Where to open Roth IRA?

Archived From: Finance
  • Page :
  • 1
  • Text Only
Voting History
rated:
I'd like to open Roth IRA account, the problem that I have is that I do not know where to open it, Everybody says just open an account at Fidelity or Vanguard and put it into "this" or "that" fund, however no one is willing to talk about any specifics, about any possible account limitations or fees, or available fund options, and I found it next to impossible to find that kind of information on the respective websites, even getting to the list of available Fidelity funds takes 6 clicks on Fidelity website.

Basically instead of just throwing my money into a fund in an IRA account and forgetting about it, I would like to have a little more control over it. I'd like the ability to move my money into "safe" funds if I see a crash coming, and I'd like to move it back into equities or stock funds if you will whenever I see fit. Yes, I'm aware of the "you can't time the market", but I want that option just in case. I also look for a place that doesn't nickel and dime your account to death with all the various fees.

So I need to open IRA account somewhere that:
1. Will have short term cash alternative funds (short term treasury bills or whatnot) that won't lose a lot of value during a crash
2. Will have variety of low expense ratio index funds
3. Preferably will have several low expense ratio funds invested in dividend paying equities
4. Have low or non existent yearly account fees
5. Have low or non existent transaction fees when I move my money from one fund into another (I'm including both load and transaction fees in that, basically any kind of fee)
6. Have low or non existent fund fees. I've read for example that in the past Vanguard had $10 fee for each fund account with less than $5K balance. I'd like to avoid these if possible.
7. Will not have any limitations (or non excessive limitations) on how often I can move my money from one fund into another, my 401k for example limits how often I can move my money around, for example I cannot move my money in and out of certain fund more than twice a month and some funds even have "termination" fees. I'd like to avoid this kind of shenanigans if possible.
8. Ideally won't charge extra for paper statements. I can live with e-statements, but I like paper.

Also, I have several additional questions just to be complete
9, Are the yearly IRA contribution limits based on the calendar year? Meaning hypothetically speaking I have until December 31st to put 5K into Roth IRA for the 2012 year, at which point the "limit" resets and I can fund my account again?
10. If I open account with say Fidelity, would I be able to buy non-Fidelity funds, and if so, what kind of fees if any would I be charged for this? What about Vanguard, or TRowe?
11. Would any of the Fidelity/Vanguard/TRowe allow me to park my money in plain old Cash? Out of curiosity?
12. Do any of the Fidelity/Vanguard/TRowe have any minimum limits to how much money you can allocate into any particular fund? I.e. say $2000 minimum to buy any of the funds? And what happens if the fund value goes below $2000 due to market movements?
13. Would any of the Fidelity/Vanguard/TRowe have any problems with me funding my account with one big chunk of money instead of monthly deposits? Or would I have to pay extra fees for that?


Yeah... rofl... didn't expect this list to grow as long. I wanted to open an account and fund it by the end of the year, but I procrastinated, my bad. Now I have a week to decide where to open an account. So... Any input would be highly appreciated. Thanks!

Member Summary
Thanks for visiting FatWallet.com. Join for free to remove this ad.

Vanguard.

thyfleshconsumed said:   Everybody says just open an account at Fidelity or Vanguard.So listen to everyone. My advice would be Vanguard. Here is their phone number, give them a call and ask all the question you like. 800-388-7073

Vanguard IRA fact sheet.

Ok I'll bite. Call Vanguard and talk to a rep - they can answer all of these questions and tell you where to look on the website for more info. Their website has answers to all of the questions you are asking.

For mutual funds Vanguard (and some fidelity funds) are the best thing going.

Most/all small balance fees are waived at Vanguard if you elect the e-statement option.

Each mutual fund option typically has its own set of fees and min. investment amounts, as well as overall account fees levied on your entire portfolio. (For example, most Admiral funds require a $10,000 min. investment.)

Use Morningstar to determine what makes sense for your situation.

Watch the expense ratios! Keep fees to a minimum and you'll be set.

My humble suggestion is to open a Roth IRA with Schwab and use their no-commission branded ETFs. No minimums, no loads, and no limitations on the number of transactions processed. Also, you can dump all 5k in at once, where it sits in cash by default. You can then choose any investment that you want, such as SCHB (broad-market equity index), SCHD (dividend equity), SCHZ (US total bond index), and SCHO (short-term US treasuries). See Schwab ETFs for more details.

Presently, Schwab has the lowest ETF expense ratios around, even lower than Vanguard.

thyfleshconsumed said:   
Yeah... rofl... didn't expect this list to grow as long. I wanted to open an account and fund it by the end of the year, but I procrastinated, my bad. Now I have a week to decide where to open an account. So... Any input would be highly appreciated. Thanks!


Take your time. You have until April 15 to open an account and make 2012 contributions.

satchelsofgold said:   thyfleshconsumed said:   
Yeah... rofl... didn't expect this list to grow as long. I wanted to open an account and fund it by the end of the year, but I procrastinated, my bad. Now I have a week to decide where to open an account. So... Any input would be highly appreciated. Thanks!


Take your time. You have until April 15 to open an account and make 2012 contributions.


