Best Places for Rollover IRAs

[blazindw]

I'm looking to rollover my 401k into an IRA. There's not much in the 401k since it was only a couple months old before I got laid off (less than $1000). I'm looking for people's suggestions as to best IRA options. I'm looking for something that can be self-managed and won't have any fees associated with transactions or maintenance fees. I want to be able to move my money around freely within the holdings they offer and have a lot of diverse offerings. Any suggestions are appreciated.

[Bluedog]

Well, typically I'd say that Vanguard is the best IRA choice with their ultra lost cost index funds (https://personal.vanguard.com/us/funds/vanguard/all?sort=name&sortorder=asc) of every conceivable type. They also have very good customer service, extreme safety (Vanguard is owned and funded by the actual mutual funds so it won't go bankrupt unless all of the mutual funds went bankrupt, which only would happen if every stock and bond went to zero; which we'd mean there would be far more severe issues in the world going on), no transactions fees for their funds, and good automatic investing plans. However, with less than $1,000, Vanguard probably wouldn't work since the vast majority of their funds require a $3000 minimum. The only fund that doesn't is the Vanguard STAR fund (https://personal.vanguard.com/us/FundsSnapshot?FundId=0056&FundIntExt=INT) at a $1,000 minimum (60% stocks, 30% bonds, rest is other). If you want to actively trade stocks (or trade at all really), I also don't think Vanguard's a good choice, but with <$1,000 I'm assuming you're not going to want to do that.

Other popular choices are Fidelity and Charles Schwab. All three of these don't have transaction fees for their own offerings or maintenance fees. With Fidelity, again, most of their mutual funds require a $2,500 or even $10,000 minimum. Schwab recently reduced their expense ratios and only require $100 minimum investment in their funds. So, if it was me, I'd open a Roth IRA with Schwab (yeah, I'd pay taxes now vs. later but I don't know your income so it could be different for you) and put all of the money in Schwab Total Stock Market Index Inv (SWTIX) with its ultra low 0.09% expense ratio. Then, I'd dollar cost average into that fund over time and as it grows re-allocate as necessary. With <$1000, asset allocation is not really as important to get perfect; more important is saving as much as you can and putting it in a tax deferred/tax free retirement account.

Good luck!

[Jeffrey]

Well, typically I'd say that Vanguard is the best IRA choice with their ultra lost cost index funds (https://personal.vanguard.com/us/funds/vanguard/all?sort=name&sortorder=asc) of every conceivable type. They also have very good customer service, extreme safety (Vanguard is owned and funded by the actual mutual funds so it won't go bankrupt unless all of the mutual funds went bankrupt, which only would happen if every stock and bond went to zero; which we'd mean there would be far more severe issues in the world going on), no transactions fees for their funds, and good automatic investing plans. However, with less than $1,000, Vanguard probably wouldn't work since the vast majority of their funds require a $3000 minimum. The only fund that doesn't is the Vanguard STAR fund (https://personal.vanguard.com/us/FundsSnapshot?FundId=0056&FundIntExt=INT) at a $1,000 minimum (60% stocks, 30% bonds, rest is other). If you want to actively trade stocks (or trade at all really), I also don't think Vanguard's a good choice, but with <$1,000 I'm assuming you're not going to want to do that.

Other popular choices are Fidelity and Charles Schwab. All three of these don't have transaction fees for their own offerings or maintenance fees. With Fidelity, again, most of their mutual funds require a $2,500 or even $10,000 minimum. Schwab recently reduced their expense ratios and only require $100 minimum investment in their funds. So, if it was me, I'd open a Roth IRA with Schwab (yeah, I'd pay taxes now vs. later but I don't know your income so it could be different for you) and put all of the money in Schwab Total Stock Market Index Inv (SWTIX) with its ultra low 0.09% expense ratio. Then, I'd dollar cost average into that fund over time and as it grows re-allocate as necessary. With <$1000, asset allocation is not really as important to get perfect; more important is saving as much as you can and putting it in a tax deferred/tax free retirement account.

