 16, 2013, 11:00:00 PM
So has anyone heard from LC about this? It seems like no one here has has so far been prevented from continuing to make trades. Perhaps this policy applies to only new accounts, either that or LC plans to implement it in the near future.
Title: Folio and IRAs
Post by: TravelingPennies on October 16, 2013, 11:00:00 PM
from: Rob L on October 16, 2013, 12:16:31 PM
Title: Folio and IRAs
Post by: core on October 17, 2013, 11:00:00 PM
Quote"> from: Rob L on October 15, 2013, 03:57:33 AM
Title: Folio and IRAs
Post by: TravelingPennies on October 18, 2013, 11:00:00 PM
Yes, you've certainly caught the essence of my "big deal" theme. I have one account and it's a traditional IRA. Just because LC isn't stopping me doesn't make it a very smart thing to use Folio. Until I get a definitive legal read on it I'll steer completely clear. If I want to cash out I'll just have to let the notes slowly run off. Glad I only have 36mo loans in my portfolios.

I've been warned. I very much appreciate your post that brought this to my attention; don't know if I would have ever noticed otherwise.

The whole LC securities structure is brand new, and it took its own major whoops and restart to get the good investment keeping seal of approval from the SEC. A part of that process must have included an opinion letter from the IRS giving the okay for qualified IRA funds to be invested in LC. Maybe that opinion letter didn't consider Folio; we have been recently and are continually warned Folio is not LC. So, some bright lawyer at LC realizes, hey we don't really know the IRS position on Folio trading of notes in an IRA account. The IRS has not issued an opinion on it. So, LC thinks it might be smart to at least warn its customers they may be running afoul of the IRS here. The "at this time" part of the warning make think that maybe nobody knows.
Title: Folio and IRAs
Post by: TravelingPennies on October 18, 2013, 11:00:00 PM
from: core on October 18, 2013, 09:01:57 PM
Title: Folio and IRAs
Post by: howler99 on October 18, 2013, 11:00:00 PM
What's to keep someone with a regular account and an IRA from listing notes from the regular high account at a ridiculous markup, and then buying then notes from the IRA account...and I assume getting a penalty free distribution from the IRA? Maybe this has something to do with it?
Title: Folio and IRAs
Post by: thezfunk on October 18, 2013, 11:00:00 PM
Quote"> from: howler99 on October 19, 2013, 10:48:17 AM
Title: Folio and IRAs
Post by: GS on October 18, 2013, 11:00:00 PM
I'm sure LC could handle "self dealing" in the way that most IRAs handle the SEC rules on "Free rides" ... Buying and selling stocks with unsettled funds within a 3 day window.  First time I did that (without knowing) I got a call and they told me I first get a warning, next time they freeze my account for a week, and the account freezes continue to increases, until the eventually ban me. 

LC should be able to detect outlier buy/sells with the same party name or SS number, and cancel or undo the trades with a warning ... Then start freezing and/or banning the people who repeatedly attempt such trades. I think it is legal to buy/sell your own notes between accounts as long as you are doing it at or near par or a normal markup.

Banning IRAs from folio would be a heavy handed way to deal with a small problem, that may not even exist.  A software detection method could work.  Or just make the user agreement "sign" that they will not "self deal" and authorize LC to report to the IRS/SEC if they detect self dealing trades.
Title: Folio and IRAs
Post by: core on October 18, 2013, 11:00:00 PM
Quote"> from: yojoakak on October 19, 2013, 10:44:06 AM
Title: Folio and IRAs
Post by: yojoakak on October 18, 2013, 11:00:00 PM
from: core on October 19, 2013, 02:56:32 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 18, 2013, 11:00:00 PM
from: yojoakak on October 19, 2013, 03:14:23 PM
Title: Folio and IRAs
Post by: Joleran on October 18, 2013, 11:00:00 PM
Quote"> from: howler99 on October 19, 2013, 10:48:17 AM
Title: Folio and IRAs
Post by: pplinvestor on October 18, 2013, 11:00:00 PM
Quote"> from: GS on October 19, 2013, 11:38:40 AM
Title: Folio and IRAs
Post by: Rob L on October 19, 2013, 11:00:00 PM
from: core on October 19, 2013, 03:23:25 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 19, 2013, 11:00:00 PM
Whoa, Rob.  The IRS scared you right out of using paragraphs and as a consequence, I'm scared out of my mind.   Thanks for the heads-up!
Title: Folio and IRAs
Post by: TravelingPennies on October 19, 2013, 11:00:00 PM
from: core on October 19, 2013, 03:23:25 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 21, 2013, 11:00:00 PM
I have not heard back from my account rep. That is quite unusual. Typical response is less than a day.

To clarify what may be the problem I copied a note sale from my June FolioFn statement. There was nothing wrong with the note; just a duplicate I bought by mistake and wanted to sell.

As you see, the first thing that happens is that the note is transferred from my LC account into my FolioFn account. The final step is the transfer of funds into my LC account from my FolioFn account. My fear is that the movement of funds and notes between these two accounts may not be considered "rollovers", thus reportable to the IRS for tax purposes and the reason I've been saying this could be a huge deal! I do very much hope this isn't the case at all.

Date : 6/24/13   
Transaction ID :   
Type : Sell

Note Transfer                    Transfer Note from Lending Club account to FOLIOfn account    
Trade                                  Sell Note: 24959816                                                        $50.49
Cash Transfer                   Transfer Funds to Lending Club account                   -$49.99
Fees                                    Trading Fees                                                                    -$0.50
Title: Folio and IRAs
Post by: TravelingPennies on October 21, 2013, 11:00:00 PM
from: yojoakak on October 20, 2013, 12:07:58 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 21, 2013, 11:00:00 PM
from: Rob L on October 22, 2013, 02:48:22 AM
Title: Folio and IRAs
Post by: TravelingPennies on October 21, 2013, 11:00:00 PM
from: yojoakak on October 22, 2013, 10:11:21 AM
Title: Folio and IRAs
Post by: TravelingPennies on October 21, 2013, 11:00:00 PM
from: Rob L on October 22, 2013, 02:21:14 AM
Title: Folio and IRAs
Post by: TravelingPennies on October 21, 2013, 11:00:00 PM
Three business days now.
If the answers to my questions were quick and easy I probably would have heard something by now. Possibly a "sticky wicket" as the Brits might say.
I wouldn't be surprised if this doesn't take a bit of time.
Title: Folio and IRAs
Post by: TravelingPennies on October 23, 2013, 11:00:00 PM
The answer from my LC Account Rep to my email is in. All posted without commentary. First my email:

Hi, There is some new language on your web site that I very much doubt was there when I joined this past May. It's a really big deal and I simply do not believe I overlooked it when I opened my account (though admittedly anything is possible). From the LC web site 10/19/2013:
Quote
Title: Folio and IRAs
Post by: core on October 23, 2013, 11:00:00 PM
Quote
Title: Folio and IRAs
Post by: thezfunk on October 23, 2013, 11:00:00 PM
from: core on October 24, 2013, 03:47:11 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 23, 2013, 11:00:00 PM
Sure there's plenty of possible reasons/problems.

All I want to know is:  Can you or can't you?  What if I claim I never saw that page?  What about those who legitimately haven't yet? They just blissfully keep trading?  I know what I'm going to do.  My memory is about to become rather poor.
Title: Folio and IRAs
Post by: TravelingPennies on October 23, 2013, 11:00:00 PM
from: core on October 24, 2013, 04:19:31 PM
Title: Folio and IRAs
Post by: Vlad on October 24, 2013, 11:00:00 PM
If LC does indeed take away my ability to trade in IRA, I will close my account. Since we can't write off losses like we can in a taxable account, it's critical to have the ability to sell loans that may default. I thus do less selling in my non-IRA account, plus I hate dealing with tax paperwork.

