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Author: dglaser Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121441  
Subject: bought 1 share past cash in ira Date: 12/20/1998 10:29 PM
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Hi to All,

In November I deposited a rollover check into my SEP-IRA at Datek, providing the only funding to this new account. I calculated the number of shares for the current RP4 at the time, and bought them all. However, the four transactions left me short in the account about $17.

I figured the last buy order would not go through if there was not enough cash in the account, and since this is an IRA there is no (should not be) margin. However, when I spoke with Datek they said all accounts get a $250.00 "margin" automatically. They said I could send them the $17 within 3 days or I could sell a single share. I elected to sell a single share (for exactly the price I paid for it).

My concern is not knowing what the IRS may do or require, etc. The account was in "margin" of about $17 for about 15 minutes till I sold the single overbought share.

Am I in for a major hassle?

Thanks in advance for any thoughts you may care to share.

dglaser

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7432 of 121441
Subject: Re: bought 1 share past cash in ira Date: 12/21/1998 6:09 PM
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[[ Hi to All,]]

Howdy...

[[ In November I deposited a rollover check into my SEP-IRA at Datek,
providing the only funding to this new account. I calculated the number of shares
for the current RP4 at the time, and bought them all. However, the four
transactions left me short in the account about $17.]]

Well...I'm kinda lost here right off the bat. Generally, if you are making a rollover from a prior pension/profit sharing plan, it goes to a regular Rollover IRA...and NOT a SEP-IRA...which is really a completely different animal. So I'm a bit hesitant to move forward, but I'll give you the best that I got.

[[ I figured the last buy order would not go through if there was not enough cash in
the account, and since this is an IRA there is no (should not be) margin.
However, when I spoke with Datek they said all accounts get a $250.00
"margin" automatically. They said I could send them the $17 within 3 days or I
could sell a single share. I elected to sell a single share (for exactly the price I
paid for it).]]

OK...

[[ My concern is not knowing what the IRS may do or require, etc. The account
was in "margin" of about $17 for about 15 minutes till I sold the single
overbought share.]]

The worst that could happen is that you would have to report a $17 distribution from the account, subject to taxes and potential penalties. But what will your broker report? I really don't know. And can you ignore this simple "blip" on the screen? Legall not, but I doubt that anything will happen if you look the other way on this minor, minor issue.

[[ Am I in for a major hassle?]]

I would sincerely doubt it.

[[ Thanks in advance for any thoughts you may care to share.]]

Hope this helps...
TMF Taxes
Roy

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Author: dglaser Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7464 of 121441
Subject: Re: bought 1 share past cash in ira Date: 12/22/1998 10:07 AM
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In response to:
[ In November I deposited a rollover check into my SEP-IRA at Datek, providing the only funding to this new account. I calculated the number of shares
for the current RP4 at the time, and bought them all. However, the four transactions left me short in the account about $17.]]

TMFTaxes wrote:
Well...I'm kinda lost here right off the bat. Generally, if you are making a rollover from a prior pension/profit sharing plan, it goes to a regular Rollover IRA...and NOT a SEP-IRA...which is really a completely different animal. So I'm a bit hesitant to
move forward, but I'll give you the best that I got.

***

Sorry I wasn't clear, and thanks for the response. But you raised an interesting point concerning SEP-IRA vs Rollover IRA, so here goes......

The check was the result of a request to my former employer to send me a check, made out to the SEP-IRA trust company that Datek uses, with my account number printed on the check along with FBO (assuming for-benefit-of) and my name. The ex-employer plan is a savings/profit sharing and (I think) retirement plan.

All contributions I made were pre-tax contributions, + company matchings.

Now I am employed by an S-corp in NJ, of which I am 100% stockholder and the only employee. I set up the SEP-IRA plan and then made the above request to my form emploer so as to fund my new plan. The entire process from request to deposit in new plan account took less than a month.

Have I done something which the IRS will not like? I am confused by the terms rollover/transfer, and was careful, upon much advice, to ensure that at no time did I recieve any funds (distributions?) in my own name. Hence the check was made out to the trust company.

Thanks again. You eased my mind in one area but now I worry about a new wrinkle :0 :)

dglaser









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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7498 of 121441
Subject: Re: bought 1 share past cash in ira Date: 12/22/1998 7:10 PM
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[[Have I done something which the IRS will not like? I am confused by the terms
rollover/transfer, and was careful, upon much advice, to ensure that at no time
did I recieve any funds (distributions?) in my own name. Hence the check was
made out to the trust company.]]

"Holding" or "receiving" the funds is not the issue. It is just very, very unusual that you would "rollover" or "transfer" your prior pension funds into a SEP-IRA account. And, since I wasn't there, I can't be sure exactly WHAT you did.

But I would certainly question my DATEK broker as to why they recommended that you "rollover" your pension funds to a SEP-IRA account. And if anything needs to be corrected, now is the time to do it.

[[ Thanks again. You eased my mind in one area but now I worry about a new
wrinkle :0 :)]]

Nothing to really worry about. We may just be getting confused with the terminology. Perhaps something else was done that you are not aware of, or are forgetting to tell me. Perhaps I'm just misunderstanding the issues.

But in any event, double check with your Datek broker, make sure that the BROKER understands what you were trying to do, ask him why he "rolled" you pension money to a SEP-IRA rather than a regular IRA Rollover account, and make sure that you guys are all square. There shouldn't be any problems whatsoever.

TMF Taxes
Roy

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