Technically it's the sooner of April 15, or the date you file your 2012 tax return.

CorradoJr said:   satchelsofgold said:   thyfleshconsumed said:   
Yeah... rofl... didn't expect this list to grow as long. I wanted to open an account and fund it by the end of the year, but I procrastinated, my bad. Now I have a week to decide where to open an account. So... Any input would be highly appreciated. Thanks!


Take your time. You have until April 15 to open an account and make 2012 contributions.


Technically it's the sooner of April 15, or the date you file your 2012 tax return.


No, you can file your return, make a contribution and then amend your return. Or even file the return claiming the contribution (for a traditional IRA), then make the contribution after filing. For a Roth you shouldn't even have to amend the return.

IRS said: Filing before a contribution is made. You can file your return claiming a traditional IRA contribution before the contribution is actually made. Generally, the contribution must be made by the due date of your return, not including extensions.

satchelsofgold said:   CorradoJr said:   satchelsofgold said:   thyfleshconsumed said:   
Yeah... rofl... didn't expect this list to grow as long. I wanted to open an account and fund it by the end of the year, but I procrastinated, my bad. Now I have a week to decide where to open an account. So... Any input would be highly appreciated. Thanks!


Take your time. You have until April 15 to open an account and make 2012 contributions.


Technically it's the sooner of April 15, or the date you file your 2012 tax return.


No, you can file your return, make a contribution and then amend your return. Or even file the return claiming the contribution (for a traditional IRA), then make the contribution after filing. For a Roth you shouldn't even have to amend the return.

IRS said: Filing before a contribution is made. You can file your return claiming a traditional IRA contribution before the contribution is actually made. Generally, the contribution must be made by the due date of your return, not including extensions.


This is a new investor looking to minimize costs and aggrivation. While you are correct, I don't believe s/he should even have to think about this. Heck, s/he is on the fence about about investment vehicle, let's not make things any harder than they have to be. Costs involved with filing an amended return?

Go down to the Roth store...you know, in the Roth district in Rothville. They'll set you right up.

CorradoJr said:   satchelsofgold said:   CorradoJr said:   satchelsofgold said:   thyfleshconsumed said:   
Yeah... rofl... didn't expect this list to grow as long. I wanted to open an account and fund it by the end of the year, but I procrastinated, my bad. Now I have a week to decide where to open an account. So... Any input would be highly appreciated. Thanks!


Take your time. You have until April 15 to open an account and make 2012 contributions.


Technically it's the sooner of April 15, or the date you file your 2012 tax return.


No, you can file your return, make a contribution and then amend your return. Or even file the return claiming the contribution (for a traditional IRA), then make the contribution after filing. For a Roth you shouldn't even have to amend the return.

IRS said: Filing before a contribution is made. You can file your return claiming a traditional IRA contribution before the contribution is actually made. Generally, the contribution must be made by the due date of your return, not including extensions.


This is a new investor looking to minimize costs and aggrivation. While you are correct, I don't believe s/he should even have to think about this. Heck, s/he is on the fence about about investment vehicle, let's not make things any harder than they have to be. Costs involved with filing an amended return?


You sound defensive. The OP said that he doesn't want to rush through the decision of where to open the account. I think letting OP know that he has 4 months to think about it should make things easier on him, not harder. If OP opens a Roth, as he plans to, he doesn't have to amend anything, as I noted.

thyfleshconsumed said:    I procrastinated, my bad. Now I have a week to decide where to open an account.!You have until April 15 for your 2012 IRA contributions, you may contribute at anytime during 2012, and up until April 15th, 2013. If you make your contribution after January 1st but before the April 15th deadline, you need to designate the contribution year that you intend to target. For most tax filers, this can be calculated using the worksheets in either IRS Form 1040 or Form 1040a. For 2013 contributions, the federal deadline is set at April 15, 2014. The same rules and guidelines apply to this tax year as well.

I'll speak about Vanguard and Fidelity:
1. Will have short term cash alternative funds (short term treasury bills or whatnot) that won't lose a lot of value during a crash: Yes, Vanguard has Prime Money Market and short term treasury, and short term bond index. Fidelity's select money market has slightly higher interest rate than Fcash.

2. Will have variety of low expense ratio index funds: yes for both. Fidelity has a healthy quantity, Vanguard has the most. Note: Fidelity's indices start at 10k min per fund. Vanguard, 3k per fund.

3. Preferably will have several low expense ratio funds invested in dividend paying equities: Vanguard has a dividend index. But you really should research index-based total return strategies rather than dividend only. The risk/expected return ratio is generally better when you aren't excluding half the stocks from your investment basket!

4. Have low or non existent yearly account fees: yes, though you may need to get paperless statements.

5. Have low or non existent transaction fees when I move my money from one account into another (I'm including both load and transaction fees in that, basically any kind of fee): from one account to another, or one fund to another?

6. Have low or non existent fund fees. I've read for example that in the past Vanguard had $10 fee for each fund account with less than $5K balance. I'd like to avoid these if possible.: get paperless statements with Vanguard.