What worries me is that we can't get a clear answer from LC on this. The rep whom I called at LC told me he thinks the new policy may only apply to new accounts, but he wasn't confident in his answer.
Title: Folio and IRAs
Post by: TravelingPennies on October 24, 2013, 11:00:00 PM
from: Vlad on October 25, 2013, 09:39:08 AM
Title: Folio and IRAs
Post by: GS on October 24, 2013, 11:00:00 PM
I really don't understand why this is an IRA/IRS problem.  Folio says it holds no cash or notes, and seems to just act as a 3rd party that matches buyers with seller, for a commission.  I don't know why they'd be involved in reporting my income to the IRS when they are not actually handling the cash.  The IRS report should be handled by LC, and if ever called into question, it should be easy to match up the folio buy/sell record with the LC account activity report.
Title: Folio and IRAs
Post by: TravelingPennies on October 24, 2013, 11:00:00 PM
from: GS on October 25, 2013, 12:21:07 PM
Title: Folio and IRAs
Post by: Rob L on October 24, 2013, 11:00:00 PM
from: Vlad on October 25, 2013, 09:39:08 AM
Title: Folio and IRAs
Post by: TravelingPennies on October 24, 2013, 11:00:00 PM
from: thezfunk on October 24, 2013, 03:56:19 PM
Title: Folio and IRAs
Post by: Verto on October 25, 2013, 11:00:00 PM
from: core on October 25, 2013, 12:56:02 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 25, 2013, 11:00:00 PM
The saga continues... I was looking at https://www.lendingclub.com/foliofn/howTradingWorks.action and found the following:
Quote
Title: Folio and IRAs
Post by: Zach on October 25, 2013, 11:00:00 PM
from: Rob L on October 26, 2013, 11:00:36 AM
Title: Folio and IRAs
Post by: TravelingPennies on October 25, 2013, 11:00:00 PM
from: Rob L on October 26, 2013, 11:00:36 AM
Title: Folio and IRAs
Post by: TravelingPennies on October 25, 2013, 11:00:00 PM
Hi "Zach" -- I will continue to attempt to get it right  :)

I contacted FolioFn because the link says "for more information..." and I wanted more information. Specifically, I wanted to know if my account with them is a Traditional IRA, like my LC account, or something else. If you read back through my long winded earlier posts you will see why I think this an important piece of information. It seemed clear to me that I must have a FolioFn account since my FolioFn monthly statement makes reference to it twice for every note purchase or sale. I did not see any reference to "LC trading account" on the FolioFn web site(maybe I missed it). The FolioFn rep didn't say aha, let me find your "LC trading account". Nothing ...

Since the rep at FolioFn indicated no account could be found,  I'm naturally confused. Can you shed some light on how this process works? My focus is on the tax consequences of moving money and notes to/from my LC traditional IRA account and this "non-account account" by using FolioFn trading.



Title: Folio and IRAs
Post by: Zach on October 25, 2013, 11:00:00 PM
Quote"> from: Rob L on October 26, 2013, 11:41:30 AM
Title: Folio and IRAs
Post by: Cries on October 28, 2013, 11:00:00 PM
Opened my IRA about 4 months ago, have been buying/selling actively on Folio, including flipping distressed notes.

Should I expect the feds to come knocking?
Title: Folio and IRAs
Post by: Rob L on October 28, 2013, 11:00:00 PM
I don't know what to expect. I stopped using Folio cold turkey when I became aware of the issue the day this thread started.
Title: Folio and IRAs
Post by: GS on October 28, 2013, 11:00:00 PM
An explanation would sure be nice.  At this point, I'm starting to suspect that LC knows something bad has happened, that might become a tax nightmare for IRA holders, but doesn't want to admit any wrong doing. 
Title: Folio and IRAs
Post by: TravelingPennies on October 28, 2013, 11:00:00 PM
Complete and totally unsubstantiated speculation on my part but ... If LC stepped in today and stopped IRA accounts from trading notes on Folio, would it set some legal precedent or admission of fault that they should have never permitted it in the first place? Is that why they still let it happen (i.e. it was always the responsibility of the account holder, not LC, and it still is)?
Title: Folio and IRAs
Post by: core on October 28, 2013, 11:00:00 PM
from: GS on October 29, 2013, 06:37:08 PM
Title: Folio and IRAs
Post by: bobeubanks on October 28, 2013, 11:00:00 PM
I have no P2P IRA, my interest here is academic. I wonder a few things. Does Prosper allow IRA/Folio trading? I don't find anything on the Prosper website saying either way. Is there any potential liability (to either investors to the the gov't) on LC and P for allowing improper trades?
Title: Folio and IRAs
Post by: DanB on October 28, 2013, 11:00:00 PM
from: core on October 29, 2013, 07:13:14 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 29, 2013, 11:00:00 PM
from: DanB on October 29, 2013, 11:46:47 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 29, 2013, 11:00:00 PM
Core......... So you think there's another coverup/conspiracy going on. Just out of curiosity, would this one be like the 6th or is it the 7th conspiracy or cover up that you've suspected, suggested or insinuated LC to be somehow involved in within just the last year? Because I've lost count since I was too busy keeping track of the ones you think I am party to in league with them. :)

No offense to the "Main Office"  :), but does anyone (other than Core) really think those guys are bright enough to be pulling off all these cover ups & conspiracies simultaneously. I mean please!

Would somebody please get to the bottom of this before Core names this whole thing LCGate!
I'd volunteer to find out, being so close to SF & all, but that'll just make Core spin another conspiracy.
Title: Folio and IRAs
Post by: cnmor54 on October 29, 2013, 11:00:00 PM
Quote
Title: Folio and IRAs
Post by: TravelingPennies on October 29, 2013, 11:00:00 PM
from: DanB on October 30, 2013, 03:23:00 AM
Title: Folio and IRAs
Post by: TravelingPennies on October 29, 2013, 11:00:00 PM
Stop being retards everyone!!! Buying a loan on Folio in a Self-directed IRA is no different than buying any other allowed asset in a Self-directed IRA. You can, for example, buy a rental property in a Self-directed IRA. Transferring cash to a counterparty's non-IRA from your IRA account and transferring a house from a counterparty's non-IRA account to your IRA are not distributions and contributions, idiots! Same goes for the rental income from an IRA-held rental property - when a tenant wires rental cash to your IRA it's not a contribution! There is no difference here between dealing in houses and dealing in Folio notes.
Title: Folio and IRAs
Post by: TravelingPennies on October 29, 2013, 11:00:00 PM
Welcome to the LA forum Icdude.
Title: Folio and IRAs
Post by: TravelingPennies on October 29, 2013, 11:00:00 PM
from: lcdude on October 30, 2013, 02:21:57 PM
Title: Folio and IRAs
Post by: core on October 29, 2013, 11:00:00 PM
Quote
Title: Folio and IRAs
Post by: DanB on October 29, 2013, 11:00:00 PM
Quote"> from: core on October 30, 2013, 02:08:49 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 29, 2013, 11:00:00 PM
from: DanB on October 30, 2013, 02:52:00 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 29, 2013, 11:00:00 PM
from: core on October 30, 2013, 03:09:39 PM
Title: Folio and IRAs
Post by: TravelingPennies on October 29, 2013, 11:00:00 PM
from: DanB on October 30, 2013, 08:52:35 PM
Title: Folio and IRAs
Post by: Lloigor on November 05, 2013, 12:00:00 AM
Did no one here have an IRA account with them in 2012 and see if there was or was not a 1099-B issued?
Title: Folio and IRAs
Post by: TravelingPennies on November 05, 2013, 12:00:00 AM
from: Lloigor on November 05, 2013, 05:06:38 PM
Title: Folio and IRAs
Post by: jimsar on November 05, 2013, 12:00:00 AM
from: Lloigor on November 05, 2013, 05:06:38 PM
Title: Folio and IRAs
Post by: TravelingPennies on November 05, 2013, 12:00:00 AM
I have just learned that in the very near future, Lending Club will be "electronically prohibiting" trades from within an IRA.  They are working with Folio legal to resolve the issue.  It doesn't sound like they know exactly what impact this will have on people who have already traded in their IRAs.


