IRA rollover vs Direct Transfer vs Direct 401k Rollover Which is More Advantageous
intro music Hi, my name is Terry White, CEO of Sunwest Trust. Today is Tuesday at two o’clock. Last week, and for the last couple of weeks, we’ve been talking about freedom freedom to invest in things other than stocks, bonds and mutual funds and then last week we talked about freedom to move your retirement account. So we’re going along with that same idea, freedom to move your account We’re going to talk about how you move your account.
Everybody talks about moving their account, and typically uses the word rollover quot;I want to roll my account over to you guys.quot; So I want to explain the difference between a rollover and a transfer because there’s a very distinct difference and it’s a very important difference Number one is the transfer Now transfer is when you move your IRA account from an existing custodian to another custodian. And that’s a transfer; the money never comes to you individually.
It just goes from one IRA to another IRA and that does not get reported to the IRS, because you never actually had receipt of the money. So there’s no taxable event in a transfer. Now, the word that most people use is rollover, and that means something very specific. A rollover is if you go to your existing custodian and you say quot;I’d like to have a check for $50,000 out of my account.quot;.
They’re going to write a check to you personally. Then, no matter what you do with that check if you put it in your checking account and then you turn around later and write a check to Sunwest Trust to roll the money over into Sunwest Trust into another IRA or whether you just take the check from whatever custodian you’re with, And you bring it to Sunwest Trust and you endorse the back of it, no matter what the old custodian is going to send you a 1099.
And they’re going to report that as a distribution to you And then what happens is when you come to Sunwest Trust we’re going to have you sign a rollover certification which basically says you haven’t had that money more than 60 days And in that event then we’ll do the rollover certification the money will be rolled over into your IRA at Sunwest Trust and you’ll report it to the IRS as a rollover Line 15 and 15a on your 1040 will say how much was the distribution.
And how much of it was taxable I’m not really sure about the line numbers so you need to have your tax person look at it So basically I took fifty thousand out of my IRA and by the way I put it into an IRA at another institution And I did all that within less then 60 days Recently, up until sometime this year, there was an IRS decision that you can only do that once a year per taxpayer.
Prior to that it was once a year per IRA account But the IRS decided that no, you can only do one rollover Not even per calendar year, it’s per twelve month period So if I do a rollover in October of 2014, I cannot do another rollover until November of 2015 I can’t do one in January, even though we’re now in the year 2016, it has to be only one within a twelve month period. I hope that answers those two questions.
Best Places to Open a Roth IRA
This is Jeff Rose from goodfinancialcents . I’m here to share with you the best places that you can open up a Roth IRA account today. Hopefully, you know I love the Roth IRA. You’ve seen the Roth IRA movement. You’ve seen me bust out my Roth IRA movement skills and you’re excited. You want to start a Roth IRA, but you’re just scared because you don’t know where to go. On my blog I have a post that summarizes the best places that you can open a Roth IRA account, but today I want to share two of my more popular options that will hopefully give you some encouragement to give you some hope that you can go out and open a Roth IRA account.
Before I share with you the two places I really love where we can open up a Roth IRA, I want to give you first why I have chosen these. When you are looking to open a Roth IRA, the two things that are very important are that you want to find a place that is going to charge you low fees because you don’t want to be ripped off and paying extra fees that are going to eat away at your returns, and the second thing that you want is good, solid, customer service. If you have a question or need you want to be able to call that entity or person and ask them how you can help with your investment situation. There are plenty of options to open Roth IRAs online. You’ve got Scottrade, eTrade, Schwab,.
ShareBuilder, OptionsXpress, TradeMONSTER. There are tons of them out there. The one I want to share with you today is Scottrade. Scottrade is based out of St. Louis. That is where their home office is at, which is about 90 miles from my house, and I am just partial to them. I called them because I was curious how it works. I have been in the investment game for 10 years now and I wasn’t really familiar with all the online options. I called them and was really impressed that they have over 3,000 mutual funds that have no fees. They have several ETFs that you can buy with no fees, and they have a tollfree number that you can call at anytime and they will help you.
Out. I actually opened an account with Scottrade, which I show you in another tutorial. I actually walk you through the process. I funded my account. The next day I got a call from the local branch manager asking if I needed help maneuvering through the Scottrade account, how to make my first trade. For an online option, it was amazing that I got a phone call from a real person that is actually within driving distance that is willing to help me out. They are always there for me and always there for you if you open an account. That is one reason why I love Scottrade. Not only are they low in fees, but you have the ability.
To actually walk into a brick and mortar location and talk to them at no cost or you can call the tollfree number and they will help you out at any time. The second option I want to mention is a newer company. It’s a newer start up, but I really love what they are doing especially for the new investor. This company is called Betterment. Betterment has been around for a couple of years now. I was able to meet the CEO at the financial blogger conference last year. What really impresses me with them is that they’ve really lowered their fees. They do have a startup investment where you have to have at least $10,000 to have a very low cost, but if you have less than $10,000 then you’re.
Only going to pay $3 a month to have an account. Three bucks a month, $36 a year is all it cost, and they will buy an ETF portfolio for you and manage it on your behalf. You just tell them how aggressive or conservative you are and they will make the changes accordingly. It really takes you out of the driver’s seat and puts all the emphasis on them to make the investment decisions for you and you can sit back, fund the account on a monthly basis and know that your money is growing and you don’t have to worry about it. The only thing about Betterment that I don’t like is if you want to buy individual stocks, if you want to have more control in your investments, then that wouldn’t be the option for you.
If you do like sitting in the back seat and let Betterment sit in the driver’s seat, then that is a solid option with very low fees. Those are just two of the options of where you can open up a Roth IRA account online. Obviously, there are tons out there. Check out the blog post that summarizes the other options that you can look at. If you have any questions regarding where to open a Roth IRA, how to open a Roth IRA, if the Roth IRA make sense to you, go to the blog goodfinancialcents and send me a question. Hit me up on Twitter or ask me on Facebook, I’ll be glad to help you out anytime. This is Jeff Rose. Take care.