What to do with IRA? Cash out or Move?

**kork13** · 09-19-2010, 06:51 PM

Because it's an IRA, your employer should have nothing to do with it. Are you satisfied with the mutual funds you're invested in at Fidelity? If so, I would recommend that you call Fidelity and ask them to confirm that you need to move it. I'm pretty sure that if you ask the Fidelity guys to allow you to keep your investments there with Fidelity, they'd be happy to oblige -- you're a customer, whether associated or not with your former employer. And if they don't allow you to keep the money there (or if you don't like what you're invested in with Fidelity), just transfer the IRA to Vanguard or something like that. As long as you reinvest the money within 30 days (I believe that's the rule), you won't face any penalties.

**Seeker** · 09-19-2010, 06:59 PM

Originally posted by LaVicky View Post

Hey all,
Sorry Im not very educated in retirement monies so any feedback will be helpful. I had a Simple IRA at my old employer, I didnt know what to do with anything and its just been sitting since I was laid off a few yrs ago.

Its not a large amount, but its ALL I have so far, I have never had a 401K or anything. Im also married.

So there is about $4000 in the IRA, I got an email saying

"Any employees who still have money in Fidelity need to do a rollover to another account .... or take the money out. (You will have to pay a penalty on taking the money out). "

So what should I do? If I roll over what does someone like me do? Roll into what? Im in my late 30s and Im self employed. I would like to start making my own deposits from self employment monies into a retirement or some type of account.

Whats the best thing for me to do in this situation?

All you need to do is call Fidelity and tell them that you have an account with your previous employer in one of their accounts and you need to move it out of your employer's account number into a new account in your name alone. They will handle it all. If it's an IRA keep it within an IRA at Fidelity.

It's not uncommon for past employers to have their past-employees move dollars out of the employers account. It simplifies management for the employer.

**LaVicky** · 09-19-2010, 07:25 PM

Ira

Thanks for the feedback, the employer is no longer, they closed the business a few mos ago for good.

I will call Fidelity tomm

**MonkeyMama** · 09-20-2010, 06:24 AM

You need to do a rollover. You would think Fidelity would make it super easy and obvious how to rollover into another Fidelity account. I would just do that. (I agree on calling them).

When you leave an employer, and the balance is below a certain amount, you have to withdraw it (a taxable event) or roll it over to an IRA.

**KTP** · 09-20-2010, 08:58 PM

if he is in a really low tax bracket he could do a roth conversion also.

**Seeker** · 09-20-2010, 11:44 PM

Originally posted by KTP View Post

if he is in a really low tax bracket he could do a roth conversion also.

To convert from a traditional IRA to a Roth IRA, she would have to pay taxes on any of the earnings from that IRA and she would have to pay taxes on the pre-taxed contributions. 4k is not really worth it.

She is self-employed now. Her BEST option is to call Fidelity and just tell them that her previous employer sent an e-mail telling her she needs to "rollover" the 4k in the employer Fidelity IRA account to another Fidelity IRA account. Anything else will cost her extra dollars.

She can also speak with them about future avenues of investing as she indicated that that was a possibility as well.

**LaVicky** · 09-21-2010, 08:01 AM

Ugh

Okay so I called Fidelity and was told to roll it into another Fidelity account there is a

$30 annual maintenance fee
$10 Close Out fee

These apply whether I roll it over or transfer or cash out.

And THEN I also need the signature of a Licensed Financial Advisor on it.

So that will be another fee to have an advisor do that for me?

It was an employee account that I was told by the employer to move out. Its a Money Market with $4,418 in it.

So how much will I loose if I cash out

How much will I loose if I pay the $40 + a fee for a financial advisor signature?

**MonkeyMama** · 09-21-2010, 11:56 AM

How do you waive that maintenance fee? Do you need a certain amount in the account?

I did a Fidelity rollover a few years ago - it wasn't nearly so complicated.

I am sure you could get rid of the annual fee if you had a certain balance, so I would ask about that. I don't remember the amount off the top of my head - I know they sent me a letter last year because one of my accounts was on the lower side and they gave me time to put more money in to avoid the fee. You could always make an IRA contribution to increase the balance.