from: jimsar on November 05, 2013, 06:59:47 PM
Title: Folio and IRAs
Post by: Rob L on November 05, 2013, 12:00:00 AM
I have learned a bit about the terminology of "IRA" speak.  An IRA rollover is the movement of funds between 2 types of retirement plans that may be different, such as from a 401(k) plan to an IRA. Rollovers may be subject to federal income tax unless all requirements are met. For example:

    You must complete the rollover within 60 days of receiving the funds (all IRAs)
    You may only roll over funds from the same IRA once every 12 months (Traditional and SEP IRAs)

An IRA transfer is the movement of funds between the same types of accounts, such as from one Traditional IRA to another Traditional IRA, where there is no distribution to you. The money is transferred directly from one financial institution to another on your behalf and is also known as a trustee-to-trustee or custodial transfer. Transfers can take place as often as you like, and they are not taxable.

It is clear what is needed here is for both the LC account and the Folio account to be the same type retirement plan, and the transfers be custodial transfer. My fear is that this is currently not the case and never has been.

Okay Core, while I was posting this, you posted a biggie. Spill the beans ... how do you know?
Title: Folio and IRAs
Post by: TravelingPennies on November 05, 2013, 12:00:00 AM
from: Rob L on November 05, 2013, 08:01:01 PM
Title: Folio and IRAs
Post by: TravelingPennies on November 05, 2013, 12:00:00 AM
Let me be the first to say I hope this is true. LC is finally doing the right thing, presuming my fears are not unfounded.
Title: Folio and IRAs
Post by: New Jersey Guy on November 05, 2013, 12:00:00 AM
"Your loss is my gain"

Core...I couldn't stop laughing!!
Great Motto!
Title: Folio and IRAs
Post by: TravelingPennies on November 05, 2013, 12:00:00 AM
from: Rob L on November 05, 2013, 08:16:31 PM
Title: Folio and IRAs
Post by: TravelingPennies on November 05, 2013, 12:00:00 AM
from: Rob L on November 05, 2013, 08:01:01 PM
Title: Folio and IRAs
Post by: Rob L on November 05, 2013, 12:00:00 AM
First lets stop the bleeding. Core, your "I have no recollection, Senator" probably would not have worked anyway. I'm not saying LC did the right thing, but they will soon be taking the first step in doing the right thing. Yes, IRA / Folio trading should have been electronically stopped dead in its tracks the day LC posted that obscure but unambiguous message. Maybe it was the "deer in the headlights" effect. For the third or fourth time I'll say "this is a big deal"!

jimsar; it's alphabet soup and past my pay grade. Like a square peg in a round hole whatever you call it I fear IRA LC and Folio don't mix and never have.
Title: Folio and IRAs
Post by: core on November 05, 2013, 12:00:00 AM
Now I'm wondering what this is going to do to the Folio market.  It's possible that a large percentage of Folio buyers might be doing their buying in an IRA and don't even have a taxable account.  I would be interested in those stats.  Once all those people can no longer buy the market could absolutely plummet.  (Or maybe it will skyrocket, if they were all sellers?)  Hell if I know.  Looks like I picked the wrong week to stop sniffing glue.

Are they going to warn people, or just abruptly shut things down?  If I was holding notes that I didn't really want to hold, I would be absolutely fuming when I got stuck holding a 5-yr portfolio of absolute crap with no way to sell it.  After the announcement there could be quite some deals to be found.  Man this could be a mess for a while.  Just when I thought the note market was recovering.
Title: Folio and IRAs
Post by: GS on November 05, 2013, 12:00:00 AM
This blows.  My strategy is built around selling notes if their FICO slips.  I never would have opened an IRA under these conditions, and now I feel my money is trapped there since there is no way to exit, ... outside of letting my notes die off for the next 5 years. 
Title: Folio and IRAs
Post by: jimsar on November 06, 2013, 12:00:00 AM
from: Rob L on November 05, 2013, 08:46:37 PM
Title: Folio and IRAs
Post by: Peter on November 06, 2013, 12:00:00 AM
Did someone drop a dime on all the self-dealing and IRA stuffing that I presume goes on or is there really a structural legal issue wrt LC/F?
Title: Folio and IRAs
Post by: DanB on November 06, 2013, 12:00:00 AM
from: nonattender on November 06, 2013, 09:24:07 AM
Title: Folio and IRAs
Post by: TravelingPennies on November 06, 2013, 12:00:00 AM
I wondered if, embedded in all the changes today, was the electronic prohibition of IRA accounts listing notes on Folio. It, so far at least, was not. I just successfully listed a note (at a ridiculous premium) for about 20 seconds. Took it right back down again, but LC still let me do it.

Must be all those wonderful upgrades made to the trading platform today were much more important than this triviality.
Title: Folio and IRAs
Post by: neals384 on November 18, 2013, 12:00:00 AM
Quote"> from: bobeubanks on October 29, 2013, 11:26:34 PM
Title: Folio and IRAs
Post by: lender_john on November 18, 2013, 12:00:00 AM

I'm just wondering what the best course of action is for those in Folio only states that have an IRA.

Just sit there and wait for clarification from LC?
Wait for years and then transfer to a different IRA?

It seems like if this was resolved at Prosper, they could allow trading again at LC.
Title: Folio and IRAs
Post by: TravelingPennies on November 18, 2013, 12:00:00 AM
from: lender_john on November 18, 2013, 02:51:09 PM
Title: Folio and IRAs
Post by: TravelingPennies on November 18, 2013, 12:00:00 AM

It was certainly possible and has been possible for years. I would assume, as you said, that it is not allowed now.

This puts the owner in quite a potential pickle.. as their only interaction with the notes has been through Folio.

If there is a problem, the blame is clearly on LC here... They advertised the IRA, allowed the creation and they well know that the only way for the person to buy notes is through Folio.
Title: Folio and IRAs
Post by: Inflationhawk on November 23, 2013, 12:00:00 AM
New to P2P.  So if I am reading this right, Prosper allows IRAs to trade on Folio, but you can't sell late notes.  On LC, you can sell late notes on Folio, but you can't trade on Folio in an IRA account.  Sounds like with LC, it's just a matter of time to get it approved since Prosper is already doing it.  But, with Prosper, is there any thought on them ever allowing late notes to be sold on Folio?  Overall, I like LC better and have started funding an IRA account, but I'm kinda bummed about the folio restriction which I didn't know about until after I signed up.  Based on what I'm reading, it seems likely LC will get this worked out...I hope!  Learning a lot on here, thanks for all the great posts.
Title: Folio and IRAs
Post by: TravelingPennies on December 01, 2013, 12:00:00 AM
Just briefly tested the waters and I am still able to list notes list notes for sale, even though my account is IRA.
So far LC has not "done the right thing" and electronically prohibited this.

