Author Topic: Dumb IRA Question  (Read 1688 times)

SimplyMarvie

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Dumb IRA Question
« on: June 12, 2016, 11:06:22 AM »
I have a $15,000 IRA that I created when I rolled over a 401(k) from a prior account. I was young and stupid and just wanted the whole thing done with, so I rolled it into an IRA with my bank (USAA). It's been basically not-growing for the 5 years I've had it there, and I'm wondering if it would have been smarter to roll it into my TSP or some other vehicle.

My question is: Is there a way to move it somewhere else without taking a tax hit for withdrawing it? And if so, should I put it in TSP (which would put all my tax-deferred retirement savings in one proverbial basket) or should I consider something else?

MDM

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Re: Dumb IRA Question
« Reply #1 on: June 12, 2016, 11:11:06 AM »
You may find https://www.tsp.gov/PDF/formspubs/tsp-60.pdf helpful.

There should be no tax from this.

MustacheAndaHalf

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Re: Dumb IRA Question
« Reply #2 on: June 12, 2016, 11:38:54 AM »
Is the IRA in a cash account at your bank?  Some banks allow investments, so if you're able to purchase stocks or ETFs that is valuable information.  For example, could you purchase Vanguard Total Stock Market ETF ("VTI") within your current IRA?

If you do a trustee-to-trustee transfer, you can keep the IRA in it's tax deferred form.  That's best, but you also need to have a destination.  I recommend Vanguard, mentioned above, because whichever fund you pick will have low fees.  You would need to fill out forms and submit them to Vanguard, and they would handle the transfer.  Your bank wants to keep your money, so none of the transfers start with them.

I'd also recommend keeping the IRA as your own investment so you have more control over it.  You could invest in a target retirement fund and do little else, or you could break it into bond / stock and even international stock allocations.

MDM

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Re: Dumb IRA Question
« Reply #3 on: June 12, 2016, 12:09:39 PM »
Note that TSP fees are lower than Vanguard Admiral fees.

SimplyMarvie

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Re: Dumb IRA Question
« Reply #4 on: June 14, 2016, 09:27:49 AM »
Note that TSP fees are lower than Vanguard Admiral fees.

This is true. I'm not loving my TSP allocation at present, but I've not leveled up enough to understand what I'm messing with, so if I rolled this it would sit with my target-date funds in my TSP.

I'm wondering if it might not be better to diversify and try Vanguard? Or should one always go with the lowest-cost option? (Right now, we're newbs and just starting to build our 'stache... so the vast majority of our current savings are going into the TSP anyway, and will until we've maxxed both my and Mr. Marvie's contributions)

beltim

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Re: Dumb IRA Question
« Reply #5 on: June 14, 2016, 09:37:42 AM »
I don't think Vanguard makes any sense here.  USAA is convenient and you can just buy one ETF at a pretty low commission if you want to keep your money there.  TSP is cheaper and better than Vanguard, so I can see the draw of that.  But opening a new account at an institution that's more expensive than the TSP and with worse service than USAA  doesn't make much sense to me.