Author Topic: How to pic an IRA to roll into?  (Read 2692 times)

ericnaz

  • 5 O'Clock Shadow
  • *
  • Posts: 9
How to pic an IRA to roll into?
« on: January 24, 2015, 07:11:59 PM »
Hi, I just found this site a week or so ago, and I've learned sooo much already, and it has really got me motivated to get out of debt, save, and hopefully retire early!

Anyway, my wife worked as a teacher here in AZ for about 5 years, and has about $30k in her AZ state retirement account. We would like to roll it into an IRA, but we don't know where to start in picking an IRA... is there one company that is better than another?  I've always had a 401k, so i've never bothered looking.

Can someone point me in the right direction?  TIA!

trugrit03

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: How to pic an IRA to roll into?
« Reply #1 on: January 24, 2015, 07:35:36 PM »
Hey, welcome to the site. I think your first step here is ensure that your wife CAN actually rollover her assets from her retirement account into an IRA. Teachers frequently have 403B plans that have similar rules to a 401K, which means that she may not be able to rollover assets until she reaches the age of 59.5 or terminates employment.

Next, ask yourself why you want to roll the account over. Different accounts have different features. An IRA isn't necessarily the best place for her money(although it CAN be in many cases). Her employer account might have some services or investment options that you can't get elsewhere. Some employer sponsored plans also provide additional protection from creditors, though this isn't a major consideration for most people.

I think there are two main reasons people might want to get out of their employer plan and into an IRA; fees and investment options. Some employer plans will light you up with fees. They could be fees for someone to administer the plan, or some sort of finance adviser who helps them choose what funds to make available. Plus maybe a service fee. The investment options themselves might have fees, like front and back end loads and 12b-1 fees. So far as funds go, some employers only offer a handful of funds. So say your wife is interested in investing in Japan for some reason, her plan might not offer a fund that gives her that option. When you pick an IRA custodian, I'd suggest you consider those exact things; fees and investment options. Big fund companies like Vanguard, Fidelity, and T Rowe Price typically offer IRAs with a minimal service fee like under $50 annually. They frequently even waive that fee based on things like your balance. Look at the funds that the company offers to make sure they have a selection that works for you. I'd also consider being careful opening an IRA through a company like Edward Jones or Raymond James that don't offer the funds themselves. That means that you'll probably have to pay a fee to them and they frequently deal with fund companies that have loaded(fee) funds. I'm not saying it couldn't work out, I'm just saying your investments would have to do pretty well to cancel out the cost of the fees. Hope this helped.

FarmerPete

  • Bristles
  • ***
  • Posts: 346
Re: How to pic an IRA to roll into?
« Reply #2 on: January 26, 2015, 09:05:24 AM »
Vanguard and Fidelity seem to be the popular choices on this board.  Both have very good selection and low fees.  I personally use Fidelity, because having an account there is a necessity to have their 2% cash back credit card.  I like my 2% cash back credit card.  :-)


Singularity

  • 5 O'Clock Shadow
  • *
  • Posts: 68
Re: How to pic an IRA to roll into?
« Reply #3 on: January 26, 2015, 09:52:13 AM »
Vanguard and Fidelity seem to be the popular choices on this board.  Both have very good selection and low fees.  I personally use Fidelity, because having an account there is a necessity to have their 2% cash back credit card.  I like my 2% cash back credit card.  :-)

Agreed, Vanguard has very low cost funds and is recommended.  I moved my accounts to Vanguard and am very happy.
You can build a simple portfolio of just 3-4 funds.  This wiki may help you get started: https://www.bogleheads.org/wiki/Lazy_portfolios#Core_four_portfolios 


Thanks for your first post.  Not sure on special rules governing educational retirement accounts. 
How are you doing with your savings rate and MMM Frugality?  Where are your new retirement savings going?  (That is significantly more important than how you are invested)


« Last Edit: January 26, 2015, 09:55:29 AM by Singularity »

James

  • Handlebar Stache
  • *****
  • Posts: 1680
  • Age: 47
  • Location: Rice Lake, WI
Re: How to pic an IRA to roll into?
« Reply #4 on: January 26, 2015, 09:56:51 AM »
I use Vanguard, they were very helpful and walked me through the process of rolling over into their accounts. If you call them they will make sure you get it done with minimal pain.

Fidelity is probably good also, my employer uses them so my current retirement accounts are with Fidelity. If I had know about that I might have gone with Fidelity for all my accounts, but I won't bring them over from Vanguard at this point because Vanguard was great to work with and I don't mind working with two different companies that are both good.

Curious about the 2% cash back card with Fidelity, will have to look into that...
Edit: Looks like it is 1.5% for the first $15k and 2% after that, still good, but not as great as it sounded...
And you need a non-retirement account to deposit into, otherwise you have to ask for a paper check to get your cash back. I don't like those complicated systems...
« Last Edit: January 26, 2015, 10:02:18 AM by James »

ericnaz

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: How to pic an IRA to roll into?
« Reply #5 on: January 26, 2015, 11:29:40 PM »
Hey, welcome to the site. I think your first step here is ensure that your wife CAN actually rollover her assets from her retirement account into an IRA. Teachers frequently have 403B plans that have similar rules to a 401K, which means that she may not be able to rollover assets until she reaches the age of 59.5 or terminates employment.

I forgot to mention that she does not work for the state school system anymore.

ericnaz

  • 5 O'Clock Shadow
  • *
  • Posts: 9
Re: How to pic an IRA to roll into?
« Reply #6 on: January 26, 2015, 11:35:47 PM »
Vanguard and Fidelity seem to be the popular choices on this board.  Both have very good selection and low fees.  I personally use Fidelity, because having an account there is a necessity to have their 2% cash back credit card.  I like my 2% cash back credit card.  :-)

Agreed, Vanguard has very low cost funds and is recommended.  I moved my accounts to Vanguard and am very happy.
You can build a simple portfolio of just 3-4 funds.  This wiki may help you get started: https://www.bogleheads.org/wiki/Lazy_portfolios#Core_four_portfolios 


Thanks for your first post.  Not sure on special rules governing educational retirement accounts. 
How are you doing with your savings rate and MMM Frugality?  Where are your new retirement savings going?  (That is significantly more important than how you are invested)


We're not going crazy with the frugality yet, but we are definitely putting off big purchases and stuff like eating out. My wife NEEDS to watch her stupid shows (I'll admit, I have a few she'd call stupid as well. lol), so we're keeping cable.  But we're getting serious about paying off debt more than ever.

Retirement is going into 401k accounts through our employers for now, but I've been thinking of getting an IRA for her, since her company doesn't match anything.