Core: talk to deep throat again and see what gives.
Title: Folio and IRAs
Post by: TravelingPennies on December 01, 2013, 12:00:00 AM
Hopefully the fact that LC had not yet cut off folio sales is because they are trying to resolve the issue (whatever the issue may be) without cutting off their users.  This may also explain why they only posted the notice in some obscure location on the website rather than in a more obvious location, like the click through screen.  Or ... Maybe current users are permanently grandfathered in ...
Title: Folio and IRAs
Post by: TravelingPennies on December 01, 2013, 12:00:00 AM
from: Rob L on December 01, 2013, 07:00:18 PM
Title: Folio and IRAs
Post by: DanB on December 01, 2013, 12:00:00 AM
Quote"> from: core on December 01, 2013, 08:53:40 PM
Title: Folio and IRAs
Post by: core on December 01, 2013, 12:00:00 AM
Do not be offended Dan.  And I agree the adjective doesn't really fit him.  Rob's watergate reference was simply begging for the use of the double meaning.  If it makes you feel any better I will try to work "Tricky DanB" in somewhere, if possible.  It might be a long wait.

And yes, it IS a cover-up.  We have been through this before.  Last time I even cited a definition of the term for you English-challenged folks.  You had better come up with something better than "there's nothing to see here".  That's exactly what people say when there is something to see.
Title: Folio and IRAs
Post by: TravelingPennies on December 02, 2013, 12:00:00 AM
There's no cover up because imo there needs to be a minimum number of interested parties in order for the act of covering up to be even necessary. As far as I can tell, it appears to be just you Core & "several" of your followers.  :) No one else seems to know &/or care. So not really necessary for a "cover up" to be put into motion even if there was something worthy of being covered up. Besides, I'm sure that in the fullness of time, a perfectly acceptable explanation will be manufactured, I mean stated, which will alleviate each & every one of your concerns.  :)

PS............For this post, I am not using the regular definition of several. I'm using what is known as the Renton definition of the word, which is substantially broader.
Title: Folio and IRAs
Post by: rlv99 on December 02, 2013, 12:00:00 AM
Hey Dan

Your girlfriend should put that last post of yours in her book.  It is truly a classic and representative of who you really are!  A champion of the oppressed!!!     8)
Title: Folio and IRAs
Post by: TravelingPennies on December 02, 2013, 12:00:00 AM
Rlv99..........Thank you, but deep down I like to think that I'm more suited to be a champion of all the people, not just the "oppressed".

Let's face it, there are some less tolerant than myself who argue that the whole "oppressed" thing is over blown & mostly just a state of mind anyway. For example, they would state that Core thinks he's being oppressed every time some new rule change complicates his God given right to make obscene profits on Folio. Or that Jesse Jackson often flies around the country on private jets, then steps off the plane & gives speeches about feeling "oppressed" in America,................. despite living more comfortably & being wealthier than 99.5% of the people. Finally, countless thousands (maybe millions) of Arabs throughout the Mid East blame the Israelis for oppression (on a weekly basis) when their lights go out or their water pressure isn't up to snuff. 

As for myself, I just want to make the world a better place, & I truly appreciate your confidence & unflinching support. :)
Title: Folio and IRAs
Post by: viking on December 08, 2013, 12:00:00 AM
It is difficult to try to draw any conclusions from this thread; Does the sell of notes in the IRA account result in a distribution (and do the proceeds constitute a contribution)?

Did I miss it, or did anyone with an IRA trade on Folio last year? If so, did they get any distribution and/or contribution tax forms?

I would be surprised if no one here with an IRA account traded on Folio?
Title: Folio and IRAs
Post by: TravelingPennies on December 08, 2013, 12:00:00 AM
from: viking on December 08, 2013, 02:58:27 AM
Title: Folio and IRAs
Post by: Inflationhawk on December 08, 2013, 12:00:00 AM
I suspect they are dealing with the IRS as we speak on a resolution.  I seriously doubt anyone that traded on an IRA account will have it treated as a distribution this year.  LC probably convinced the IRS it would be a quicker resolution (i.e. by tax year 2014) to set up IRA LC accounts to be linked to IRA folio accounts than to systematically restrict the current LC IRA accounts from trading with nonIRA Folio accounts, and the IRS allowed them to just put a restriction notice on their website as an interim solution.  I believe we'll see a resolution before the new year.  I'd also guess that in 2014 any trading on non IRA folio accounts would be treated as a distribution by the IRS.
Title: Folio and IRAs
Post by: Randawl on December 08, 2013, 12:00:00 AM
I opened a new Roth for my wife last month, "applied" for a Folio account and was "approved."  First trades settled successfully on Friday.

They are not placing any restrictions on new IRA accounts that attempt to use Folio.
Title: Folio and IRAs
Post by: Rob L on December 08, 2013, 12:00:00 AM
from: Randawl on December 08, 2013, 11:49:31 AM
Title: Folio and IRAs
Post by: TravelingPennies on December 08, 2013, 12:00:00 AM
from: Rob L on December 08, 2013, 12:33:56 PM
Title: Folio and IRAs
Post by: TravelingPennies on December 08, 2013, 12:00:00 AM
from: Rob L on December 08, 2013, 12:33:56 PM
Title: Folio and IRAs
Post by: TravelingPennies on December 08, 2013, 12:00:00 AM
A couple more random thoughts:

1) I believe LC was blissfully ignorant of this situation until they posted the notice sometime mid-year. It does strain credibility to imagine this of a financial industry company with literally a who's who list of board members, but the ball does sometimes get dropped (ask Stevan Ridley). So, in prior years IRA investors that traded Folio did not receive a 1099-R for distributions (for LC notes or cash transferred to their non-IRA Folio account), nor a form 5498 for IRA contributions (notes or cash transferred from their Folio account into their LC IRA account). Now that LC is well aware of the situation I can't see how they could possibly avoid sending them to investors in 2013. Surprise!

2) To remedy the situation your Folio account must be an IRA compatible with your LC IRA account, and the transfers custodian to custodian. Presently it seems the basis of the problem is that LC investor Folio accounts are not IRA. LC IRA investors will most probably be required to open new IRA Folio accounts if they want to trade notes. More book keeping work will be required of Folio as well as annual distribution of the required IRS forms to investors. Doubtful this will be free; Folio fees may rise for LC IRA investors.
Title: Folio and IRAs
Post by: TravelingPennies on December 08, 2013, 12:00:00 AM
from: Rob L on December 08, 2013, 02:36:36 PM
Title: Folio and IRAs
Post by: TravelingPennies on December 08, 2013, 12:00:00 AM
I don't see any investors getting "screwed" on this that traded during tax year 2013, however I certainly wouldn't test the waters now that its known there is an issue trading on Folio from an LC IRA account.  I have no proof, but my guess would be that the IRS came knocking on LC's door and said you have this set up incorrectly and get your act in gear. They gave them a deadline to fix it and told them to stop allowing trading.  LC probably negotiated to add a strongly worded statement to their site for now so they didn't have to spend resource time blocking trading systematically and committed to get it all fixed by tax year 2014.  Since at the end of the day trading will not be an issue with IRAs once its set up properly, I really doubt the IRS is going to come after anyone individually.  There very well may be a fee/penalty behind the scenes that LC has to pay the IRS though. 
Title: Folio and IRAs
Post by: Bohb Daishi on December 09, 2013, 12:00:00 AM
Quote"> from: core on December 08, 2013, 03:47:28 PM
Title: Folio and IRAs
Post by: core on December 19, 2013, 12:00:00 AM
Randawl posted this in another thread:

Quote"> from: Randawl on December 19, 2013, 02:22:10 PM
Title: Folio and IRAs
Post by: GS on December 20, 2013, 12:00:00 AM
We don't even know for sure if this is about taxes and legality.  It could be that Folio wants to cut off IRA accounts because of the additional accounting and paper work burden.  Or maybe Folio told LC they want an additional yearly fee to handle IRA accounts and LC balked, since they advertise free IRAs if you have over $10K.  So far, the "tax problem theory" is just theory.
Title: Folio and IRAs
Post by: Beekaycee on December 20, 2013, 12:00:00 AM
from: GS on December 20, 2013, 08:48:17 AM
Title: Folio and IRAs
Post by: TravelingPennies on December 20, 2013, 12:00:00 AM
True, it is only a theory.  But if Folio and LC are having a disagreement, why would LC post that message saying that trading was prohibited _months_ ago, and on a page that few people are likely to see?  And not do anything further since then?  It would make far more sense to not say a word until they were confident no agreement could be reached or when trading was about to be shut down..  If they wanted to rally support or something then it would have been much more visible.  In either case it probably would have been worded with a more cautious tone.

