Do you endorse a check made to FBO?

Answer 1

Well, honey, an FBO check means "For Benefit Of," so technically you can't endorse it since it's not made out to you. You can only deposit it into the account of the person or organization it's intended for. So, no, you can't endorse it, but you can sure as heck get it to the right destination.

Answer 2

In short, no. Usually FBO checks (For Benefit Of) are made out to an institutional administrator in a company-to-company transfer, rollover, or 1035 exchange, where the funds are NOT to be handled by the individual for tax purposes. Institution-to-institution transfers are not endorsed by the FBO person because checks are negotiable instruments between the issuing company and the receiving company. Often in these type of transaction a physical check is not issued, but the funds are sent by wire or electric fund transfer (EFT). There are really two reasons for a custodian to issue a paper FBO check: (1) the individual is the sent the check so they know that the correct amount of their funds have been taken out of the previous account. They can then mail the check to the new company and there are no income tax consequences because the check was not made out to them. (2) The previous custodian earns interest on the funds being transferred from the date of issuing the check until the new custodian cashes the check. This interest on uncashed checks is called float. Large institutions have very large sums of money in outstanding checks earning interest, and even at low interest rates, this 'float' can be a sizable amount and the source of considerable income for the institution.