Help! Need 401K/IRA Investment Info!

[Ornery]

Yikes!

Our 401K account is no more. My money has been transfered to an IRA at the same company that handled the 401K. It was my choice to put it there. I didn't realize these loads were involved! Since it is now in an personal IRA, instead of a 5 million dollar 401K, we're going to have to pay loads for the "Investment Advice". Like 5% up front, and nothing after, or 1.4% annually instead. There are other options, but from what I was just told, it's pretty much a wash.

Should I put this somewhere else, or will I pay loads no matter what? Will I have to pay some kind of fee just to move it elsewhere now? Oh Lord, I ain't too keen on giving them hundreds of dollars just to lose money for me. Hell, I can do that!

Before, I was able to juggle the money from different funds online. That's not going to be available now either. I'll have to call this "advisor" and have them move the money around. Where are you guys putting your money? If I pay all these loads now, then get another job, which has a 401K, may I move this money into the new one? If that's doable, why pay all the fees now? God, I don't know anything about this crap! 😕

 

[BooneRebel]

What happened to your 401K?

 

[Ornery]

The company is gone, so the account is gone. It was a $5 Million account, so fees were not imposed. Now it's just in a piddly personal fund. Shoot! I gotta get more info pronto!

 

[BooneRebel]

Is it your company that is gone, or the 401K provider that your job was using? I think the best bet would be to roll it over into another 401K plan, but depending on how many duckies you're talking about, I'd highly recommend talking to a real-live accounting for advice. There are a host of options with IRAs, Roth IRAs, etc. that can give you some pretty good tax shelters.

 

[DaveSimmons]

Did they give you the choice of rolling over the moeny to an IRA at a completely different brokerage like Schwab or eTrade? If so, that's a much better choice if you have enough ($5K for eTrade, $50K for Schwab) to avoid the quarterly account fees. Put all the money into an S&P 500 index fund (Vanguard's is good, one up-front transaction fee to buy it) and forget about it for 20 years.

Will I have to pay some kind of fee just to move it elsewhere now?

How could we know? Look it up in your paperwork / ask your company. This would have been a good thing to find out at the time the 401k was shut down.

If I pay all these loads now, then get another job, which has a 401K, may I move this money into the new one?

Usually not. But if you set up a "Rollover IRA"account at a brokerage (eTrade / Schwab) you can move the money from each new job into that account when you leave the job and close out the 401k for that company.

we're going to have to pay loads for the "Investment Advice". Like 5% up front, and nothing after, or 1.4% annually instead

Lousy, is the company at least kicking in some matching money? If you're sure you'll leave within 3-4 years then of course the 1.4% is a better deal.

 

[Ornery]

The company I worked for is belly up. The 401K account no longer exists, because it was owned by the company. I was told to move the money, or take it in a lump and pay the fines and taxes. I already had it "Rolled Over" to an IRA. This IRA account is handled by the same company that handled our 401K. Same advisor, as a matter of fact.

Here's the sticky part. How do I tactfully ask this advisor whether I should move my money to some other account to avoid paying fees to them?

This just in: I called the Human Resources gal from our company, and asked where her funds were being put. Turns out they're going to the exact same place mine is. I guess if that's good enough for her, it should be good enough for me... no? 😕

 

[SuperTool]

Question about buying vanguard on etrade.
I want to buy a Vanguard index fund, and it says there is a 25 dollar comission. Once I pay that, and I want to add more money to it, do I have to pay the comission again, or is it a one time fee?
Thanks.

 

[DaveSimmons]

Our 401K account is no more. My money has been transfered to an IRA at the same company that handled the 401K. It was my choice to put it there.

The company is gone, so the account is gone.

Oh, so you've already done a "Rollover IRA" to the same financial company? You should have done your homework before the rollover, it may be too late to change to a different company now without paying some fees / more fees unless there is some grace period that hasn't already expired.

 

[DaveSimmons]

Originally posted by: Ornery
The company I worked for is belly up. The 401K account no longer exists, because it was owned by the company. I was told to move the money, or take it in a lump and pay the fines and taxes. I already had it "Rolled Over" to an IRA. This IRA account is handled by the same company that handled our 401K. Same advisor, as a matter of fact.

That was a lie, you only pay taxes / fees if you yourself take possession of the money. You can roll over the money to an IRA account at any company (like eTrade) and pay no taxes if you have the check made out to them not you. [ ed ] and if you have over $5K no annual fee for an "adviser"

 

[DaveSimmons]

Originally posted by: SuperTool
Question about buying vanguard on etrade.
I want to buy a Vanguard index fund, and it says there is a 25 dollar comission. Once I pay that, and I want to add more money to it, do I have to pay the comission again, or is it a one time fee?
Thanks.

Yes, every purchase just like with stocks. eTrade might also have a "no load" S&P500 index mutual fund of their own with no transaction fee (just a minium initial purchase) -- I know Schwab does, that's where my money lives.

 

[Nitemare]

1.4????

on a 5 mill account????