Everything about this screams C.Y.A. to me.
Title: Folio and IRAs
Post by: Inflationhawk on December 20, 2013, 12:00:00 AM
from: core on December 19, 2013, 09:39:09 PM
Title: Folio and IRAs
Post by: TravelingPennies on December 20, 2013, 12:00:00 AM
from: core on December 20, 2013, 09:33:49 AM
Title: Folio and IRAs
Post by: edward on December 20, 2013, 12:00:00 AM
If that's the case, I wouldn't mind paying the $100/yr in order to maintain access to Folio trading. In that case, just let the investors choose if they want to pay for it or not.
Title: Folio and IRAs
Post by: Rob L on December 20, 2013, 12:00:00 AM
For now it's all a know unknown.

I'm IRA and I haven't traded any Folio notes in many months nor bought any fresh notes since 12/6 (probably should have stopped that even sooner).
I'll decide what to do when this becomes a known known. I will not lock down my investment with no escape for 36/60 mo. If trapped (after the fact) at least my account run off has already begun.

I do believe something reasonable will be worked out in the future, but for the past and now it looks like a probable tax mess.
Also I too wonder if LC will electronically shut down IRA/Folio trading on or before 12/31 to prevent this spilling into the next year as mentioned above.
Title: Folio and IRAs
Post by: Randawl on December 20, 2013, 12:00:00 AM
I hope I'm wrong, but at this point I think the most likely scenario is LC is playing CYA.  They're just not sure yet how to deal with all of the IRA accounts that have traded or are actively trading.  They don't have any clarity from the IRS and who knows what the correspondence between LC and Folio is at this point regarding this issue.
Title: Folio and IRAs
Post by: TravelingPennies on December 20, 2013, 12:00:00 AM
from: GS on December 20, 2013, 11:35:01 AM
Title: Folio and IRAs
Post by: TravelingPennies on December 21, 2013, 12:00:00 AM
Not to quote myself, but to quote myself:

Quote"> from: Rob L on December 08, 2013, 02:36:36 PM
Title: Folio and IRAs
Post by: TravelingPennies on December 22, 2013, 12:00:00 AM
from: Rob L on December 21, 2013, 06:24:23 PM
Title: Folio and IRAs
Post by: TravelingPennies on December 22, 2013, 12:00:00 AM
from: core on December 22, 2013, 12:28:07 AM
Title: Folio and IRAs
Post by: TravelingPennies on December 22, 2013, 12:00:00 AM
from: Rob L on December 22, 2013, 10:25:13 AM
Title: Folio and IRAs
Post by: Rob L on December 27, 2013, 12:00:00 AM
Ran another quick test this AM and can still sell list notes for sale from my IRA account on Folio. If LC plans to electronically stop this "prohibited" practice before the new year they are certainly waiting until the last moment to do so.
Title: Folio and IRAs
Post by: RaymondG on December 29, 2013, 12:00:00 AM
Not sure if anyone already mentioned it. The post is too long for me to go through all.

If IRAs can buy/sell loans in Foliofn, then people who has one regular LC account and one LC IRA account can gain enormous benefits since Foliofn is not a fully liquid market.

case 1. He can sell *Late* loans from his IRA to his regular LC account on full remaining principal or even above. So his IRA account will never have lose, and he can claim tax deduct on the likely defaulted loans now *transferred* to his regular LC account.
case 2. He can sell good loans from regular LC account to his IRA at price much lower. His IRA account can have unreasonable high return (in theory, whatever return you want), while he can also claim tax deduct on the sells that *lose* money in his regular LC account.

My 2 cents.
Title: Folio and IRAs
Post by: Zach on December 29, 2013, 12:00:00 AM
from: RaymondG on December 29, 2013, 12:51:20 AM
Title: Folio and IRAs
Post by: TravelingPennies on December 29, 2013, 12:00:00 AM
from: Zach on December 29, 2013, 01:13:44 AM
Title: Folio and IRAs
Post by: core on December 29, 2013, 12:00:00 AM
from: RaymondG on December 29, 2013, 01:18:34 AM
Title: Folio and IRAs
Post by: TravelingPennies on January 01, 2014, 12:00:00 AM
Happy New Year!
It is now 2014 (on the east coast) and I can still list notes from my IRA account for sale on Folio.
It seems strange when a company posts strict rules (after the fact in my case), but fails to enforce them as they can easily do.
Catch 22.

Update 1/1/2014, 10:45am EST; still possible to list notes for sale.
Wonder why there are no warnings on the Folio account summary page, sell page, etc.?
Title: Folio and IRAs
Post by: pplinvestor on January 01, 2014, 12:00:00 AM
Perhaps, their software to enforce the rule is not working.  :)  It will take them some time to get it fixed.
Title: Folio and IRAs
Post by: Randawl on January 03, 2014, 12:00:00 AM
from: pplinvestor on January 01, 2014, 01:06:06 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 03, 2014, 12:00:00 AM
from: Randawl on January 03, 2014, 05:19:56 PM
Title: Folio and IRAs
Post by: Simon on January 03, 2014, 12:00:00 AM
For what it's worth, I directly emailed management about this and was told I would receive a reply, a reply which never came.
Title: Folio and IRAs
Post by: TravelingPennies on January 03, 2014, 12:00:00 AM
Peter's 2014 predictions didn't mention this trivial matter. How will it be resolved?
Will LC customers that traded on Folio before the prohibition was obscurely posted  mid 2013 receive "Greetings" letters from the IRS?
Why do some IRA customers continue to blithely trade away; ignoring the warning? Don't ask, don't tell?
I wouldn't think of it, but maybe I'm just paranoid ("Only the paranoid survive" - Andy Grove).
Title: Folio and IRAs
Post by: lender_john on January 04, 2014, 12:00:00 AM

I was really hoping for a clearer resolution at this point.

This leaves those of us in folio-only states who have IRAs that were started before any rule changes, in quite a pickle..
Title: Folio and IRAs
Post by: GS on January 04, 2014, 12:00:00 AM
from: Rob L on January 03, 2014, 07:24:03 PM
Title: Folio and IRAs
Post by: graceful on January 04, 2014, 12:00:00 AM
Ignorance of the law is no excuse.

Someone could say they relied on LC, but if that doesn't fly, you'll be open to some pretty serious consequences. I reserve the defense of having relied on someone else only for a desperation defense. Not generally a good policy to say, "I did it anyway because they let me." Of course, I try to minimize my exposure to lawyers, the IRS and financial expenses, so I may be too conservative for others who like to live on the wild side.

Graceful
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
I don't think that trusting a licensed securities firm to not break securities laws is exactly "living on the wildside".  It's like saying if I put my money in a legitimate bank, and that bank is found to be laundering drug money, then I'm in for "serious consequences" because I should have known better than to trust a bank with my money and I willfully participated in a crime.  Please.  I have no knowledge of what LC/Folio is doing with my money "behind the scenes", but I can assume only good and legal things.

I have not received (nor has anyone that I know of) any statement or explaination from LC stating that my past trades on folio have been in violation of SEC and IRS laws and regulations.  If they provided such a statement, I would immediately comply.  But right now, all we have is speculation and guesswork as to what is happening.  I'm still of the theory that this is just a fee dispute between LC/Folio until further notice.

