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How to Open a Lending Club IRA

by Peter Renton on April 5, 2011

I have mentioned before that I am a big fan of the Lending Club IRA. I rolled over all of my wife’s 401(k)’s and other IRA’s into Lending Club last year. Now, I am opening a new IRA in my own name. So, I thought I would create a short video and share with everybody how simple it is.

Now here are a couple of things to keep in mind if you are thinking about a Lending Club IRA:

  1. Your paperwork and check need to received at Lending Club by April 15, 2011 to be eligible to open a 2010 IRA.
  2. Your IRA will be “No-Fee” (as in free) if you open your account with $5,000. To maintain the “No fee” status you need to kick in more money next year to ensure your balance is above $10,000 after 12 months.
  3. You can open a Traditional IRA, a Roth IRA or a SEP IRA.

I believe everyone, if at all possible, should use an IRA instead of a regular taxable account when investing at Lending Club. You don’t have to deal with all the hassles of working out your peer to peer lending taxes and your money grows tax free. And the process is so simple. The video is just over five minutes and the whole process from start to finish took me about ten minutes. Here’s the video.

For Prosper investors at this time unfortunately you do not have an option to open an IRA there. If you want to use a retirement account for your p2p lending investments then Lending Club is your only option.

One last tip, when writing your check you need to make it out to SD IRA Services FBO [your name]. This part is not made clear on the application so I thought I should clarify here.

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Aaron April 5, 2011 at 12:54 pm

Is there any info on rolling over a 401k? Or any other IRA?

Peter Renton April 5, 2011 at 2:43 pm

@Aaron, Holy crap! I actually missed including a section in the original video, and that is the step that deals with rollovers. That is now fixed in the video (go to 2:06 in the video for the step that was missing – I recorded each step in separate segments and somehow missed a segment). Thanks for bringing this to my attention.

You can rollover an IRA or 401k – I did this on four different retirement accounts for my wife last year. Let me know if you have any more questions.

Dan B April 5, 2011 at 7:26 pm

So the IRA cannot be opened via a ACH, is that correct??

Peter Renton April 6, 2011 at 10:31 am

@Dan, I double checked with Lending Club on this one. ACH is definitely not available for new IRA setup or for new contributions to an existing IRA. I was told there is a wire facility but the funds have to go through SD IRA Services, the third party that processes the money (not really worth the extra hassle and expense). I was also told by my rep at Lending Club that they are working on something that will allow an ACH type transfer for new contributions but it is not close to being implemented yet.

Dan B April 6, 2011 at 1:16 pm

Thanks for checking Peter.

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