[Cryptography] Bad and good patterns at my financial vendor

John Levine johnl at iecc.com
Wed Jan 5 20:21:55 EST 2022

I said:
>Back in the day, they left the small deposits in the other account but
>now they usually do a third withdrawal to reverse them. I wonder why.

It appears that Henry Baker <hbaker1 at pipeline.com> said:
>Re: reversing the coded deposits
>I can think of some reasons for *reversing the deposits*:
>* The IRS isn't amused if you 'make a deposit' -- no matter now small -- into a Roth IRA when you aren't allowed to -- possibly
>triggering penalties far in excess of the deposit.
>* Ditto for 'regular' IRA's
>* A 'distribution' is often a taxable event -- no matter how small -- and it may trigger an IRA *basis calculation*, which you will
>then have to keep track of *forever*.

This hack is for bank accounts, not investment accounts. While it is
possible at some investment managers to set up a direct deposit into
a retirement account, it is much more common for it to go the other
way, the investment manager pulls the money from your bank and the
test deposits go into your bank account.

My guess is that someone figured out how to script the process and
was collecting a gazillion of those 49c deposits.


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