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Closing down a Prosper IRA: issues, tips and traps

Started by Peter, March 12, 2017, 11:00:00 PM

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I planned to close my IRA Prosper accounts and had been transferring funds out to my Fidelity accounts everytime $10,000 in cash accrued. When the shut down of FolioN was announced. I fast-tracked my shutdown by selling everything on FolioN in the week remaining.

Each account was already down to about $10,000.00 when I launched the sales on FolioN.

The fees for annual maintenance were my initial target -- selling notes in a single calendar year and avoiding the Prosper annual fee once I got below the $10,000 minimum. But I discovered that the larger fees (by 3x) are the account closing fees at Equity Institutional. I arranged to pay these fees on a credit card, so the maximum tax-sheltered amount could rollover to my Fidelity IRA. You must set up the credit card payment before issuing the order to close the account.

Stray notes are a problem. Several notes went late in the week I was selling off, and then came current again, but too late to get sold. And a couple of late notes were in collection, which can take months to wind down. My shutdown started last October, and 5 months later is complete, sort of (see below). As soon as the accounts went to zero, Equity Institutional took the last bit of cash from Prosper and then sent it to Fidelity.

HOWEVER, now both accounts are showing a balance again. There must be some bookkeeping lag at Prosper. In my case, my EI account is now closed, so I don't have a way to move these stray amounts out. Since these are IRA accounts, this might be a problem for the IRS. I'm going to contact Prosper and see what they suggest. A wait of an extra few months would have solved this, if I'd had any idea it was possible.

Prosper told me last December that they plan to have another way to sell notes, but don't yet have anything definite. 

Debt Free

I don't know Prosper, but I wonder if you can capture the remainder with a 60-day rollover paid directly to you?


I haven't heard back from Prosper yet, but yes, the amounts are small. I'm not going to worry about it, just wait for Prosper to figure out how they want to handle this. They know I can accept payout (I'm over 59.5) and they may also revert the stray funds with a bookkeeping adjustment. It is not enough money to fret over.

But others can avoid it by simply knowing they should wait a bit after hitting zero to close your IRA trustee account.


How do you move cash from your Prosper account to your Equity Trust account?
My Prosper account shows all cash and no notes but my Equity Trust account shows no cash and all securities.
With Lending Club you just use the Transfer Funds feature of their website to move cash but Prosper doesn't seem to have this.
I think I may need a form but I can't find one to download from either the ET or the Prosper websites.

Funny thing but I transferred cash from Prosper back to Fidelity a year ago and all I can find that I submitted at that time was a TOA to Fidelity to request the transfer from Equity Trust. As far as my records indicate Equity Trust moved the cash from Prosper to them and then to Fidelity without anything else from me.


NEW LOANS:   | 8033.eth 0.349 Ξ | 5033.eth 0.349 Ξ | scyther.eth 0.800 Ξ | ALL