Good luck!

FWIW, IMO, good advice!

[blazindw]

Well, typically I'd say that Vanguard is the best IRA choice with their ultra lost cost index funds (https://personal.vanguard.com/us/funds/vanguard/all?sort=name&sortorder=asc) of every conceivable type. They also have very good customer service, extreme safety (Vanguard is owned and funded by the actual mutual funds so it won't go bankrupt unless all of the mutual funds went bankrupt, which only would happen if every stock and bond went to zero; which we'd mean there would be far more severe issues in the world going on), no transactions fees for their funds, and good automatic investing plans. However, with less than $1,000, Vanguard probably wouldn't work since the vast majority of their funds require a $3000 minimum. The only fund that doesn't is the Vanguard STAR fund (https://personal.vanguard.com/us/FundsSnapshot?FundId=0056&FundIntExt=INT) at a $1,000 minimum (60% stocks, 30% bonds, rest is other). If you want to actively trade stocks (or trade at all really), I also don't think Vanguard's a good choice, but with <$1,000 I'm assuming you're not going to want to do that.

Other popular choices are Fidelity and Charles Schwab. All three of these don't have transaction fees for their own offerings or maintenance fees. With Fidelity, again, most of their mutual funds require a $2,500 or even $10,000 minimum. Schwab recently reduced their expense ratios and only require $100 minimum investment in their funds. So, if it was me, I'd open a Roth IRA with Schwab (yeah, I'd pay taxes now vs. later but I don't know your income so it could be different for you) and put all of the money in Schwab Total Stock Market Index Inv (SWTIX) with its ultra low 0.09% expense ratio. Then, I'd dollar cost average into that fund over time and as it grows re-allocate as necessary. With <$1000, asset allocation is not really as important to get perfect; more important is saving as much as you can and putting it in a tax deferred/tax free retirement account.

Good luck!

That's interesting. When I talked to Schwab this morning, they said the account balance minimum was $1000. Which ones require a $100 minimum account balance? That would be something for me to look at. I agree with everything else, and for now, that's what I want: something that I can control, but looking to just roll the money over and leave it until I can put more money into it.

[Bluedog]

That's interesting. When I talked to Schwab this morning, they said the account balance minimum was $1000. Which ones require a $100 minimum account balance? That would be something for me to look at. I agree with everything else, and for now, that's what I want: something that I can control, but looking to just roll the money over and leave it until I can put more money into it.

Oh, that's certainly possible that the overall account minimum is $1,000. I didn't think about that. The $100 minimum is the fund investment minimum. Sorry about that. I didn't think to look up overall account minimum. Honestly, if you're close to $1,000, I'd look to scrounge up an extra $100 or so and put it in the Roth IRA with Schwab. You might also ask if they'd waive the minimum if you sign up for an automatic investing plan (AIP); sometimes they do that. Just set it up for $100.month for 8 or 9 months or whatever you can afford, and then cancel it at that time.

If you absolutely cannot afford to get to the $1,000 minimum, then I think you have two options: 1.) Keep it in the 401(k) and hope it grows a bit more or you can save enough (I don't know how far away you are), 2.) Roll it over into a brokerage firm that has no minimum. According to this article (http://cashmoneylife.com/2009/09/10/where-to-open-a-roth-ira-account/), these include Scottrade, E*Trade, Zecco, TradeKing, and ShareBuilder. These brokerages are more for active traders in general as their companies don't really offer their own funds that can be purchased for free. Personally, I don't think it's worth opening an account with these firms for the long-term for the vast majority of individuals, you included (if you did though, I'd simply buy VTI (Vanguard Total Stock Market, an ETF). And rolling it over now into one of those to then just roll it over again once you get to $1000 seems like an unnecessary amount of work. I think I'd personally leave my money in the 401k until I have saved the extra $100 or $200 or whatever you need to get to $1000, and then roll it over at that time contributing the extra money from a taxable account.

