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Financial Planning / Tax Strategies
|Subject: Re: Roth Cash In?||Date: 12/8/1998 10:00 AM|
|Author: TMFTaxes||Number: 6885 of 122638|
But the company that the fund is with says I have to pay a 10% penalty if I take it out before
If you cash the Roth in, you pay the 10% penalty. BUT, what they are not telling you is that you
can have it transferred directly to ANOTHER mutual fund, even at a different mutual fund family,
and not have to pay the 10% penalty. That will get you out of the bad investment.]]
As pointed out, you can certain make a "transfer" of your Roth IRA from your current mutual fund to another family of funds without penalty. Or you could even make the transfer to a broker and invest in securities...all without penalties if done correctly.
Remember that you still have the same "rollover" rules for your Roth IRA that are available for a regular IRA. If you are not happy with your broker or investment, you can move the funds (under the rollover provisions) to another investment or broker without the 10% penalty. This is usually best done via a "trustee to trustee" transfer...which avoide the "once a year" rollover rules completely.
The only time the 10% penalty comes into play is when you take a distribution...and keep the funds.
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