My Banker has My Back…and the Dagger’s in up to the Hilt

Wow!  I always thought banks had to operate on some code of honor.  That they were more upright than the average financial advisor/broker.  I no longer think that way.  Let me tell you about what I’m experiencing with my bank.

I wanted to enter into a business with my daughter.  The purchase price was steep but the value appeared to be there and our new partner appeared very experienced in the field.  None of that was true…but that’s another story.

I had some retirement assets in an IRA managed by the Wealth Management section of my bank.  I was willing to use these assets for the purchase of the stock in the business (yes, I’m past 59 1/2) but wanted to avoid paying income taxes on the distribution.  So instead, I borrowed the money at the same bank where I held the IRA.  The business profits could pay down the loan but if worst came to worst, I could liquidate any remaining balance with an IRA distribution.

So, fast forward two years to this past January, and I’m struggling to decide whether to pay off the loan or not.  The decision hinges actually on whether I believe the market will have more upside than the interest on the loan because then I’ll make some money.  The tax issue on a IRA distribution appears moot since the original investment soured (at least so I believe).

I think, I ponder, and eventually come to the conclusion that I see more downside issues in the market than upside…so “SELL!” I says to trusty banker and send the balance in excess of the loan payoff to me.

Dutifully, he emails me a letter of instruction to sign on Jan 13 which I return signed via email the same eve.  So I’m relieved that’s all over and, since I’m busy as hell at work, I’m glad I can concentrate on that.  Over the next two weeks, the bottom falls out of the market and I’m feeling really good about my decision.

Well, subsequently, I begin wondering where the portion of the distribution that’s to be sent to me could be.  So I call trusty banker who informs me that he’s been trying to get a hold of me (true as it turns out but I’m not reading much email at the time) because there’s an IRA distribution form that has to be signed.  He sends on the 25th and I return on the 29th.

Subsequently, I do get my portion of the distribution but it’s a LOT less than I anticipated.  Huh!?  “What gives?” says I to trusty banker.  “Oh, well you didn’t send the form back promptly” is the essence of his reply.  The assets weren’t actually sold until the 28th, the nadir of this particular market slide.  “Oh crap” (significantly sanitized version) says I and I go bury myself in work.

So pretty straight forward…no one to blame but myself…or so I thought. Read the next post for learn more…