Need to rollover, but where?

[jpro]

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I want to rollover my 403b from my internship to a Roth IRA, but I'm not sure where to go. My bank is with USAA, and I really enjoy the service I get. I don't know if I will have as many options with them though. Does anyone have experience with USAA Roth IRA, or do you have an alternate idea?

The other option would be to keep the money where it is (ING). It is only a few thousand dollars, and I don't have any other investments aside from my house. Depending on who you read this may not be considered an investment, but I'm already up 10-15k in a few months after buying a foreclosure at the "bottom" of the market. I digress.

Thanks in advance.

 

[southerndoc]

Wait, where is the money exactly? Does ING offer 403b's now?

A rollover must be a direct rollover -- meaning you must transfer it from one account to another, or you'll face a tax penalty. They will withhold 30% of your rollover for taxes if they issue a check directly to you. You have 60 days to deposit the full amount into another account or you'll have to pay the taxes. This is why most places do a direct rollover from a 401k/403b directly to a Rollover IRA.

You'll need to roll this over into a Rollover IRA unless you wait til 2010 when I think there is a provision that you can do a direct rollover to a Roth IRA. You can't do a rollover from your 403b to a savings account or you'll need to pay taxes plus a 10% penalty on the amount (unless you put it into a Rollover IRA within 60 days).

I used TD Ameritrade before, but now use Schwab because of their customer service. Ameritrade is cheaper if you trade a lot. If you don't trade a lot, or if you want to invest in Schwab's funds (no transaction costs), then I would go with Schwab.

 

[UserNameNeeded]

Considering your 403b amount is not huge (well, even if it was), and you're willing to be more aggressive/speculative in a tax-free account (that's the whole point-- maximize capital gains in an account that's tax-free), you might want to try a Wells Fargo PMA account (checking + brokerage + retirement account package) where they give you 100 commission-free trades per year per account if you have $25,000 in total assets, credit card or other loan (mortgage) balances with them.

Plus, Wells Fargo offers the most no-load, no-transaction fee mutual funds out of any brokerage (more than Schwab, Fidelity, Vanguard, etc.), if you'd rather play it safe/easy with mutual funds and not individual stocks.

Zecco.com also offers a lot of commission-free trades. Bank of America offers 30 free trades monthly, but you have to have $25,000 in deposits with them in their checking, saving or money market accounts.

 

[The White Coat Investor]

Vanguard. Hello? Why would you go somewhere else? Roll it over to Vanguard. Toss it into a broad-based index fund like Total Stock Market Index, Total World Stock Market Index, or a Target Retirement fund and forget about it. Don't get caught up in the brokerage game thinking you can beat the market because "I'm a doctor so I must be smarter than the average joe."

 

[touchadream]

Vanguard. Hello? Why would you go somewhere else? Roll it over to Vanguard. Toss it into a broad-based index fund like Total Stock Market Index, Total World Stock Market Index, or a Target Retirement fund and forget about it. Don't get caught up in the brokerage game thinking you can beat the market because "I'm a doctor so I must be smarter than the average joe."

This Doctor is correct. "Don't get caught up in the brokerage game" is great advice for the long term, too. I am in the business and it is treacherous beyond understanding. Suffice it to say that EVERY time money changes hands, each hand it passes through gets some. So this is the only caveat. Once you get to some real money, get to some real professionals, and I don't mean a guy on the street with an office. I mean seek out institutional level qualified advice and know what you are paying for it. Like when the guy says, you can do it, we can help? No, you can't and no they won't. You really have no business "trading" retirement funds, trading is for gamblers, full-time traders, or for funny money if you love trading as a serious amateur. The best way to win at trading is with the low or no cost structure you can easily negotiate with a custodial firm when you have a couple of billion in the account you manage. Vanguard isn't perfect. They cut services in ways you won't know until its too late, but for where you are now, its an excellent choice, and this is great advice.

 

[blanche]

Wait, where is the money exactly? Does ING offer 403b's now?

You'll need to roll this over into a Rollover IRA unless you wait til 2010 when I think there is a provision that you can do a direct rollover to a Roth IRA. You can't do a rollover from your 403b to a savings account or you'll need to pay taxes plus a 10% penalty on the amount (unless you put it into a Rollover IRA within 60 days).

I think the thing about 2010 is a new provision will allow you to pay the tax burden of rolling over an IRA to Roth (since the balance becomes taxable income during this step) over two years--2010 and 2011. It's not clear how long this will be in effect, ie--future years also. My understanding (and I'm not an authority on this in any way...) is that is the only change next year.

But along these lines--are most residents who are contributing to 401Ks/403Bs going to roll-over to a Roth before ending residency? It appears to make sense for most of us, as we will hopefully not be in this tax bracket for much longer (exceptions--married peeps who have significant others that are making more $$$, and filing jointly)

 

[notoriousmoops]

Vanguard. Hello? Why would you go somewhere else? Roll it over to Vanguard. Toss it into a broad-based index fund like Total Stock Market Index, Total World Stock Market Index, or a Target Retirement fund and forget about it. Don't get caught up in the brokerage game thinking you can beat the market because "I'm a doctor so I must be smarter than the average joe."

ActiveDutyMD couldn't be more correct. Vanguard will not kill you with fees like other brokerage/investment firms. The best approach for the investor who does not trade actively for a living is to go with low cost index funds through Vanguard.

 

[Vyvanase]

Go with Vanguard if you want to set it and forget it. Great index funds at the lowest expense ratio. I used Vanguard when I was a novice investor for my first 2 years of a ROTH IRA. If you want more hands on go with Scottrade. It has no account fees and just $7 trades and you can always transfer out after a year if you don't like them for free. Choose large cap stocks with high dividends (BP, LLY, MO, or T) and then set it and forget. I did the Scottrade route just to play around with my old 401k. I'm in the green with my Scottrade account and red with my Vanguard. Only do the brokerage if you have the time and knowledge to manage your own money or you'll be deep in red.