[blazindw]

Oh, that's certainly possible that the overall account minimum is $1,000. I didn't think about that. The $100 minimum is the fund investment minimum. Sorry about that. I didn't think to look up overall account minimum. Honestly, if you're close to $1,000, I'd look to scrounge up an extra $100 or so and put it in the Roth IRA with Schwab. You might also ask if they'd waive the minimum if you sign up for an automatic investing plan (AIP); sometimes they do that. Just set it up for $100.month for 8 or 9 months or whatever you can afford, and then cancel it at that time.

If you absolutely cannot afford to get to the $1,000 minimum, then I think you have two options: 1.) Keep it in the 401(k) and hope it grows a bit more or you can save enough (I don't know how far away you are), 2.) Roll it over into a brokerage firm that has no minimum. According to this article (http://cashmoneylife.com/2009/09/10/where-to-open-a-roth-ira-account/), these include Scottrade, E*Trade, Zecco, TradeKing, and ShareBuilder. These brokerages are more for active traders in general as their companies don't really offer their own funds that can be purchased for free. Personally, I don't think it's worth opening an account with these firms for the long-term for the vast majority of individuals, you included (if you did though, I'd simply buy VTI (Vanguard Total Stock Market, an ETF). And rolling it over now into one of those to then just roll it over again once you get to $1000 seems like an unnecessary amount of work. I think I'd personally leave my money in the 401k until I have saved the extra $100 or $200 or whatever you need to get to $1000, and then roll it over at that time contributing the extra money from a taxable account.

I appreciate all the info! I'm pretty close to $1000, but it seems like my 401k has stopped doing anything since no one's making contributions to it anymore. Personally, I think I can find the extra change to invest and make it an even $1000, but I also want to be out of the company's program as soon as possible. I've already lost my FSA to them ($250) since I didn't have any qualifying expenses before I left, as I waited for my card to arrive before I was to make those purchases (it arrived after I got laid off).

I think I'm going to get the extra money so I can set up an account with $1000 in it and see how it grows. I got time ;)

[Jeffrey]

If you absolutely cannot afford to get to the $1,000 minimum, then I think you have two options: 1.) Keep it in the 401(k) and hope it grows a bit more or you can save enough (I don't know how far away you are), 2.) Roll it over into a brokerage firm that has no minimum.

The OP may not continue to have option #1. IIRC, the OP's past employer can force the OP out of their 401k since the balance is under $5k.

[Jeffrey]

I've already lost my FSA to them ($250) since I didn't have any qualifying expenses before I left, as I waited for my card to arrive before I was to make those purchases (it arrived after I got laid off).

Have you asked your past employer, in writing, for the FSA back? Did you have a means to access the funds before the card's receipt?

[Turk]

Did your old company tell you that you had to get your money out of the old 401(k)? The simplest thing to do is to leave it there and then roll it over into a 401(k) at your new job. (if you've got one lined up). I've changed jobs twice over the past 8 years. One employer allowed me to leave the 401(k) alone, and the other gave me 6 months to find a rollover destination. That stuff (including minimums) will vary by employer and fund company.

The other thing you might want to check out are the rules regarding contributions. I don't think you're allowed to mix pre-tax and post-tax money in the same IRA, or else it's a big headache to figure out the tax situation out even if it's legal.

I keep my 401(k) pile in one Mason jar and bury it in the front yard, and my after-tax pile in another Mason jar and bury that one in the back yard, so that way I don't have to worry about getting them mixed up.

In case there's any doubt, I am NOT a financial professional, and last night I slept in my van by the river... ;-)

[blazindw]

The OP may not continue to have option #1. IIRC, the OP's past employer can force the OP out of their 401k since the balance is under $5k.

Yes, the company that runs my 401k has already informed me that since I'm no longer employed by my old organization, I need to rollover into an IRA.


Have you asked your past employer, in writing, for the FSA back? Did you have a means to access the funds before the card's receipt?

I haven't yet...just found out I couldn't get the money yesterday. I could have accessed the funds before the card's receipt, but I didn't because I didn't want to come out of pocket for anything. The debit card would have automatically deducted the money instead of waiting for reimbursements (which take 4-6 weeks). The FSA was not even a month old when I was let go.


