arrowspark said:One of the most annoying things I've found with 401ks's and Rollover IRA's is the transfer of funds. Different brokerages have different forms, procedures etc and they aren't always compatible. I rolled the 401k from my previous job into a rollover IRA at TD Ameritrade. My new job has a 401k at fidelity and I wanted to move my rllover IRA funds into the new 401k. The problem is that Fidelity wants me to mail their form and a check payable to Them "in care of Me" to them. TD Ameritrade wants me to fill out their form and state where the funds are to be transferred to so they can mail the check directly. They say they can't make a check out to a third party and mail me the check, they have to mail the check directly to Fidelity. Fidelity says they don't know what to do with the check if it doesn't come from me and came from TD Ameritrade instead. This has been a brain racking nightmare dealing with these two companies and trying to figure out how the heck to get my funds form TD Ameritrade to Fidelity.

I am pretty much at this stage too and not sure about how to do it?
My wife has a rollover IRA with Schwabb and she doesn't do much with it, so I am thinking of switching this over to one of the Vanguard index funds, but am wondering about charges etc.

How do you start here? Open an account with Vanguard first and transferred the balance from Schwabb over? Would Schwabb charge me anything for this?

Is it also true that 401k have different (maybe better) treatement in bankruptcy or divorce vs. IRAs?

LH2004 said:psychtobe said:it is my understanding that if your child inherits your 401(k), your company can require him/her to withdraw that money within 5 years. In an IRA, that cannot happen; you have the life expectancy of the child to withdraw the money. Is this not correct?It is correct (in practice; an IRA could also require you to withdraw faster, but they generally don't do that). But it doesn't make any difference. If you die with a 401(k) account, your kids (or other heirs) can roll over the account into "inherited" IRAs, which will then function exactly the same as if they had inherited an IRA from you: they can take withdrawals over their life expectancies.

Under old law, it was not possible to do a rollover from an inherited 401(k) account: the heirs (other than a spouse) were stuck with whatever payout schedule the plan allowed. Under modern law, they can, and then will be treated exactly the same as if they had inherited an IRA. So if you prefer the investment options in your 401(k), there's no longer a good reason to roll over just because you might die.

In either case, it doesn't (and didn't) matter, if your account is inherited by your spouse (which is typically what you want): a spouse heir can roll over an inherited IRA or 401(k) to his own IRA, and therefore doesn't have to take any withdrawals until age 70 1/2. Typically, that's what you will want if you have a spouse (since it is the most favorable taxwise). So the law change is most important for the unmarried, and was welcomed as a major civil rights victory for gays. But it's useful for people who die simultaneously with their spouses, leaving a 401(k) to a contingent beneficiary, or possibly for people with elderly spouses and other, much younger heirs.

If a living trust is named as a beneficiary of a retirement plan - say, a 401(k) - I can't see how it could be stretched - the trust could in theory live many decades. Does this mean the strech option is not available in this case? I understand having a real person (preferably young) as beneficiary is better for these types of accounts, but if the person is very young (ie, a minor) then the management of this money needs to be done in some form of trust.

Dracolith said:arrowspark said:The problem is that Fidelity wants me to mail their form and a check payable to Them "in care of Me" to them. TD Ameritrade wants me to fill out their form and state where the funds are to be transferred to so they can mail the check directly. They say they can't make a check out to a third party and mail me the check, they have to mail the check directly to Fidelity.
Fidelity says they don't know what to do with the check if it doesn't come from me and came from TD Ameritrade instead.

It sounds like what Fidelity wants you to do is highly unusual.

You should be making a direct trustee to trustee transfer. TD Ameritrade mails a check
to Fidelity. This is something Fidelity _should_ be able to handle, as it is the
standard and legally required way to transfer funds and avoid paying a penalty.

Fidelity should know what to do with the check, because your trustee will identify
the name on the account as part of the transfer.


You never get to see the check. If you actually receive the check in the process,
and you haven't reached the age requirement, the custodian has to withold tax penalties
as if you were taking a distribution.

Then you have to deposit to fidelity the full amount within a short time limit,
and the only way you avoid paying some IRS early withdrawl penalties + taxes is to
make up for the witholding out of pocket, by putting in more money than you got the
check for.A check made payable to Fidelity that is mailed to you does not trigger tax withholding. It is not legally required that Fidelity accept trustee to trustee transfers. That being said, Fidelity does accept IRA direct trustee transfers. However, the posted is doing a rollover into an 401k plan adminstered by their employer. The plan policies, are created by the employer

I just went through something similar, leaving a pension plan from a former employeer (Vanguard was the administrator). My employer prohibited direct trustee to trustee transfers, and required that Vanguard issue me a check, payable to my rollover account (which was also administered by Vanguard).


If the poster wants to roll their IRA from TD into their 401K plan from their employer (why I don't know) a two step process would probably be more straightforwared. First do a direct trustee to trustee IRA transfer from TD to Fidelity. This will be governed by Fidelity's rules, not the employer. Then do a rollover, all handled by Fidelity of the IRA into the 401k

Bobalude said:
careful there, if you touch the money in an IRA early, you can run into some headaches. A distribution from an IRA requires the custodian withold 20% of the redeemption for taxes, something u may get back at tax time of course if you roll it all into a qualified retirement account, except that 20% withholding difference you may have to make up from your pocket. This rollover is they send a check to you, you cash it, you send a check to the new plan.
There is no requirement for federal withholding on distributions from IRA accounts. The default federal withholding rate for IRA distributions is 10%. However you may elect not to have any federal withholding at all by selecting that option on Form W-4P or the form provided by your IRA custodian. Generally, most IRA distribution request forms ask you how much you want to have withheld. 0% is an acceptable answer.

