Posted on 10/27/2004 9:23:02 PM PDT by GYPSY286
My son married this past June. His wife had worked at a salon for over 3 years where she had an IRA. She changed jobs recently and received a letter from ABC bank about moving her IRA account.
R&T decided to cash out the IRA in order to move into an apartment (they are living with me). T went to ABC bank, signed the necessary papers to cash out, gave them a voided deposit slip for her checking account at 123 Bank. ABC bank deposited an amount (less taxes and their fee) into their joint account.
Four days later, ABC bank realized they had deposited too much $ and attempted to take it back directly from R & T's joint account since they had the numbers, althought they had no authorization to take money, only to deposit money. They did not even bother to contact R & T by phone first to explain their error.
ABC bank attempted every day for four days to retrieve their mistake and R&T have in excess of $200 of bank fees for insufficient funds. They went to 123 Bank and were told that there was nothing 123 Bank could do about the attempts because ABC bank had the account number. My son contacted the manager of IRA accounts at ABC and explained that the funds were gone, and would be willing to make monthly payments to return the funds but would deduct the $200 bank fees because of their attempts to take the money back. The manager refused, told him he would hear from the bank attorney and hung up on him. R&T have since closed their account at 123 Bank to avoid further insufficient fund fees. Are the kids at fault even though the bank made the mistake?
What is this about making monthly payments? Why doesn't your son offer to return in full the amount that is not rightfully his?
That happened to me too, not exactly the same but very similar. I told them to pack sand and eat it.
They put in on my credit report but I refused to pay them a dime.
They just went away.
I told them that I wouldn't pay unless they settled, but they were willing to lose all rather than get some. They must have thought I wasn't serious.
Yes, they are responsible. They should have noticed that the amount deposited was incorrect, and they should not have SPENT it!!!
Your son took what didn't belong to him. Not only that, someone is going to be hit with a tax bill and penalty if they dont roll that IRA into another IRA account within 60 days. Come on, would you encourage your grandkids to take the money (of someone else) and run?
Let me clarify -- your kids are responsible for knowing how much money is in their account and for NOT SPENDING money that isn't THEIRS!
That's showing them. With interest and fees, you'll end up having to pay them twice that amount if you want to get a mortgage. And if you ever want a car or consumer loan, you'll pay a higher interest rate.
Does your state have a "Banking Commission" or some oversight/regulatory agency? If so, start there.
I had a similar problem, where an online transaction from my cable company (the cable company took 14 separate payments of $89 in ONE DAY) and it caused problems, but the bank was very cooperative and the Cable company made good on their error. The comsumer cannot be held responsible for banking fees which are not directly or indirectly attributed to the consumer...ie bank error, or vendor error)
Did you read the story? They took what wasn't theirs. The bank was trying to get it back. I don't think that was the case in your situation.
Maybe, maybe not. The only issue was did they know that they had received too much money. Your information leaves out 2 facts that I would need to know to give a more reliable opinion. 1. Were they aware of the correct amount that they should have received? 2. Did they have knowledge of the overpayment before they withdrew the money from the account? If they had knowledge of the overpayment, and removed the money from the account anyway, then they could have some liability. But I would argue that this would be something the depositing bank would bear the burden of proof. If they had no knowledge of the overpayment, and the the depositing bank gave them no notice, or demand for repayment, thus causing the overdraft charges...then the depositing bank would be the one to bear the cost thereof. But that is what concerns me about your recital of the facts. Did they withdraw all or most of the money after it was deposited (your kids that is)? If they did, then they should have had some knowledge of the overpayment...and they might be stuck. Provide me some more info and I will try to be more detailed. If you want, PM me. And yes...I am an attorney.
Not necessarily. Potential creditors often overlook "disputed" situations for modest amounts.
Your kids need an attorney admitted in the state where this occurred. This is not legal advice, and neither you nor your children are my clients, but if they received more money than they were entitled to, they may not keep it. If they do attempt to keep it (i.e. the withdrawl) they would be at fault, the extent of which would depend, in part, on whether they knew the amount was greater than they were supposed to get. (i.e. if the total deposited exceeded the IRA balance, it should have been obvious it wasn' t all their money) Don't fool around on this, as it could affect their credit and ability to do major things like buy a house (get a mortgage) or car.
I think they're on the hook for the NSF charges. But your mileage may vary.
I had a similar situation happen a few years ago with one of my clients which almost exactly duplicated the circumstances that you described. Ultimately, the depository bank (123 Bank) had to refund the overpayment to the IRA Fund (ABC Bank). The depository bank then sought restitution from my client who had to hire an attorney to ultimately work out a payment plan with the bank.
The recipients will be able to keep the excess funds due to a bank mistake.
No wonder they were living with you. They don't have a clue how the real world works. They better kiss buying a house goodbye for about 7 years. No bank wants a customer that screws banks. They should have never spent the overage they knew wasn't theirs.
Come on you guys. How many of you know to the penny how much you are getting if you cashed in a 401K or IRA? I know I would have probably only known an approximate amount.
Haven't any of you ever had to live on a budget or from pay check to pay check? I take it that these young people spent the money to get into an apartment and didn't have the money to pay back in a lump sum. That is why they asked to make payments. These kids weren't trying to steal from anyone. Don't be so hardnosed, have a heart.
My point was, the I/F wasn't caused by the bank...it was caused by the cable company helping themselves 13 times to many, of $89. Its not the banks fault, but worked with me. In fact, the bumped by overdraft to $1000 to protect against other outstanding checks.
Their bank put to much in...then tried to get it back...the kids should have been aware of the error and not spent it, but in the same breath, the bank must give the consumer some period of time to remedy, if the bank extracted the funds to force the account into the red.
Your son has an obligation to return the money that is not his.
But it IS your error if you spend money that isn't yours. It's your responsibility to know what your balance should be.
With these kinds of accounts, you often don't know how much you really have in them. IRA's flucuate, and they also put in and take away fees when you withdraw them.
We cleaned out our IRA years ago when my husband first became ill. The Thrift Savings Plan sent me a statement of what it was worth, and that was that. I probably wouldn't have known off the bat if it was wrong or not.
The Office of Personel Mgt overpaid us by $1800. We didn't know. We spent the check. A month later we got a notice. We had to pay every month for $5 years, which we willingly did. It would have given us severe problems if they just kept trying to take the money back out of our account.
I don't think anyone can EVER take money out of your acct without your permission, without a court order. Let a lawyer correct me, but like everything in this life, everything has to go through due process and according to the law.
Oh, by the way, our IRA sent us a check two years later - they had underpaid us.
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