Question about Roth IRA

[Djg06]

Hello All,

New to the forum and curious about something. Currently I work for a company with a deferred profit sharing plan where they put money in a retirement plan for me and I do not need to put anything in. I used to work at target however and have a 401k with about -/+ 26000. My question is what can I do with that? I've been asking around and people have been bringing up putting into an Roth IRA. I would love to put it into something and also start contributing to that account bi weekly with my work check. Thank you!

[Jluke]

you may want to read this article for options that are available to you...

in some cases you can convert from a 401k directly to a Roth IRA. if not, then you would convert from a 401k to a Traditional IRA; then you may have the option to convert the Traditional IRA to a Roth IRA, but this would be a taxable event.

https://investor.vanguard.com/401k-rollover/options?lang=en

Also, you should be able to open a Roth IRA on your own, unless you salary makes you ineligible.

http://www.rothira.com/roth-ira-limits

[Djg06]

Thank you for the quick reply! I will look into this.

[Djg06]

With converting it would I call target or would I call a bank? Thanks

[bjl584]

With converting it would I call target or would I call a bank? Thanks

You'd call a brokerage firm or some other entity that offers investment accounts and retirement accounts.

I recently rolled an old 401K from an old part time job into my ROTH. There are tax consequences to doing this, so be aware of that going in.

[Petunia 100]

Is this 401k money traditional or Roth? If it is traditional, are you aware that rolling into a Roth IRA is a taxable event?


I suggest you contact Vanguard, Fidelity or Schwab about rolling your 401k money. All three offer excellent investment vehicles at low cost. Any of the three would be happy to help you with the paperwork.

http://vanguard.com

http://fidelity.com

http://schwab.com

[Thrif-t]

Just to add, I had a 401k at an old company and I called up Vanguard and told them I wanted to roll it into an IRA with them and they walked me through the whole process. I'm sure it's the same at the other companies linked above. Just give them a call they'll help you. If it's a regular 401k you probably want to roll into an IRA because if you roll it into a Roth you'll have to pay taxes now on that money as opposed to when you withdraw and IRA at an age appropriate time.

[Djg06]

Thanks for all your help? I'll give one of those companies a cal! Is the cost usually a one time fee or yearly? Just curious?

Ans from the looks of it, traditional 401k

[Petunia 100]

Thanks for all your help? I'll give one of those companies a cal! Is the cost usually a one time fee or yearly? Just curious?

Ans from the looks of it, traditional 401k

I'm fairly certain all of the 3 will waive any annual fee provided you agree to have all statements delivered electronically. All three offer no-load mutual funds and their own etfs can be bought/sold with no transaction fees.

But by "low cost", I mean low expense ratios. Every mutual fund and etf has an expense ratio. You don't see the expenses being deducted from your account because they are paid at the fund/etf level, but they directly impact your returns.

[Djg06]

And sorry last question, was talking to a friend and he referred me to his financial advisor, would you recommend I just called places like vanguard on me own? Well reading on the forum I noticed financial advisors seem to be more sales people. Thanks, sorry I'm such a been with this.

[disneysteve]

And sorry last question, was talking to a friend and he referred me to his financial advisor, would you recommend I just called places like vanguard on me own?

Absolutely, positively stay away from financial advisors. If you want to open a Roth, Vanguard, Fidelity, T. Rowe Price, and Schwab are all good choices.

[Thrif-t]

You can do it yourself just call one of the three and start reading and educating yourself on how to take care of your money. Suze Orman always says and I agree! no one cares about your money like you do!

[Petunia 100]

And sorry last question, was talking to a friend and he referred me to his financial advisor, would you recommend I just called places like vanguard on me own? Well reading on the forum I noticed financial advisors seem to be more sales people. Thanks, sorry I'm such a been with this.

Asking questions is exactly the purpose of this forum, no need to apologize.

I personally would not use a "financial advisor" and absolutely believe you can do much better simply buying an "all-in-one" type fund, such as a Vanguard LifeStrategy or Target Retirement fund.

[EdwardG]

Hiring a Finance Consultant is the best idea. Yes, they do charge a bit, but the will walk you through the whole process. Also, talking to your company about the situation will give a clearer picture.

[disneysteve]

Hiring a Finance Consultant is the best idea.

Hiring a "finance consultant" is a truly AWFUL idea.

EdwardG, if every one of your posts is going to say basically the same thing - "Hire a financial advisor" - may I suggest you take your business elsewhere.