Put your money in another bank my friend. My piddly IRA is gaining about 4-5%. See if you can join a credit union and roll your IRA over to one of theirs. Going from 401k to IRA or IRA to 401k might still result in you having to pay a percent handling fee depending on which brokerage firm did the transaction. I would seriously see if you could get it back into another 401k without any fees, especially since it appears your company moved your money without your input(A big no no)....401k to 401k is a good thing and should not require a percent handling fee, maybe just a one time handling charge.

 

[SuperTool]

Originally posted by: DaveSimmons

Originally posted by: SuperTool
Question about buying vanguard on etrade.
I want to buy a Vanguard index fund, and it says there is a 25 dollar comission. Once I pay that, and I want to add more money to it, do I have to pay the comission again, or is it a one time fee?
Thanks.

Yes, every purchase just like with stocks. eTrade might also have a "no load" S&P500 index mutual fund of their own with no transaction fee (just a minium initial purchase) -- I know Schwab does, that's where my money lives.

Well, that sucks. If I put 3000 dollars into IRA, I have to pay 25 bucks to etrade. That's almost 1% right there. 🙁
If I open an IRA account with Vanguard, do I not then have to pay that fee?

 

[DaveSimmons]

Originally posted by: SuperTool

Originally posted by: DaveSimmons
Yes, every purchase just like with stocks. eTrade might also have a "no load" S&P500 index mutual fund of their own with no transaction fee (just a minium initial purchase) -- I know Schwab does, that's where my money lives.

Well, that sucks. If I put 3000 dollars into IRA, I have to pay 25 bucks to etrade. That's almost 1% right there. 🙁
If I open an IRA account with Vanguard, do I not then have to pay that fee?

Not sure, hunt around www.vanguard.com -- not sure if they take accounts that small directly though (instead of making you go through a brokerage).

If you can put together enough to fund your 2002 and 2003 IRAs together thats $7K and the up-front cost at eTrade drops to about 0.35%. That's probably low enough to make buying Vanguard a better choice than an eTrade "house brand" S&P500, since the no-transaction-fee funds usually have a higher annual management fee (Vanguard's is the lowest of the S&P500 funds).

 

[Ornery]

Thanks Dave. Just got off the phone with Schwab. We have an appoinment set up for Thursday morning. They have 1,100 no load/no fee accounts available.

"You should have done your homework before the rollover..."

Boy, that's the truth!

"...you only pay taxes / fees if you yourself take possession of the money."

Yes, that is exactly what I was told, so I rolled it to the IRA instead of taking possession.

 

[SuperTool]

Originally posted by: DaveSimmons

Originally posted by: SuperTool

Originally posted by: DaveSimmons
Yes, every purchase just like with stocks. eTrade might also have a "no load" S&P500 index mutual fund of their own with no transaction fee (just a minium initial purchase) -- I know Schwab does, that's where my money lives.

Well, that sucks. If I put 3000 dollars into IRA, I have to pay 25 bucks to etrade. That's almost 1% right there. 🙁
If I open an IRA account with Vanguard, do I not then have to pay that fee?

Not sure, hunt around www.vanguard.com -- not sure if they take accounts that small directly though (instead of making you go through a brokerage).

If you can put together enough to fund your 2002 and 2003 IRAs together thats $7K and the up-front cost at eTrade drops to about 0.35%. That's probably low enough to make buying Vanguard a better choice than an eTrade "house brand" S&P500, since the no-transaction-fee funds usually have a higher annual management fee (Vanguard's is the lowest of the S&P500 funds).

well, the contribution limit for 2002 is $3000. I already put it into e-trade IRA account, but haven't bought a fund yet.
I have another 1.5K in there (used to be 2K 🙁) for 2001 in a stock. I can put another 3K for 2003.
Is 6K enough to get lower price comission? Who sets comission, e-trade or Vanguard?
Oh, you mean comission is the same, just lower percent. I see.
I could also buy a Vanguard ETF for the total stock market index, and pay just $10 comission. It's not a mutual fund, but a ETF stock.

 

[DaveSimmons]

Glad I could help Ornery, and one last bit of Schwab advice: they do have an account fee of $30 per quarter if all of your combined Schwab accounts total less than $50K. So if your rollover would be less than that you might need to either put some money into a non-IRA account or figure out whether your salary allows you to fund a Roth IRA for 2002 and/or 2003.

Either that or use eTrade instead, but I gather the customer service is more bare-bones there.

Oh, and my advice to SuperTool on S&P500 index funds applies to Schwab too -- if you are thinking of putting more than about $6K into an S&P fund and keeping it there for years, then Vanguard VFINX has a lower management fee than Schwab's own SWPIX and over time you're better off with the $35 transaction charge to buy the VFINX instead.

 

[Ornery]

Man, Schwab acts quickly! The fellow I'm supposed to meet Thursday just got off the phone with me. He was contacted by email from the guy I spoke with initially in Phoenix. Impressive!

The fellow who called said they could do a "Basic Assessment" (I think that's what he called it) for a fee of $250.00. My money would be directed to the accounts best suited to this "assessment". Or for no fees, I could be given a "Select List" of no load/no fee "self directed" funds to take care of myself.