If you roll it to another company, would the fee only be $10? + advisor signature? No maintenenance fee is you move it elsewhere, it would seem. I'd be tempted to do that, since they are fee-ing you so much, but I also think it is somewhat a sign of the times.

IF you take it out, 10% penalty plus income taxes. Could be well over $1k in taxes/penalties.

**tripods68** · 09-21-2010, 01:00 PM

My wife had a similar case. She left her old employer a while back. She got a letter from Fidelity about her 403(b) telling her options. She decided to convert to ROTH.

**LaVicky** · 09-21-2010, 01:21 PM

Ira

They said I have to pay the $40 no matter what I do, keep it with Fidelity, cash it out, move it somewhere else.

Im going to meet with my local bank tomm to inquire on rolling it over to my bank and get more info. Its all so confusing, ack.

Fidelity said because I had a Mutual Fund and not B Shares? Whatever that is why its this way, I also cant contribute to this account since it was an old employer acct. You cant put $$ in it.

**MonkeyMama** · 09-21-2010, 01:28 PM

Originally posted by LaVicky View Post

Fidelity said because I had a Mutual Fund and not B Shares? Whatever that is why its this way, I also cant contribute to this account since it was an old employer acct. You cant put $$ in it.

So they just charge the maintenance fee upfront? No way around it, then?

You can contribute to the fund after you roll it over to an IRA. But sounds like you mean they will charge the fee upfront, before you can add to it. Before you can transfer it elsewhere. That stinks.

I think it is a good idea to meet with your bank. If Fidelity treated me like that when I left my employer, I'd be long gone! What's the incentive to stay?

It seems to me you should be able to just roll it from your "employer account" status to an IRA elsewhere. I don't see why there would be any "maintenance fee" in that case?

As a hint - you will need to liquidate the funds (move them to cash) before the money can be transferred out. They won't tell you that - they will just not co-operate with your bank until you call them and ask them what the problem is. (That, they did to me).

**Seeker** · 09-21-2010, 07:08 PM

LaVicki,

Ask your local bank what they can do for you with a 4k Mutual Fund IRA that needs to be moved out of your previous employers Fidelity account. Ask about the least costing options.

You might also want to ask about SEP IRAs (Self-EmPloyment IRAs).

Ask your local bank (if you can afford this and if it's possible to blend a Mutual Fund IRA with a Mutual Fund SEP IRA) if it would be advisable or possible to create a new SEP IRA and rollover this 4k IRA into it? See if your local bank will create a SEP IRA in the Mutual Fund (versus B Shares aka "Stocks") format and roll over the 4k into that account.

There are a lot of different types of IRAs. They are characterized by how they "invest" the monies. Mutual Fund IRAs ; Money Market IRAs ; and Stock Market IRAs are all different. Know which you have and which you're getting. Generally it's not advisable to mix or blend different types in the same account. Generally most people end up with several different types of accounts.

I don't know much of how Self-Employment IRA's work (SEP IRA), but you might want to ask them about your least costing possibilities with both these issues. Do NOT invest in anything you do not understand.

To get cash out at your age, would mean gov't tax penalties for early withdrawal. You do need to definitely "roll it" into another account to keep the majority of the 4k. You may end up paying something extra either way.

Fidelity said because I had a Mutual Fund and not B Shares? Whatever that is why its this way, I also cant contribute to this account since it was an old employer acct. You cant put $$ in it.

You cannot put $'s into an account that is under your employer's realm.

That's why it needs to be coverted to cash (as MM stated) or "liquidated" and then rolled into another account.

If you have them cash it out to you, be careful, as when a certain time elapses, you will be liable for tax penalties. It's best to let the banks do the transactions and you never touching or seeing that money.

Once the 4k is in your account, then you can add to it if you desire.

**LaVicky** · 09-22-2010, 09:53 AM

Okay

Okay I went to one of my banks today as I have 2. Im moving it to the an IRA there

And there would have been a $50 annual fee there, BUT because my husband is an employee of this co the fee is waived.

**mikebanker** · 09-25-2010, 07:41 AM

cash out and find a low retirement fund such as Vanguard.

What to do with IRA? Cash out or Move?