If there was some kind of SEC or IRS investigation into how LC/Folio handled accounts, wouldn't that be public knowledge by now?  Wouldn't the IRS or SEC take direct action in notifying affected account holders that illegal transactions have been made without their knowledge?
Title: Folio and IRAs
Post by: core on January 04, 2014, 12:00:00 AM
Quote"> from: GS on January 04, 2014, 01:39:37 PM
Title: Folio and IRAs
Post by: GS on January 04, 2014, 12:00:00 AM
Core,

If any of this is true, then I was already screwed for 2013 anyway ... I don't think the few trades I made after October make much of a difference.    But, as we already pointed out, how does posting a drastic policy change statement in "obscure corners" then not enforcing it, despite the fact that it could be easily enforced, qualify as notice?  Until November, at least, the Folio FAQs still said any LC member could participate, and I was unaware that had been changed until I checked today.   Apparently, if you call or email a question, you get no meaningful response.  I bet most users who use Folio and don't read Lend Academy have no idea this is even going on. 

My guess, if there is a tax related problem, is that LC and regulators are working out a solution, users will be held harmless, and it will be resolved without the IRS raiding my house.
Title: Folio and IRAs
Post by: Rob L on January 04, 2014, 12:00:00 AM
Quote"> from: GS on January 04, 2014, 01:08:16 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
I'm pretty sure I'm safe, too, since my IRA is a Roth and I neither would have "withdrew" more than I put in, nor deposited more than I'm allowed.  There is no tax or penalty for withdrawing up to your deposited amount on a Roth, since I've already paid the taxes.  That said, I continue to doubt anything will come of this, as far as the users are concerned, anyway.
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
from: Rob L on January 04, 2014, 03:25:26 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
from: core on January 04, 2014, 04:14:05 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
Quote"> from: GS on January 04, 2014, 01:39:37 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
from: Rob L on January 04, 2014, 06:26:16 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
from: Rob L on January 04, 2014, 06:26:16 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
Yeah, me too. I do not use Prosper and saw what you did in this thread.
More recently however, "All I know is what I read in the papers":
http://www.lendacademy.com/forum/index.php?topic=1902.0
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
Interesting and informative link, there.  Thanks for posting that.  I don't read the Prosper boards, so I was unaware of that thread, but at least Prosper seems to be communicating with their users what exactly the problem is, and it's that they are seeking clarification if Folio is a "valid IRA trustee by the IRS".  First time I've heard anyone claim a P2P company made that statement, so that does give some validity to the theory.  But if it's true, then at least we know their is a conversation between Folio and the regulators to clear up this matter.
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
from: core on January 04, 2014, 06:41:24 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
from: Rob L on January 04, 2014, 08:51:18 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
from: core on January 04, 2014, 06:41:24 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
from: GS on January 04, 2014, 09:42:20 PM
Title: Folio and IRAs
Post by: Zach on January 04, 2014, 12:00:00 AM
Quote"> from: GS on January 04, 2014, 09:42:20 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 04, 2014, 12:00:00 AM
Quote"> from: core on January 04, 2014, 10:00:09 PM
Title: Folio and IRAs
Post by: Rob L on January 05, 2014, 12:00:00 AM
Quote"> from: core on January 04, 2014, 09:37:24 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 21, 2014, 12:00:00 AM
My Daddy always told me "If ignorance were bliss you'd be blistered". Case in point. A month or so ago I decided to cease reinvesting principal in my LC IRA account. Haven't bought a note in a long time. Instead, I'd open a taxable account and my liquidity concerns would be history. Folio would be there if I needed cash.

My Grand Daddy said "Up Jumped Santa Claus" when I'd give him the card he needed to Gin. So "What to my wondering eyes did appear but the capital gains loss limitation of $3k per year". Yeah, I was ignorant of LC taxable accounts 101; charge offs have strings attached. If you have an account of maybe $75k or more you will probably exceed $3k per year in charge offs. If you're selling stock with gains the LC charge offs will offset the gains; otherwise anything over $3k is carried over year to year and dies when you do. Well my little Rosana Danna; it's always something.
Title: Folio and IRAs
Post by: viking on January 28, 2014, 12:00:00 AM
If indeed LC/FolioFn now considers FolioFn sales as IRA distributions shouldn't a 1099-R have been generated by now?

Has anyone with an IRA, who sold notes on FolioFn in 2013, received a 2013 distribution form (1099-R)?

BTW, who would be responsible for generating such a 1099-R; LC or FolioFn?
Title: Folio and IRAs
Post by: TravelingPennies on January 28, 2014, 12:00:00 AM
I have not received a 1099-R from anyone as yet.

The LC tax FAQ makes no mention of sending out 1099-R's.

http://kb.lendingclub.com/investor/articles/Investor/What-tax-documents-does-Lending-Club-issue/?l=en_US&fs=Search&pn=1

From that same FAQ:

"Lending Club will provide a Consolidated 1099 Package for individuals, partnerships, and trusts (for trusts established using an individual’s social security number) that hold taxable accounts. Lending Club is not required to and will not provide these forms for corporations, tax-exempt organizations, or for tax-deferred accounts."

I take that to mean no 1099-B's will be issued to IRA account holders by LC. Waiting and watching ...
Title: Folio and IRAs
Post by: TravelingPennies on January 28, 2014, 12:00:00 AM
from: Rob L on January 28, 2014, 09:22:00 AM
Title: Folio and IRAs
Post by: TravelingPennies on January 28, 2014, 12:00:00 AM
from: viking on January 28, 2014, 01:24:10 PM
Title: Folio and IRAs
Post by: TravelingPennies on January 28, 2014, 12:00:00 AM
In an interesting coincidence I received an email from SDIRA this afternoon prompting me to go online to my account and get my 4th quarter statement. I did.
Actually, I couldn't find my 4th quarter statement but I was able to access all of my transactions. There were ACH deposits and monthly valuation mark-to-markets, but nothing Folio related (as expected).
Title: Folio and IRAs
Post by: TravelingPennies on January 30, 2014, 12:00:00 AM
I see from another thread here that LC has posted 1099's and, as expected since I'm IRA, nothing.

Then I flipped over to Folio and looked at my "Year End Summary - Notes Sold 2013".
I had looked at this back on 1/20/14 and printed out a copy. The columns at that time were:

   Note Id  Purchase    Purchase    Sales    Sale    Par Value at     Fee
                     Date             Price         Date     Price          Sale

Tonight (1/30/14) there's two additional columns:

   Note Id  Purchase    Purchase    Sales    Sale    Par Value at     Fee    Principal         Interest
                     Date            Price          Date     Price          Sale                        Received        Received

I don't know what to make of this, but the sum total of all my principal received is $2.16 and interest received is $2.27.
Guess I'll just file this away with my tax records and forget about it.

Title: Folio and IRAs
Post by: yojoakak on January 30, 2014, 12:00:00 AM
from: Rob L on January 30, 2014, 10:21:17 PM
Title: Folio and IRAs
Post by: twigster on March 10, 2014, 11:00:00 PM
I  was informed that Notes can't be sold (or bought) via Folio with a Lending Club  IRA account.  How about Prosper.... can notes be sold (or bought) via Folio with an IRA account? 
Title: Folio and IRAs
Post by: Bohb Daishi on March 10, 2014, 11:00:00 PM
from: twigster on March 11, 2014, 02:31:33 AM
Title: Folio and IRAs
Post by: core on March 10, 2014, 11:00:00 PM
from: twigster on March 11, 2014, 02:31:33 AM
Title: Folio and IRAs
Post by: ggnoob1337 on March 10, 2014, 11:00:00 PM
from: twigster on March 11, 2014, 02:31:33 AM
Title: Folio and IRAs
Post by: NorseBoric on March 10, 2014, 11:00:00 PM
I read this entire thread but I don't think I'm any more informed. Is there still yet no resolution on whether selling notes from an IRA account on Fiolio is a no-no in the eyes of the IRS?
Title: Folio and IRAs
Post by: Boatguy on March 10, 2014, 11:00:00 PM
The money never leaves your IRA so why would the IRS care?  It's no different than having an IRA at a brokerage and buying or selling a stock, the proceeds/profits/losses stay in the IRA.  It's only a taxable event when the proceeds leave the IRA.