The 20% you are refering to is the withholding from qualified retirement plans such as a 401k. That rule does not apply to IRAs.

cuddleFART said:I am unexpereinced and confused. I read somewhere that I can withdraw penalty free from IRA when I am 70 1/2 years old. I beleive I would like to retire earlier then that, if I could.Withdrawals are penalty-free form the time you turn 59 1/2. There are a number of exceptions that let you access the money before that without penalties, too.

70 1/2 is the age when you MUST start taking withdrawals (or the next year) from a traditional IRA.

I am in a similar situation where my employer is switching fund companies and all the new fund data is telling me that the new funds are no good (Legg Mason to Principal Funds).

All of the new funds have high expense ratios with not a single fund beating its benchmark index, even their index fund is lagging behind the index due to the an astounding expense ratio of .90%, and massive tracking errors, this is on top of all the sales charges which are as high as 5.5%.

They are still not telling me which freakin class of shares they are offering us so that I would have a clue how much money they will sucker in upfront.

I still plan to participate in the 401K plan, but only to the extent of getting the employer match. I am thinking if I roll over my existing balance from Legg mason to say a vanguard traditional IRA then I can pick better funds (basically all index funds, diversified by large cap, mid cap, small cap and international equity) and also add any more money to it on a yearly basis that I can manage on top of the 401K plan.

I just don't want to see my money that has grown well so far, go in smokes due to a greedy fund company and lousy managers at this new company.

Would rolling over my existing balance to an IRA be a good idea in this situation? Btw, I do not plan to touch the money in the IRA until retirement and so it will stay there for 30+ yrs at least. I would like to have the option of rolling it over back to a 401K if and when I change employers and if the new plan is attractive enough - a very remote possibility though.

LH2004 said:Cataphract said:Would rolling over my existing balance to an IRA be a good idea in this situation?Yes -- other than the fact that it's impossible. You can't withdraw your elective salary deferrals until you turn 59 1/2 or are no longer employed by the plan sponsor, except if you meet certain narrow exceptions.

If they permit you to withdraw other money, such as matching contributions, then, yes, rolling over to an IRA is an excellent idea.

Ok, that does throw a wrench in my plan. I was thinking that since I am fully vested in my contributions, the company may not object to my rolling over the existing balance. However, that is still speculation on my part, I need to get more info on the exact rules.

btw, are you suggesting that I can't do this by law, or is it because most employers don't allow existing employees to rollover money from their current plans to an IRA period.

Our HR is really not much help on this a their knowledge is limited and they actually direct me to the new so called "financial advisor" who infact is the guy that came up with the brilliant idea of going with Principal group, he I am sure will be thrilled when I tell him, hey these funds that you are recommending suck and I want to take my money elsewhere, what is the best way to go about?

Cataphract said:btw, are you suggesting that I can't do this by law, or is it because most employers don't allow existing employees to rollover money from their current plans to an IRA period.By law. Not letting you withdraw the salary deferrals is one of the conditions for a plan to qualify under sec. 401(k). There is no need to bug your "advisor" about this money. OTOH, it's possible they let you withdraw other money, such as matching contributions.

Yes, they suck in short as their fund fees are too high.

Gross Expense - Advisor - Type
1.15% - Principal Global Investors - Money Market Sep Acct
1.30% - Principal Global Investors - Bond and Mortgage Sep Acct
1.74% - Principal Real Estate Inv - U.S. Property Sep Acct
1.45% - Principal Global Investors - Principal LifeTime Strategic Income Separate Account
1.49% - Principal Global Investors - Principal LifeTime 2010 Separate Account
1.56% - Principal Global Investors - Principal LifeTime 2020 Separate Account
1.57% - Principal Global Investors - Principal LifeTime 2030 Separate Account
1.58% - Principal Global Investors - Principal LifeTime 2040 Separate Account
1.59% - Principal Global Investors - Principal LifeTime 2050 Separate Account
0.90% - Principal Global Investors - Large Cap Stock Index Sep Acct
0.90% - Principal Global Investors - Mid-Cap Stock Index Sep Acct
0.90% - Principal Global Investors - Small-Cap Stock Index Sep Acct

In addition to Principal we get these options as well.

2.52% - Russell Investment Group - Russell LifePoints® Balanced Strategy Separate Account
2.34% - Russell Investment Group - Russell LifePoints® Conserv Strategy Separate Account
2.65% - Russell Investment Group - Russell LifePoints® Eqty Growth Strat Separate Account
2.57% - Russell Investment Group - Russell LifePoints® Growth Strategy Separate Account
2.42% - Russell Investment Group - Russell LifePoints® Moderate Strategy Separate Account
1.52% - AllianceBernstein LP - LargeCap Value Sep Acct
1.50% - T. Rowe Price Associates, Inc. - Large-Cap Blend Sep Acct
1.50% - T. Rowe Price Associates, Inc. - LargeCap Growth I Sep Acct
1.76% - Dimensional/Vaughan Nelson - SmallCap Value II Sep Acct
1.76% - Fidelity (Pyramis Global Adv) - Mid-Cap Growth II Separate Account
1.76% - Goldman Sachs/LA Capital Mgmt - Mid-Cap Value I Sep Acct
1.76% - UBS/Emerald/Essex - SmallCap Growth II Sep Acct
1.88% - Fidelity (Pyramis Global Adv) - International Sep Acct

For me, none of the funds offer stand out from a return v. expense standpoint. So my personal allocation is split 4 ways amongst the 3 different index funds offered by Principal plus the Fidelity international fund.