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Author: beachyhead100 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76075  
Subject: Moving from one Roth to another Date: 12/30/2001 12:21 PM
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I currently have my retirement with Janus in a Roth IRA. The investments are split between a growth and a money market fund. I'm thinking of moving all of this to a different custodian, Vanguard. Consequently, I have some questions. First, can I simply contact Vanguard and have them "transfer" (rather than "rollover) the balance to two similiar funds, growth/money market, without being hit with expenses, or penalties from Uncle Sam?.

My second question has more to do with buying and selling. I am not a particularly savvy investor, so pardon my ignorance. I'm not sure if this would be the right time to make this transition, because my understanding, up to now, has been you shouldn't sell while the market is down. However, even if the return isn't particularly high from Janus, it seems I would be buying new stocks, within the new Vanguard fund, at a low price, so it would more or less balance out, right? So would it be more prudent to wait until the market is up, to make the transfer or does is really matter?

Lastly, from what I've read on this forum, it seems that a "transfer" would make more sense than a "rollover." Does this sound right?

Thanks in advance for any answers/insight.

Mike
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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32973 of 76075
Subject: Re: Moving from one Roth to another Date: 12/30/2001 2:52 PM
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First, can I simply contact Vanguard and have them "transfer" (rather than "rollover) the balance to two similiar funds, growth/money market, without being hit with expenses, or penalties from Uncle Sam?.

Yes, as long as the money is going straight from a Roth IRA custodian to another Roth IRA custodian, there are no tax consequences at all.

I think this is called a "transfer" rather than a "rollover", but in any case, you want Vanguard to arrange for a "custodian-to-custodian transfer" of the Roth IRA, having Janus sell your invstments in the Roth IRA and send the check to Vanguard and directing Vanguard to invest the money in certain specific funds. Vanguard should be able to set this up to avoid any IRS entanglements.

I am not that familiar with Janus, so I don't know if there are exit fees, account closure fees, or the like, but in any case they are not IRS-related.

I'm not sure if this would be the right time to make this transition, because my understanding, up to now, has been you shouldn't sell while the market is down. However, even if the return isn't particularly high from Janus, it seems I would be buying new stocks, within the new Vanguard fund, at a low price, so it would more or less balance out, right? So would it be more prudent to wait until the market is up, to make the transfer or does is really matter?

It doesn't matter if you sell low to buy similar types of investments low, or if you sell high to buy similar types of investments high.

Which do you think would have the odds of growing more in the next few years, starting from today? Or if you were just now going to invest new money today if you did not have any investments, where would you put that money today? If you think it is Vanguard, that is where your money should be so it could enjoy that growth.

The fallacy of thinking a fund has to recover before you move money out of it is that when it recovers, the money could have grown much more in the investment you plan on moving it to, but by keeping it in the old fund you have lost out on that growth.

my understanding, up to now, has been you shouldn't sell while the market is down.

Like many "rules", the answer is "It Depends!" If you were going from a growth fund to cash, I would be advising against it ("buying high, selling low"). But since you are moving from a Janus growth fund to a Vanguard growth fund, the situation doesn't match the scenario the warning is about.


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Author: beachyhead100 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32980 of 76075
Subject: Re: Moving from one Roth to another Date: 12/31/2001 12:35 AM
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Thanks for the advice. It helped confirm what I was thinking.



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