Foliofn is just a broker, not a custodian.

I populated my IRA almost entirely from Foliofn last year (i.e., transferred in cash from another IRA and bought notes on Folio) and have not seen any negative consequences.
Title: Folio and IRAs
Post by: Rob L on March 10, 2014, 11:00:00 PM
Yes, that seems to be correct. We just don't know.
All we know for sure is that LC has posted notices on its web site prohibiting IRA accounts from buying and/or selling notes on Folio.
We also know LC permits these transactions to occur. Maybe it's like a traffic light. When it's red you can still step out in front of that bus if you chose.

The only thing I might add is that Peter recently mentioned he had asked LC about this and not yet gotten an answer. Maybe real soon now.
It's not LC hasn't known for months this question is hanging out there. This thread has been one of the most read and responded in the history of LA.
You should know since you just read it all.

See the comments to the following blog post:

http://www.lendacademy.com/orchard-p2p-and-online-lending-ecosystem/
Title: Folio and IRAs
Post by: PennySaved on March 10, 2014, 11:00:00 PM
There was a lot of discussion before on why selling notes from your IRA lending club account might be a problem.  Could be viewed as a taxable distribution.  Status of Folio as an IRA custodian is not clear.  See this thread.

http://www.lendacademy.com/forum/index.php?topic=1674.0
Title: Folio and IRAs
Post by: twigster on March 10, 2014, 11:00:00 PM
I am in the process of opening a ROTH IRA account at Lending Club. 

Here is the reply from the application form:
Quote
Title: Folio and IRAs
Post by: TravelingPennies on March 10, 2014, 11:00:00 PM
Quote
Title: Folio and IRAs
Post by: Zach on March 11, 2014, 11:00:00 PM
from: Boatguy on March 11, 2014, 09:24:22 PM
Title: Folio and IRAs
Post by: TravelingPennies on March 11, 2014, 11:00:00 PM
Just in case anyone stumbles on this thread I would refer you to the following recent replies on another similar thread that is tracking this.

http://www.lendacademy.com/forum/index.php?topic=1674.165

Quote
Title: Folio and IRAs
Post by: TravelingPennies on March 11, 2014, 11:00:00 PM
from: Zach on March 12, 2014, 12:58:48 AM
Title: Folio and IRAs
Post by: Keltset on March 11, 2014, 11:00:00 PM
I wonder what the odds are even of being able to transfer notes like this without them being intercepted by a scripter and seeing major losses....
Title: Folio and IRAs
Post by: core on March 11, 2014, 11:00:00 PM
from: Keltset on March 12, 2014, 12:33:40 PM
Title: Folio and IRAs
Post by: TravelingPennies on March 11, 2014, 11:00:00 PM
from: core on March 12, 2014, 12:43:25 PM
Title: Folio and IRAs
Post by: TravelingPennies on March 11, 2014, 11:00:00 PM
There are many ways to commit tax evasion and this thread has veered into one of the more obscure.

Let's assume a more benign situation where you just want to trade notes in your IRA, like you can trades stocks, ETFs, bonds, etc.  Where's the harm/foul?
Title: Folio and IRAs
Post by: TravelingPennies on March 11, 2014, 11:00:00 PM
from: Boatguy on March 12, 2014, 04:18:21 PM
Title: Folio and IRAs
Post by: TravelingPennies on March 12, 2014, 11:00:00 PM
Does Folio even hold cash or notes? I thought they only acted as a "broker" of them... This is an area I'm not well educated on but if that's the case wouldn't the loans never technically be leaving the lending club accounts? (Note in LC Act A is matched to a buyer LC Act B and "Lending Club" is notified by "Folio" that a transaction has settled and to move the note from LC Act A to LC Act B) I have real estate in an IRA and I can't help but associate what Folio does here is nothing more than what a real estate agent would be doing (facilitating in the transfer but never taking possession).

If that's the case, then folio wouldn't need to be IRA and it should hold no relevance. We all know the Folio isn't Folio anyway and that it's really LC. I guess I just don't understand the liability/legal issue here other than saying they said not to allows them to walk from any liability of  fraudulent activity by the investors.
Title: Folio and IRAs
Post by: core on March 12, 2014, 11:00:00 PM
Keltset-  Folio does not "hold" cash or notes according to the site.  You see this message every time you log in.  But take a look at your statements and you can see that they are going out of their way to make the point that cash is being "transferred" to your "Folio account".  Why this is, I have no idea.  They went through a lot of trouble to give this appearance so logic dictates there must have been a reason from the beginning.
Title: Folio and IRAs
Post by: GS on March 12, 2014, 11:00:00 PM
Someone pointed out that LC apparently does not have a securities brokerage license.  I assume that's why they have to make it clear that  Folio is handling the trades, it also appears to be the "catch".  LC can't claim the money and notes are staying within the IRAs for tax purposes, while also claiming the money and notes are being transferred in and out of IRA accounts for SEC compliance purposes ... I guess.

It's kinda frustrating that I have to guess ...
Title: Folio and IRAs
Post by: NorseBoric on March 12, 2014, 11:00:00 PM
Okay, it makes sense to me that your Folio account is not an IRA. Selling a note is therefore equivalent to withdrawing money and putting money back in?
Title: Folio and IRAs
Post by: Rob L on March 12, 2014, 11:00:00 PM
from: GS on March 13, 2014, 04:09:41 PM
Title: Folio and IRAs
Post by: yojoakak on March 12, 2014, 11:00:00 PM
from: NorseBoric on March 13, 2014, 06:34:19 PM
Title: Folio and IRAs
Post by: RaymondG on March 12, 2014, 11:00:00 PM
But the amount *withdrawed* is likely not equal to what will be redeposited back after the sale/purchase.
Title: Folio and IRAs
Post by: TravelingPennies on March 12, 2014, 11:00:00 PM
from: RaymondG on March 13, 2014, 10:53:47 PM
Title: Folio and IRAs
Post by: TravelingPennies on March 12, 2014, 11:00:00 PM
It appears that if you take an asset out you have 60 days to put it back or put into another IRA. However, from the IRS pub 590 guidelines:

Quote
Title: Folio and IRAs
Post by: TravelingPennies on March 13, 2014, 11:00:00 PM
from: Rob L on March 13, 2014, 11:55:13 PM
Title: Folio and IRAs
Post by: Boatguy on March 13, 2014, 11:00:00 PM
from: yojoakak on March 13, 2014, 11:08:23 PM
Title: Folio and IRAs
Post by: TravelingPennies on March 13, 2014, 11:00:00 PM
I don't think it has to be a trustee to trustee direct transfer.  I was just reading an article that said you are legally allowed to "loan" yourself IRA money for up to 60 days, for any purpose, as long as you put back into an IRA before the 60 days is up.  I don't think that was the intent for the 60 day grace period, but apparently it's a legal way to give yourself a "bridge" loan.  I wouldn't want to try it, though. 

One of the real limiting factors is that you can only roll over an IRA once every 12 months, so I guess that means you can't trade more than your account value ... in theory.  There are plenty of ways to play this if the IRS wants it's pound of flesh.  I used a Roth IRA and legally I'm allowed to withdraw up to want I put in without penalty or interest, so there is that angle, as well.

