Author Topic: Itty bitty little rollover...  (Read 3180 times)

Frankies Girl

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Itty bitty little rollover...
« on: February 22, 2014, 12:12:33 AM »
I'm torn on what to do with this darn account.

Rollover IRA (former 401k I'd forgotten about) with about $950 in it. In cash right now (sold off the crappy fund it was holding).

Should I just roll it to my Roth, or keep it as a separate account? If I do roll it to the Roth, will that count as part of my 2014 contribution? It will count as income and I'll need to pay taxes on it, but it is so small, I doubt it's going to have much of an impact.

I can't get into any index fund that I know of since it's under the minimum investment level (my go-to is the Spartan total stock index - $2500 minimum). I have it with Fidelity, so I'm pretty sure I can do ETFs for dirt cheap, but I've actually never done ETF buys. I also haven't been able to determine if Fidelity has a ETF equivalent of the VTI, otherwise I think I would have just done that before now.

So any suggestions?



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Re: Itty bitty little rollover...
« Reply #1 on: February 22, 2014, 01:44:03 AM »
I'd probably just convert it into my Roth account. It's such a small amount of money that the taxes on the conversion won't be painful, and consolidating accounts makes managing your money easier. The conversion will not count toward your Roth contribution limit.

Grateful Stache

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Re: Itty bitty little rollover...
« Reply #2 on: February 22, 2014, 05:44:11 AM »
As Cyclone has stated, rollovers don't count towards the contribution limit. I would just roll it since you can't contribute to it anymore. If you can roll it into another pre-tax account (such as a traditional IRA, 401k or 457), you should be able to roll tax-free. However, if you convert from a pre-tax to a Roth, then you will have to pay tax.

Hey, it's free money!
« Last Edit: February 22, 2014, 05:56:10 AM by Grateful Stache »


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Re: Itty bitty little rollover...
« Reply #3 on: February 22, 2014, 07:55:44 AM »
Invest it in penny stocks and pray it pays off

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Re: Itty bitty little rollover...
« Reply #4 on: February 22, 2014, 08:34:00 AM »
The commission free ETF for total US market at Fido is ITOT.  Expenses are 0.07 percent.  Since the money is tax deferred, you could try total US bond market, AGG, expenses 0.08 percent.  However, you have to buy in whole shares.  For $950, you might have difficulty investing the exact amount or just under that.


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Re: Itty bitty little rollover...
« Reply #5 on: February 22, 2014, 10:13:27 AM »
I had the same thing once, I found a very old account from a summer job from when I was 17.  Yeah, I had NO idea about investing back then!  It was $137 when I found it a few years ago, so I just rolled it to my current 401-K.  I did that because I don't yet have a non-Roth IRA to roll it to.  Then I just added it to one of the funds I was already invested in.

It is sort of weird to look at my 401-K now and see the tiny rollover portion (up to $187.01!), but whatever, every little bit helps!

So yeah, I'd go ahead and roll it to your current 401-K if you have one, or to an IRA if you don't.


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Re: Itty bitty little rollover...
« Reply #6 on: February 24, 2014, 07:09:05 AM »
Presumably you do not have any traditional IRAs so the rollover to Roth would not be subject to the proportionality requirement? 

Since the amount is so small I would roll it over to some existing account in order to consolidate.  If you buy VTI through Fidelity, you will have a one time trading fee, but Fidelity does offer a bunch of other ETFs that can be traded commission free. 


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