Well this sucks. I have a Lending Club IRA and decided to start the process to slowly roll out of Lending Club and move the funds over to my Vanguard IRA in traditional investments. Just haven't been happy with the return in my LC IRA, as it didn't match my prior experience with a taxable Lending Club account (late-note adjusted return is just about 5% with average age of notes less than 1 year... barf).
For my taxable LC account, I've set up some automated sales with lending robot, and have sold most everything with no discounts, other than late notes. Over the past year, I've wound down the account to just 25% or so of the value it was this time last year. I usually pull out the cash weekly, without fee, via ACH -- super easy.
Winding down the LC IRA won't be so easy. The fee for any "partial transfer" is $50, courtesy of SDIRA. And then the account termination fee is $150. Note sure if one transfer and termination would therefore cost $200. Shit.
https://quikforms.com/viewform/zpWO-MeLbKwAm --> Fee Schedule actually indicates partial transfer fee of $100 and account termination fee of $250, but apparently it's lower for Lending Club IRAs.
Does anyone have experience getting out of an LC IRA? I suppose to minimize fees it would be best to sell everything and transfer it once, but that means either (i) sitting on cash sitting for a long time while winding down slowly using automated sales, or (ii) trying to liquidate more quickly, but that likely requires significant discounts.
Of course when Googling IRA transfers and Lending Club, I find a million articles about how to roll IRAs to Lending Club, but have not easily found info about getting out. IMO, these fees are absurd (esp. for the partial transfer), given that Lending Club itself doesn't charge anything to withdraw from their taxable accounts. Perhaps I should've considered this more carefully when opening the account, but I was more focused on how to get the annual fee waived and how much better the returns would in the tax-advantaged account. Please feel free to punch me in the face for this one, and then let me know if there are any strategies for dealing with this headache.
Err yeah, sorry that you bought an IRA. I was close to buying one until I saw that fee schedule. I didn't like the fees to get out. I don't know how much money you put in, but trying to sell everything on the Secondary Market and just close it out all at once sounds like the way to go.
I've recently decreased my minimum discount requirement in my Sec. market buy account. Whereas before I bought notes at 10-15% (making about a 8-9% return) discount, I require a 15-25% discount now with he same note conditions as before. The recent lending club wave of defaults is going to make liquidating more expensive. My best investment buys on the secondary market are A-C loans. Lending Club in my estimation has been way off in D-G loans, and you'll likely have to sell those at discount.
I came up with a strategy to get out of a LC IRA as efficiently as possible, but it's fairly complicated:
--SDIRA, the custodian that manages Lending Club IRAs, allows you to invest in other assets (e.g. ETFs) if you open a separate IRA brokerage account with TD Ameritrade.
--Funds from the LC IRA can be transferred to TD Ameritrade for a $25 wire fee or for free with check (from SDIRA to TD Ameritrade).
--Normally this would increase the SDIRA annual fee from $100 to $175. However, Lending Club covers the annual fee (that is normally $100) that occurs on the 1st anniversary if you have more than $5000 invested in LC notes, and covers the fee on the 2nd anniversary and thereafter if you have more than $10k.
--In my case, the 1st anniversary annual fee is set to be charged in March 2017. With more than $5k in LC Notes, LC will cover this fee to SDIRA.
--After that fee is covered, I can open a separate brokerage account with SDIRA via TD Ameritrade, and the fee will have already been paid that year (and the $175 fee for the next year will not occur until March 2018). So basically you get 1 year free with TD Ameritrade.
--Sell notes with Lending Robot over the year, periodically transfer cash from SDIRA LC IRA to SDIRA TD Ameritrade IRA until all funds are held in TD Ameritrade.
--TD Ameritrade has certain commission free ETFs (including VTI).
--Once all cash is converted from LC to TD Ameritrade and held in a single ETF (VTI), this can be transferred to Vanguard IRA.
One negative -- once the whole balance is rolled over to TD Ameritrade, and is then closed out and rolled to Vanguard, there is a $250 account termination fee (and a $100 'partial termination' fee for any partial transfers) rather than the semi-reduced LC IRA fees which are $150 for termination and $50 for partial termination.
The benefits for this over-complicated solution is that you don't have to choose between (i) cash sitting around while liquidating the Notes, or (ii) liquidating notes at a steep discount to minimize idle cash. Instead funds can periodically transfer to TD and be invested in an ETF while the LC notes are liquidated more gradually without fire-sale discounts. Then the ETF holding can be transferred over from TD Ameritrade to Vanguard once so as to minimize fees. So long as this is completed by March 2018, there should be no additional fee other than the $250 account termination fee.
Hopefully that strategy will be useful if anyone else attempts to get out of the LC IRA.