I don't think anything will come of this, tax wise.  Tax year 2013 is upon us and Folio is not sending me any IRA distribution filings ... seems like it was now or never.
Title: Folio and IRAs
Post by: TravelingPennies on March 14, 2014, 11:00:00 PM
from: GS on March 14, 2014, 09:03:39 PM
Title: Folio and IRAs
Post by: TravelingPennies on March 15, 2014, 11:00:00 PM
from: Rob L on March 15, 2014, 12:25:32 PM
Title: Folio and IRAs
Post by: TravelingPennies on March 15, 2014, 11:00:00 PM
from: RaymondG on March 16, 2014, 05:05:15 PM
Title: Folio and IRAs
Post by: TravelingPennies on March 15, 2014, 11:00:00 PM
from: GS on March 14, 2014, 09:03:39 PM
Title: Folio and IRAs
Post by: lender_john on March 16, 2014, 11:00:00 PM

I'm waiting for them to 'get their ducks in a row'.. while my IRA return keeps going down and down since I can't (or shouldn't) reinvest anything. 
With the current mess I'd be perfectly happy to sell my IRA portfolio and transfer to another investment.. Of course I can't (or shouldn't) do that either.
Title: Folio and IRAs
Post by: BruiserB on March 16, 2014, 11:00:00 PM
I'm quite pleased with my returns in my IRA account and have no issue continuing to reinvest.  I would like them to get these Folio issues clarified though as I think it would be an advantage to be able to trade in Folio and also it would be an effective way to liquidate if/when it comes time to take a distribution or roll over to a different investment.  Having to wait until all loans pay back to do so seems ridiculous.  It doesn't seem as though it is a real issue to use Folio, but I am refraining from doing so till the doubt is removed. 

It is important to remember that Self Directed IRA Services is technically the custodian of our IRA accounts, so I find it hard to believe a transfer of funds/securities between LC and Folio could be considered a withdrawal or distribution. A distribution would have to come through SD IRA Services. I can understand the concerns about the potential to buy/sell notes with yourself and/or some related 3rd party, but that's just blatantly illegal and it would be stupid to do this. 


Sent from my iPad using Tapatalk
Title: Folio and IRAs
Post by: TravelingPennies on March 16, 2014, 11:00:00 PM
Unfortunately since I'm in a folio-only state, the only way to reinvest is through Folio.
Title: Folio and IRAs
Post by: twigster on April 07, 2014, 11:00:00 PM
I have applied for a Folio account with my newly set up Roth IRA and it all processed OK and then said wait 4 business days.  That was a while ago and it is still in the same status so I called LC and the lady said that Folios are no longer allowed for IRA accounts.

If anyone is successful in getting a Folio open with an IRA after this can you let me know (or if you have any other info)?  It seems very odd (which I pointed out to the girl on the phone) that the system would allow you to apply for the folio and it just gets hung up and never goes though.  She implied there may eventually be a time when it is allowed (again) but could not give any kind of time estimate.
Title: Folio and IRAs
Post by: core on April 07, 2014, 11:00:00 PM
Twigster I took some time to read back and this link has already been given to you and ack'd.

http://www.lendacademy.com/forum/index.php?topic=1674.0

The LC folks will say what ever it is that they want to say. 
Title: Folio and IRAs
Post by: yojoakak on April 07, 2014, 11:00:00 PM
Quote"> from: Zach on March 12, 2014, 12:58:48 AM
Title: Folio and IRAs
Post by: TravelingPennies on April 07, 2014, 11:00:00 PM
Put most of these tax fraudster arguments away.  I can claim billions in losses in options and futures and nobody is the wiser.  Investment taxes, like most taxes, still mostly on the honor system.  Basis reporting on stocks just since 2012?  Yeah, IRS sees tiny fraud opportunity in p2p and goes after it while ignoring 99.997% of the rest of fraud.  Makes friggin sense to me.  Try again.
Title: Folio and IRAs
Post by: TravelingPennies on April 07, 2014, 11:00:00 PM
Quote"> from: core on April 08, 2014, 04:16:57 PM
Title: Folio and IRAs
Post by: TravelingPennies on April 08, 2014, 11:00:00 PM
from: BruiserB on April 08, 2014, 09:45:38 PM
Title: Folio and IRAs
Post by: TravelingPennies on April 08, 2014, 11:00:00 PM
Sorry about posting it in the wrong spot!
Title: Folio and IRAs
Post by: Rob L on April 08, 2014, 11:00:00 PM
Hey Zach, how about moving this thread's posts to http://www.lendacademy.com/forum/index.php?topic=1674.0?
Keeps everything in one place and there is some recent interesting info here.
Title: Folio and IRAs
Post by: Zach on April 08, 2014, 11:00:00 PM
from: Rob L on April 09, 2014, 09:46:42 AM
Title: Folio and IRAs
Post by: TravelingPennies on April 08, 2014, 11:00:00 PM
I just got off the phone with Lending Club again.  This time the guy was more explanatory than the gal I spoke to previously.  He said they were aware of the problem and were working on a fix to allow trading in notes from the IRA accounts.  He said it may be complete within a matter of months but could not give an exact date! 
Title: Folio and IRAs
Post by: TravelingPennies on April 08, 2014, 11:00:00 PM
from: twigster on April 09, 2014, 10:38:35 AM
Title: Folio and IRAs
Post by: thezfunk on April 08, 2014, 11:00:00 PM
from: lender_john on April 09, 2014, 10:49:58 AM
Title: Folio and IRAs
Post by: lender_john on April 08, 2014, 11:00:00 PM
Quote"> from: thezfunk on April 09, 2014, 10:59:58 AM
Title: Folio and IRAs
Post by: Boatguy on April 09, 2014, 11:00:00 PM
Quote"> from: twigster on April 09, 2014, 10:38:35 AM
Title: Folio and IRAs
Post by: core on April 09, 2014, 11:00:00 PM
from: Boatguy on April 10, 2014, 08:38:02 PM
Title: Folio and IRAs
Post by: twigster on April 13, 2014, 11:00:00 PM
Quote
Title: Folio and IRAs
Post by: Rob L on April 13, 2014, 11:00:00 PM
Nothing seems to have changed. All the "thy shalt not" messages regarding IRA accounts and Folio trading are still present on the LC web site.
Title: Folio and IRAs
Post by: Kowser on April 14, 2014, 11:00:00 PM
Well that's a shame. Here I was thinking I would sell notes from my IRA to my regular account for absurd markups and fund my tax-free IRA that way. Not to mention the tax write off on the losing side making such bad investment decisions. Shucks!  ;D
Title: Folio and IRAs
Post by: ggnoob1337 on April 14, 2014, 11:00:00 PM
from: Kowser on April 15, 2014, 01:03:28 AM
Title: Folio and IRAs
Post by: TravelingPennies on April 14, 2014, 11:00:00 PM
Yes it was a "good idea" years ago before people were blabbing about it.  Now you would be rather foolish to openly do anything like this if both accounts are tied to you personally.

If you're going to try it, it's best to find an unrelated third party's account to use for a short time.  The safest thing to do is "borrow" someone's identity who is not involved with LC and create a fresh account that you retain control of.  That way your friend can't change his/her mind in the middle of the operation and decide to keep the temporary profits.  As for legal sources of throwaway identities, I find cocktail waitresses are good for these types of schemes as the girls are often game for an extra $100 here and there, and you can snag a high-resolution copy of their ID right there over drinks.  The waitresses are of course good for other things too.
Title: Folio and IRAs
Post by: yojoakak on April 15, 2014, 11:00:00 PM
from: logan1337 on April 15, 2014, 02:24:45 PM