7. Will not have any limitations (or non excessive limitations) on how often I can move my money from one fund into another, my 401k for example limits how often I can move my money around, for example I cannot move my money in and out of certain fund more than twice a month and some funds even have "termination" fees. I'd like to avoid this kind of shenanigans if possible.: depends on the fund. Some funds have preventions from immediately buying back in after you sell, and this prevention lasts a few months. Other funds have redemption fees if you redeem within the first few months.

8. Ideally won't charge extra for paper statements. I can live with e-statements, but I like paper. See above.

9, Are the yearly IRA contribution limits based on the calendar year? Meaning hypothetically speaking I have until December 31st to put 5K into Roth IRA for the 2012 year, at which point the "limit" resets and I can fund my account again? You have until 4/15/13 to make your contribution for 2012. When you contribute between 1/1/13 and 4/15/13, the brokerage should ask you if this should count towards 2012 or 2013.

10. If I open account with say Fidelity, would I be able to buy non-Fidelity funds, and if so, what kind of fees if any would I be charged for this? What about Vanguard, or TRowe? Yes, costs $75 typically. At Vanguard, no, you cannot buy others' mutual funds.

11. Would any of the Fidelity/Vanguard/TRowe allow me to park my money in plain old Cash? Out of curiosity? Fidelity: Fcash. Vanguard: you need to buy Prime Money Market.

12. Do any of the Fidelity/Vanguard/TRowe have any minimum limits to how much money you can allocate into any particular fund? I.e. say $2000 minimum to buy any of the funds? And what happens if the fund value goes below $2000 due to market movements? Yes, Fidelity indices start at 10k. Most Vanguard funds start at 3k.

13. Would any of the Fidelity/Vanguard/TRowe have any problems with me funding my account with one big chunk of money instead of monthly deposits? Or would I have to pay extra fees for that? Should be fine no matter what.

You have a lot of questions. Strongly recommended to read more on these websites, and to read more about investments in general. You may want to register on Bogleheads forum and post a thread asking for some help. Strongly recommended to not trade in and out of equities & cash/bonds. You'll likely lose quite some money, and/or face the opportunity cost of missed market growth.

satchelsofgold said:   
Take your time. You have until April 15 to open an account and make 2012 contributions.


Are you REALLY sure? I would like to do this too but have been procrastinating for 3 years, only because my brain freezes when I start doing this stuff, its just beyond my understanding (and I am PhD in Genetics !!!)

LendingClub.com has a self directed Roth IRA. I have had one for years now. Making about 6.5%.

Savyasachi said:   satchelsofgold said:   
Take your time. You have until April 15 to open an account and make 2012 contributions.


Are you REALLY sure? I would like to do this too but have been procrastinating for 3 years, only because my brain freezes when I start doing this stuff, its just beyond my understanding (and I am PhD in Genetics !!!)


A PhD in Genetics must be pretty easy, cause this stuff isn't hard. I wouldn't wait till April, as you will have to work harder to max out the contribution in 2013.

habibbijan said:   Presently, Schwab has the lowest ETF expense ratios around, even lower than Vanguard.

I just want to say that I think it's worth choosing the more popular ETF's over others. My reasoning is that, although technically ETF's are linked to a basket of interests that you can exchange them for, realistically, for the casual user, they are simple a stock ticker. Which means that liquidity can play a significant role in your trading. If you buy low volume ETF's, it may be hard to get a true market value price when you want to exit.

So personally, I would recommend iShares (and thus a Fidelity account that lets you trade those for free), which are probably the most well-known and popular family of ETF's. I don't know how popular Schwab ETF's are now, but I was wary of them initially at least, for this reason. Just something to consider.

Go with TD ameritrade or Schwab if you are going to buy ETF's that are no commission because they have the EFT's with the lowest expense costs. Fidelity has high expense no commission ETF's. TD ameritrade has some vanguard ETF's with no commissions.
Vanguard website is not as flexible as the above brokers. I believe all of them have no annual fee with the required minimum balance.
Buying mutual funds rather than etf's in a IRA is not as flexible as no commission ETF's.
Interests rates are so low at5 this time I do not think that they should be a major consideration at this time.

This WSJ link is quite informative
http://online.wsj.com/article/SB10001424052748704713004576209022...

Vanguard has online transfer limitations for their mutual funds. So Schwab's ETFs might be a better option.

Well, I have my Roth with OptionsHouse. No annual fees. You have the whole universe of things to invest. I actually like to invest in stocks. I don't do mutual funds. You won't find mutual funds without some kind of expense. After all, you are paying the mutual fund manager to invest for you. When you buy stocks, you pay $4 commission, and that's it. If you never sell, you don't get charged a dime more. That's sweet. If you invest in dividend paying stocks, you can DRIP the dividends, no cost for you.

The drawback of this is that you better know what you are doing, since you are picking stocks yourself. It is not for everyone. You need to like the market, and keep up with the news regarding all the companies you hold. You can't just go to sleep, come back a year later, and find that your investment lost 90% in value.

And you have until April 15, 2013 to make the contribution on your Roth. I suggest you don't wait till the end. And open a Roth. I find a Roth to best the best of the retirement accounts.



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

TRUSTe online privacy certification

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2014