I have funds in my employer's Simple IRA that I'd like to move most of elsewhere. I don't want to take the money out, just move it to somewhere that isn't killing me with costs and makes more money.
I've had two different people tell me A. Yes you can do this if your plan manager is OK with it. (A Vanguard consultant where I already have accounts) B. No, I don't think you can do that. (Another investment guy that doesn't have any skin in the game for me)
Anyone in here know what the deal really is? Thanks
You can move IRA's, but make sure it does not go through your hands or you will pay penalties. It has to be done with a trustee to trustee transfer...that is... it's wired from one bank to the other without it going through you.
One thing I just discovered a month ago...... if it's a ROTH IRA and you close it out you have to meet two requirements. You must be 59 1/2 years old, and the money has to have been in the ROTH for over 5 years. If you have done a trustee to trustee transfer, it must be in the new place for 5 years before you withdraw it or else it's a mess. Ask me, I now know. For some reason the Feds do not allow the banks to add 7 plus 3. All they see is the 3. In the end, all will be OK, but ....this is crazy!.... the Feds say I must pay tax on the entire amount because it was only 3 years in the new bank....even though it was 7 years in the first bank. AND....there is no provision to explain it come tax time. I have no choice but to not pay the "due" taxes and wait for them to do a (hopefully) through the mail audit. If I had known I would have waited 2 more years....or not have done the transfer.
OP: check with your plan manager. If it were a personal IRA, there'd be no issues but there might be limitations due to vesting and employer contributions. If in-service transfers are allowed, have the new account company (hopefully Vanguard or Fidelity, the Admiral/Spartan class funds are excellent) initiate the transfer. When I transferred my old 401(k) to Vanguard, MassMutual sent me a check (it was made out to Vanguard, this is key, under no circumstances should you take ownership of the funds) and I forwarded it to Vanguard.
Thanks for all the replies. It seems NYLife insurance wants to take money from me. I don't understand why, if I'm fully vested, that I only have so much of my money that I can move without incurring a sales fee. Dirty bastards anyway.
cabinover wrote:I don't understand why, if I'm fully vested, that I only have so much of my money that I can move without incurring a sales fee. Dirty bastards anyway.
Yes, you'll find that all over the industry. The only 2 companies I trust are Vanguard and Fidelity. And advisors are generally a bad idea unless they're fee-only (that is, they only make money from you when actively working with you, not from merely "managing" your money.")