Has Your Bank Lost Your IRA?

A growing trend has been taking place, which hasn't seemed to hit the major media yet. I have been hearing from stockbrokers and financial planners recently about clients who have put their money in Individual Retirement Accounts with the funds invested in bank savings accounts and Certificates of Deposit. And the money has disappeared.

I heard about one recently retired person who invested in over a dozen bank IRAs over many years at a major bank, went to consolidate them, and discovered that the bank has no record of the IRA accounts.

What has been going on? First, I heard that at this particular bank, the branches/managers/employees get bonuses or bonus points for every new account opened. So ever year when this person went to invest $2,000 in an IRA, the bank would open up a brand new IRA account and put the funds in a new savings account or CD. This is how this investor ended up with so many IRAs.

Then if there is no activity in the account (in other words, no contributions, since earning interest is not considered activity), it is deemed to be dormant, and after a certain number of years, the funds are supposed to be turned over to the state. In this case, the state has no record of this person's funds.

Because these contributions had been going on for many years, this person never saved old paperwork going back that far, not even cancelled checks (although in some cases, the funds could have been transferred directly from the checking account to the IRA).

What's an investor to do? In this particular case, let's hope the bank has records going back that far and can find them. But this is one of many cases I have been hearing about, with various banks involved.

The takeaway from this is keep records that may affect something in the future. Any paper records showing retirement contributions should be saved, no matter how many years into the future your retirement is. It doesn't matter whether you are investing with a bank, a brokerage firm, a mutual fund, or an insurance company, keep the records. Any online IRA contribution transactions should be printed out and saved (don't just save a copy on your computer).

The same rules apply to other long term investments, especially real estate, such as documents related to your home and rental property. Hopefully, you won't have to rent a storage unit to save all this paper, but a file box should be more than adequate. Being a micro-packrat can save you a lot of grief.

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How Long Will Your Money Last?

If you are considering retirement, and you are wondering if your investment assets will last for the rest of your live, there is a cool site that will calculate it for you in a simple format. The site, Zunna Calculators, has you pick just four options: your investment horizon in years (in other words, how long you anticipate withdrawing money from your accounts), the account ending value goal ('Don't Go Broke' if you eventually deplete your account by the time you pass away), the required historical success rate (or how certain you want to be of success). and desired annual withdrawal amount.

For example, if you plan on a 30 year period of retirement and you want to be certain that you don't want to go broke before you die, assuming you want a minimum of $50,000 a year to live on, you would need investment assets in the amount of $1,253,133. The maximum sustainable withdrawal rate is 3.99% and the Optimized Portfolio that the site gives is 62.05% large cap stocks and 37.95% US T-Bills.

I have no connection to this site whatsoever, just thought it might be of interest.

Free (for now) Retirement Analyzer

On of my readers recently discovered a flaw on the Retirement Analyzer that I created, which is available through WallStreetNewsNetwork.com. Apparently, I had locked part of the worksheet, which prevented users from changing the amount of assets. In addition, the protection had a password. (And to make things worse, I had forgotten the password.) Anyway, the analyzer is now unprotected. I think that some of the previous users discovered a way around the password, by copying the whole worksheet and pasting it into a new blank worksheet.

The reason why I am writing about this is that I am planning on enhancing it, making it more comprehensive and easier to use, and eventually coming up with a RetAnalyzer Pro. So if you have any feedback about any suggestions or changes to the program, please post it to this write-up. Suggestions can include such things as separating the pension income from the Social Security income, have a worksheet to add up all taxable assets and tax free assets, etc.

The basic premise of the program is to determine if you can outlast your money, based on various assumptions. In addition, you can do various worst-case what-ifs, such as high inflation, low investment return, higher retirement expenses, etc.

As I make each change and update, I will post it to the wsnn.com site. For now, the RetAnalyzer Pro program will still cost nothing, nada, zero, zilch, and zip. No login, no request for you email address.

Thanks for you feedback.

By Stockerblog.com