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Author: rgreaves1 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: 401K - IRA rollover question Date: 11/21/2002 3:18 PM
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I had a 401K that I rolled over into an IRA through my financial planner. The mutual funds in the IRA are underperforming (I think) and I'm trying to figure out what if anything I should do about it. Can I move the money from this IRA into another one (and drop my financial planner along the way)? If so I should be able to get the money into an index fund, but could I also use it to invest in individual sticks within the IRA?

-Rich

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Author: FuskieFool Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35242 of 75335
Subject: Re: 401K - IRA rollover question Date: 11/21/2002 4:52 PM
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I had a 401K that I rolled over into an IRA through my financial planner. The mutual funds in the IRA are underperforming (I think) and I'm trying to figure out what if anything I should do about it. Can I move the money from this IRA into another one (and drop my financial planner along the way)? If so I should be able to get the money into an index fund, but could I also use it to invest in individual sticks within the IRA?

What is it with which you were unsatisfied in the IRA? Was it the pool of funds available to you or selection made by the financial planner? If the current IRA does not allow you to invest in the funds or stocks that you want, then you should be able to transfer it to another broker.

If the problem is not the poll of funds and stocks but the advise by your planner, then that is where you should focus your attention. Ultimately, it is your decision where to invest. You need to educate yourself Foolishly so that when your planner recommends something or explains a strategy you can be on an equal basis. You need to establish your investment/retirement strategy and make sure the decisions you or your planner make fit within that strategy. If your choices are reasoned and in line with your goals, then you should focus on the long run and not worry too much about short term results. Which is not to say do not focus on them at all, but do so by understanding how your investments do or do not fit in with your overall plan.

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Author: gopete One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35243 of 75335
Subject: Re: 401K - IRA rollover question Date: 11/21/2002 7:41 PM
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FuskieFool provided some excellent advice; however, you certainly can change IRA custodians if you so desire. For example, you can open a "self directed" IRA account at Vanguard and have them do the nitty- gritties of the IRA transfer for you. This will allow you to buy combinations or mutual funds, stocks and bonds within one IRA account.
You can also do this through a discount brokerage such as TDWaterhouse.

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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35244 of 75335
Subject: Re: 401K - IRA rollover question Date: 11/21/2002 9:03 PM
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"I had a 401K that I rolled over into an IRA through my financial planner."

I take this to mean that you changed jobs, so your 401k with your previous employer became available to roll into an IRA. For your custodian, you chose the company your financial planner works for?
An IRA custodian can be a bank, a mutual fund company, or a brokerage. Which is most suitable depends on the type of investments you want to make. If your custodian is a bank, you will find your money invested in certificates of deposit and perhaps a savings account. If it is a mutual fund company, you expect to invest in mutual funds, although the big mutual fund companies such as Fidelity and Vanguard have brokerage arms through which you can invest in such individual stocks as you may see fit. If your custodian is a broker, you will invest primarily in stocks and bonds, although the broker may also offer an assortment of mutual funds.
You can do a trustee-to-trustee transfer from your current custodian to a new one as frequently as you wish. The custodian from which you are departing will probably levy an exit fee as a parting insult--$50 is typical. You contact the new custodian, tell them you want to invest in their index fund (why anybody other than Vanguard for this??). They send you the paperwork, which you sign and attach the most recent account statement. You don't even have to say goodby to your ex-financial planner. The old custodian can drag their feet for a few weeks, and as mentioned levy an exit fee (which comes out of your account) but that's all there is to it.
With Vanguard, you can divide your money between mutual funds and stocks anyway you like.
Best wishes, Chris


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Author: rgreaves1 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35245 of 75335
Subject: Re: 401K - IRA rollover question Date: 11/21/2002 9:48 PM
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What is it with which you were unsatisfied in the IRA? Was it the pool of funds available to you or selection made by the financial planner?

I feel I don't have access to funds that will meet my goals and everthing I do with the account has to go through the financial planner. Since I've started becoming educated in the way of the Fool I've become increasingly frustrated with this arrangement. So I'm inclined to move the money at least into an index fund and then ultimately (as I continue my education here) into stocks.



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Author: rgreaves1 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35246 of 75335
Subject: Re: 401K - IRA rollover question Date: 11/21/2002 9:56 PM
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For your custodian, you chose the company your financial planner works for?

I went with the company he recommended (NFS? I think it is linked with Fidelity in some way even though the funds I'm in aren't fidelity funds).


So is there anything "Special" about this IRA account because it was created through a 401K Rollover? Can I contribute to it like any other IRA? We have a "Simple" IRA at work which I contribute to but was told funds from the 401K Rollover can't be combined with the Simple.




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Author: W401K Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35247 of 75335
Subject: Re: 401K - IRA rollover question Date: 11/21/2002 10:36 PM
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One point no one has brough up is the fact that you invested in mutual funds at the recomendation of a Financial Advisor. This means the Advisor was paid a commission unless it was a fee only advisor.
If the advisor was paid a commission you will proably pay a sales charge to tranfer the money out of that fund if you are going to switch it to another fund family. If you are in Class B shares and the purchase was made recently, you could be looking at a 55 sales charge.
Get the facts about if there is a slaes charge on your IRA investment.

Bill

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Author: FuskieFool Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35248 of 75335
Subject: Re: 401K - IRA rollover question Date: 11/21/2002 11:47 PM
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I feel I don't have access to funds that will meet my goals and everthing I do with the account has to go through the financial planner. Since I've started becoming educated in the way of the Fool I've become increasingly frustrated with this arrangement. So I'm inclined to move the money at least into an index fund and then ultimately (as I continue my education here) into stocks.

A financial planner is supposed to be working for you. He/she gives you advice but you make the decisions. If you feel he/she is steering you wrong, try discussing it. With your new-found knowledge, they may be willing to bring your conversations to a new level.

I agree it is liberating to make your own decisions without having to go through an intermediary. It is also a risk of which you need to be aware since you are depending on yourself. I am pretty much self-managed, but every now and then I need someone off whom to bounce ideas.

All I am saying is before you make any drastic changes in your retirement situation, make sure you have researched your decisions and are comfortable with your level of risk.

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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35249 of 75335
Subject: Re: 401K - IRA rollover question Date: 11/22/2002 7:35 AM
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If you keep your rollover IRA funds in a separate account, you retain the right in the future to roll it into another employer's 401k. You CAN add funds like any other IRA, but if you do you lose the right to roll it into another 401k. Since you have more choices and probably less expenses in the IRA, this isn't much of a thing. If your custodian charges an annual fee you may prefer to comingle.
Best wishes, Chris

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35250 of 75335
Subject: Re: 401K - IRA rollover question Date: 11/22/2002 7:48 AM
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If you keep your rollover IRA funds in a separate account, you retain the right in the future to roll it into another employer's 401k. You CAN add funds like any other IRA, but if you do you lose the right to roll it into another 401k.

That was true in the past, but no longer. Effective January 1, 2002, any money in a traditional IRA that has yet to be taxed (i.e., pretax annual contributions, employer plan rollovers and earnings) may be transferred to an employer's retirement plan that accepts such transfers. The only IRA money that is now restricted from a transfer to an employer's plan is that stemming from after-tax, or nondeductible, contributions.

Regards...Pixy

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Author: rgreaves1 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35252 of 75335
Subject: Re: 401K - IRA rollover question Date: 11/22/2002 11:32 AM
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Thank you all for your advise and information. It's been very helpful.

Best Regards,

Rich

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