What is a "taxable account" with TDAmeritrade?

[fuzzybabybunny]

I'm looking to move my retirement accounts out of Fidelity because they require a paper check to fund my Solo 401(k). I want all my accounts to be managed and funded electronically.

The TDAmeritrade service rep said this:

"We require a paper application to open a 401(k) account as there is a large amount of plan information we must obtain - but this can be scanned and submitted electronically. You can fund an account electronically via wire transfer or internal transfer from a taxable TD Ameritrade account. The taxable account would be eligible for ACH deposits so you could move funds from you bank account into the taxable account and then transfer it to the 401(k)."

If I had to guess, the TDAmeritrade taxable account would just be another bank account, right? I do a direct deposit into the TDA account from my primary bank account, then transfer that money into my retirement accounts. Sound about right? Doesn't seem that big of an issue - unless I'm missing something?

I've got a Solo 401(k) and ROTH IRA.

 

[DaveSimmons]

Taxable = non-retirement investment account. It's what you put money into to invest NON-retirement savings after you've maxed out all of your tax-sheltered retirement choices.

You do NOT want to move any 401k etc. money into that since it is the same as withdrawing the money.

Have you looked at vanguard.com? They are the top funds for low-expense index fund investing, which is the best choice for most people's retirement savings.

 

[Spacehead]

If I had to guess, the TDAmeritrade taxable account would just be another bank account, right?

Don't guess, ask them.

 

[fuzzybabybunny]

Taxable = non-retirement investment account. It's what you put money into to invest NON-retirement savings after you've maxed out all of your tax-sheltered retirement choices.

You do NOT want to move any 401k etc. money into that since it is the same as withdrawing the money.

Have you looked at vanguard.com? They are the top funds for low-expense index fund investing, which is the best choice for most people's retirement savings.

Right. So what I'm proposing is fine. I'm just looking for a way to electronically fund my retirement accounts.

The TDA retirement accounts don't accept ACH transfers but they do accept electronic fund transfers from TDA taxable accounts.

So I'll just take my Chase account and do a direct deposit into the TDA taxable account, and from the TDA taxable account I move the money into my TDA retirement accounts.

 

[DaveSimmons]

Sure, if they let you fund an IRA or 401k from your regular brokerage account that's fine.

Check carefully what funds they offer though. Even if they have a "Target" fund it might include high-expense low-return actively managed funds in it. Vanguard's Target funds contain 100% low interest index funds. And electrolytes!