Author Topic: I can have a taxable account, but not an IRA? What?  (Read 1423 times)

SarahV

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I can have a taxable account, but not an IRA? What?
« on: February 11, 2013, 03:25:53 pm »
So I am trying to set up a Lending Club IRA account, and in the process I thought I had done something wonky, so I e-mailed support to ask them to see if I'd done it right.

When they e-mailed back about my question, they added: "As a Massachusetts resident, you can participate via a taxable account in our secondary market (The Note Trading Platform) buying and selling notes . Massachusetts residents are restricted from participating in the issuance of notes on the primary platform by state securities authorities. Also, please note that residents of restricted states such as Massachusetts are not able to buy and sell notes via an IRA on the secondary market at this time."  (Emphasis mine)  They helpfully added some links to FAQs and even a Lend Academy post, none of which said anything about Massachusetts residents and IRAs. I can't find anything about it on their site, although I do find it hard to navigate the Folio/LC FAQs.

I've never read anything about there being different rules for IRAs than taxable accounts on what kind of securities are legal or not legal. Is this something other people have run into? I'm really disappointed, I was planning on at least tripling my investments into LC and now I really can't because that money is earmarked for retirement.

AmCap

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Re: I can have a taxable account, but not an IRA? What?
« Reply #1 on: February 12, 2013, 12:19:39 am »
Maybe check the prospectus?  Ctrl+F IRA or something and see if they disclose something.

SarahV

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Re: I can have a taxable account, but not an IRA? What?
« Reply #2 on: February 12, 2013, 12:41:58 pm »
Didn't turn up anything about IRAs in the prospectus.

I wrote back to them yesterday and asked where I could find the information on which states are allowed to have IRAs and which aren't, so they wrote back and gave me the list for which states can use the retail platform, with no comment on IRAs at all.  ::)  I wrote back again asking for clarification and linked them to their own blog post saying that my state can invest on the note trading platform.

SarahV

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Re: I can have a taxable account, but not an IRA? What?
« Reply #3 on: February 12, 2013, 06:02:18 pm »
They wrote back and told me that IRA holders can ONLY invest in notes on the retail platform, so if you can't invest on the retail platform (i.e., Folio-only states) you cannot have an IRA with them.

"IRA account holders are only allowed to purchase notes at issuance, and are restricted from trading notes on the Note Trading Platform. This restriction may not be permanent. We will work with our marketing team to clarify the limitations on IRAs."

So I guess you can't sell notes in an IRA, either? That seems crazy... they really need to make this info easier to find. I asked them for a link to where it says all this, and they never could give me one.

thezinfan

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Re: I can have a taxable account, but not an IRA? What?
« Reply #4 on: February 12, 2013, 06:47:28 pm »
I have an IRA account and can trade notes (although I only sell notes). I'm in a full LC state (Washington)...in fact, one just cleared folio 5 minutes ago.

SarahV

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Re: I can have a taxable account, but not an IRA? What?
« Reply #5 on: February 12, 2013, 10:41:32 pm »
I'm not surprised - I thought I would have surely heard about it by now if IRAs were actually restricted from trading notes.

I can't find anything about this on their web site, and they can't apparently send me a link to show me the rules, so really all I have to go by is this one random support person who doesn't seem to understand it very well. Frustrating.

Peter

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Re: I can have a taxable account, but not an IRA? What?
« Reply #6 on: February 13, 2013, 09:01:05 am »
Sarah, When I read your initial post it was news to me. I am in SF today and happen to be meeting with LC management. I will get a straight answer for you and report back.
Publisher of the Lend Academy blog

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SarahV

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Re: I can have a taxable account, but not an IRA? What?
« Reply #7 on: February 13, 2013, 12:07:49 pm »
That would be great, Peter! Thanks!

nonattender

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Re: I can have a taxable account, but not an IRA? What?
« Reply #8 on: February 13, 2013, 03:09:57 pm »
This'll be good.

faeriering

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Re: I can have a taxable account, but not an IRA? What?
« Reply #9 on: February 14, 2013, 04:23:42 pm »
I have an IRA account and trade on the secondary market.

Peter

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Re: I can have a taxable account, but not an IRA? What?
« Reply #10 on: February 14, 2013, 10:50:27 pm »
Interesting. Well I am afraid that I didn't get a straight answer at LC. They are running it by their legal team for clarification and have said they will get back to me. Will let you know when I hear back.
Publisher of the Lend Academy blog

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SarahV

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Re: I can have a taxable account, but not an IRA? What?
« Reply #11 on: February 14, 2013, 11:22:23 pm »
Thanks for asking them.

At least now I can be sure I wasn't asking a stupid question :-)

nonattender

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Re: I can have a taxable account, but not an IRA? What?
« Reply #12 on: February 15, 2013, 08:19:13 pm »
It's a great question, Sarah, but it goes to the heart of LC's decision to sell securities into states where they aren't approved to sell them.

You're not going to get a "real" answer - their legal department would never allow it.

SarahV

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Re: I can have a taxable account, but not an IRA? What?
« Reply #13 on: February 15, 2013, 10:03:51 pm »
I don't think that's the issue - they straight-up said that we are allowed to trade on the secondary market in a taxable account but not in an IRA. They gave me a straight answer, I just think it may have been a wrong answer because it is contradictory to other people's experiences.

SarahV

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Re: I can have a taxable account, but not an IRA? What?
« Reply #14 on: March 03, 2013, 03:50:36 pm »
Interesting. Well I am afraid that I didn't get a straight answer at LC. They are running it by their legal team for clarification and have said they will get back to me. Will let you know when I hear back.
Peter, just curious if you heard anything back? I'm guessing not, but I just thought I'd ask since I am very interested in the answer and in theory it seems like an extremely simple question  ;)