Did your old company tell you that you had to get your money out of the old 401(k)? The simplest thing to do is to leave it there and then roll it over into a 401(k) at your new job. (if you've got one lined up). I've changed jobs twice over the past 8 years. One employer allowed me to leave the 401(k) alone, and the other gave me 6 months to find a rollover destination. That stuff (including minimums) will vary by employer and fund company.

The other thing you might want to check out are the rules regarding contributions. I don't think you're allowed to mix pre-tax and post-tax money in the same IRA, or else it's a big headache to figure out the tax situation out even if it's legal.

I keep my 401(k) pile in one Mason jar and bury it in the front yard, and my after-tax pile in another Mason jar and bury that one in the back yard, so that way I don't have to worry about getting them mixed up.

In case there's any doubt, I am NOT a financial professional, and last night I slept in my van by the river... ;-)


No job yet, so no 401k to roll into...thus the need to rollover into an IRA.

[Jeffrey]

I haven't yet...just found out I couldn't get the money yesterday. I could have accessed the funds before the card's receipt, but I didn't because I didn't want to come out of pocket for anything. The debit card would have automatically deducted the money instead of waiting for reimbursements (which take 4-6 weeks). The FSA was not even a month old when I was let go.

IMO, your past employer might be wise to refund the $250. You might not have had the additional funds (a second $250) to make the out of pocket purchases and wait for a refund 4-6 weeks later. Your past employer determined how long it took you to receive your FSA debit card and withheld money from your pay knowing you did not have the card.

I'd send a friendly written request for the $250.

[blazindw]

IMO, your past employer might be wise to refund the $250. You might not have had the additional funds (a second $250) to make the out of pocket purchases and wait for a refund 4-6 weeks later. Your past employer determined how long it took you to receive your FSA debit card and withheld money from your pay knowing you did not have the card.

I'd send a friendly written request for the $250.

To be fair, they didn't determine anything...the company that handles their 401k and FSAs didn't send me the card, and my employer didn't know I didn't have one until they asked me something random about it and I told them. When they told me who to talk to, I did just that and got my card 2 weeks later...I was laid off the week I got the card.

[Jeffrey]

To be fair, they didn't determine anything...the company that handles their 401k and FSAs didn't send me the card, and my employer didn't know I didn't have one until they asked me something random about it and I told them. When they told me who to talk to, I did just that and got my card 2 weeks later...I was laid off the week I got the card.

IMO, your past employer is accountable for their subs.

I'd send a friendly written request for the $250. No harm in trying.

[Bluedog]

The OP may not continue to have option #1. IIRC, the OP's past employer can force the OP out of their 401k since the balance is under $5k.

Oh, oops, forgot about that. Yeah, I'm certainly not a financial adviser so definitely confirm everything I say ;). Jeffrey is much more knowledgable about the than I am in this topic.


The other thing you might want to check out are the rules regarding contributions. I don't think you're allowed to mix pre-tax and post-tax money in the same IRA, or else it's a big headache to figure out the tax situation out even if it's legal.

I'd think it'd be fairly simple (and legal), but perhaps I'm missing something. Let's say he has $900 in the 401(k) and $100 from a checking account. He pays tax on the $900 in the year of conversion to the Roth and then no taxes on the $100, right? Seems pretty simple to me. Perhaps they don't allow you to fund the account from two different sources. If that's the case, doesn't one have the legal right to withdraw the money from the 401k and then have 30 days to put it in an appropriate retirement vehicle without penalty? Obviously, if it takes more than 30 days, then you're shooting yourself in the foot. But I'd think that you could withdraw the $900, put it in your checking, and then fully fund the Roth IRA with $1000 from your checking within 30 days. In that case, you'd pay taxes on the $900 and the $100 would be tax-free for the Roth IRA. Again, I could be missing something, but that's my understanding. Jeffrey can chime in and correct me as needed. :D