What Is the Medallion Signature Guarantee?
This spring, I was wrapping up the calming and never stressful process of converting my previous employer’s 401 (k) to an IRA when I faced a requirement I hadn’t seen before: the Medallion signature guarantee.
The documents warned that this is not the same as getting something notarized. A Notary Seal proves your identity when you sign legal documents, while Medallion’s signature guarantee verifies your identity when transferring securities such as tradable assets in your retirement account.
Here’s a quick guide to the Medallion Signature Guarantee so you’re ready if you need one.
When you need it
You may need the Medallion Signature Guarantee when you sell, redeem, or transfer your securities, such as stocks and mutual funds.
When you prepare to transfer these funds, the bank officer, who provides the seal and signature, verifies your identity until they guarantee the transfer of the amount.
How to avoid it
If institutions can transfer on their behalf and not on your behalf, you probably won’t need the Medallion Signature Guarantee. For example, I asked my old program to transfer my funds directly to my new account, with my name and the name of the recipient company on the check.
Please read all transaction-related forms carefully to ensure that you really need this guarantee.
Where to get
According to the SEC, you can get the Medallion Signature Guarantee from a bank, savings and loan association, brokerage firm, or credit union where you are already a customer. More than 7,000 financial institutions in the US and Canada participate in the Medallion Securities Transfer Agents (STAMP) program. If you are not a customer, the financial institution probably does not guarantee your signature. After all, the bank is risking its own funds to guarantee your signature, so it will need some proof of your financial events. The bank can also set a minimum period of time during which you are a client before he signs these transfers; 6 months is typical.
This very obscure website really helps you determine which banks in your zip code are offering these guarantees. From there, you will need to call the department to make an appointment. When you do, be sure to ask what the bank’s surety limit is to make sure your transaction amount does not exceed it. Many credit unions are limited to a $ 100,000 guarantee.
How to prepare
Banks often offer this service for free, but it may not be something you can do quickly. For example, Bank of America says that while some Medallion signature guarantee checks take only 30 minutes, it most often takes two business days.
Be sure to follow the special rules your bank gives you when you make an appointment. You may need to bring some identification documents along with proof of your ownership of the funds you wish to transfer.