He said I may have to pay a transfer fee to the other company to move this money, but likely no more than $50.00, if that.

Thanks Again

 

[glenn1]

He said I may have to pay a transfer fee to the other company to move this money, but likely no more than $50.00, if that.

Ask him to pay the fee for you since you'll be bringing your assets under his management. As a broker myself i can tell you that's a pretty standard practice.... if he wants your assets in his book of business, he'll gladly pay the freight to get your money there (that's what an accomodation account is for). GL to you...

 

[Maetryx]

I would not go to Schwab. In fact I left them in 1998 or so. Look for an online deep discount broker instead. I'm with Ameritrade/Datek. I don't recall any fees to set up my IRA there. Also, if you go with mutual funds instead of individual stocks, always go with no-load funds like Vanguard's.

If you're young, you may want to invest more aggressively than simply going with index funds. You've got a long way to go. Also, WTF is a $250 assessment fee for picking mutual funds for you? This is fscking bogus. You're being taken for a ride.

 

[Lvis]

I would roll it over again into a mutual fund family that you like. One with low fees, and an assortment of investments that suit you. I'd probably put it in a money market account at first. Then depending on your age, and when you plan to retire, figure out what risks you are willing to take. Mutual funds, money market, bonds, etc. Vanguard has a reputation for low fees, especially on their index funds.

 

[DaveSimmons]

Originally posted by: Maetryx
I would not go to Schwab. In fact I left them in 1998 or so. Look for an online deep discount broker instead. I'm with Ameritrade/Datek. I don't recall any fees to set up my IRA there. Also, if you go with mutual funds instead of individual stocks, always go with no-load funds like Vanguard's.

If you're young, you may want to invest more aggressively than simply going with index funds. You've got a long way to go. Also, WTF is a $250 assessment fee for picking mutual funds for you? This is fscking bogus. You're being taken for a ride.

Schwab doesn't charge to set up IRAs or normal accounts, the Schwab person was talking about a charge by the other financial company to transfer the money to Schwab.

The $250 is an optional one-time fee to have their person help pick funds / act as a financial consultant. If Ornery doesn't want the help he doesn't have to pay.

Schwab is a good company if you have enough to avoid the quarterly account fee (higher minium than eTrade / Ameritrade) and if you aren't a heavy stock trader (higher transaction fee).

If you have enough and are just making no-load / no-transaction fee mutual fund purchases then Schwab costs nothing -- no account fees and no transaction fees.

 

[Ornery]

Yep, Dave's got it. Optional one-time fee. Honestly, I can see the wisdom in that, too. I could recover that $250.00 in one day with the right advice! I do have enough to skate on their fees. I have about 15-20 more years till retirement. I'll go with more aggressive funds.

I don't expect Schwab to pay for my transfer, if they're not going to charge fees. I'm hoping to end up with the same type of account I just lost. On that one I was able to go online and change the amount of deduction from my payroll quarterly. I was able to move my money from one fund to another daily. My money was in at least four different funds, and I think it could have been more, if I wanted. All that for no fees or loads at all. If Schwab can come close to that, I'll be happy.

Is it possible that the funds available with no loads or fees won't be good performers? I guess that's the next big question.

 

[linuxboy]

Whew. Glad this was taken care of. Loaded funds for that much money work only if you get the reduced load (less than 1 %) and internal expenses are lower than no-load funds. Talk to the advisor, that person should help you out.

But yeah, do the homework before you move. There are limits to how many times you can move your money in an IRA, and plenty of fees hidden if there's vague disclosure.


Cheers ! 🙂

 

[DaveSimmons]

Is it possible that the funds available with no loads or fees won't be good performers? I guess that's the next big question.

Many good fund, the difference is usually a little higher annual expense. For example Schwab's SWPIX is an S&P500 index fund just like Vanguard's VFINX -- both have exactly the same mix of stocks since they mimic the same index. Both are even no-load, but with the Vanguard you pay a transaction fee to buy fund shares, with Schwab's "house fund" version you don't.

I was able to move my money from one fund to another daily.

You can't really do this in (any) IRA rollover account with mutual funds, there are penalties for holding a fund for less than 180 days. Since you won't be putting any more money into this rollover account for awhile (unless you plan to be self-employed or work somewhere that has no retirement plan) you should be picking funds (or stocks) to "buy and hold" anyway.

That said, you can buy as many different funds as you want with the limitation that many funds have a $2-$3K minimum initial purchase for IRA accounts, then $500 minimum for later purchases. You also don't have to "spend" all of your money at once, it's kept automatically as money market funds until you decide what and when to buy.

In other words, an IRA rollover at Schwab works just like a normal trading account at Schwab except there are restrictions on adding more money into the fund. You might want to poke around the Schwab.com website to get a better idea of how it all works.

 

[SuperTool]

What's the difference between VIIIX and VFINX?
Both are S&P 500 mirrors from vanguard, but VIIIX has expense ratio 0.02% and VFINX 0.18%?