not sure what just happened

published on July 14th, 2008

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In an attempt to simplify my Rollover IRA into either a traditional or roth so that I could actually do something with it, I ended up with 2 new retirement accounts… Yeah, I’m not quite sure either…

I took Foxie’s advice and went and opened a Sharebuilder account through ING. I was finished opening the account by the time I realized that I couldn’t transfer my account from Merrill Lynch over to the bright and shiny new Roth IRA I just created. Great. (You can only transfer Roth to Roth, Traditional to Traditional…my account at ML is a Rollover IRA, so it doesn’t qualify.) So now I’m contributing a minimum of $50/month into this Roth IRA and I still have money floating around over at Merrill Lynch racking up fees because it’s under $20,000.

So I took her other words of wisdom and looked into Vanguard, which I actually liked. I was able to pick out a moderate model of investing and it picked the stocks and bonds for me, and this is what I’m comfortable with. But now I have to get my signature verified by a Medallion Guarantee Stamp and send the paperwork in to Vanguard before Merrill Lynch will release my funds to the new account (which doesn’t have fees, even though it’s below $20,000).

I am up at 2:30 in the morning because I was so stressed out and on the verge of an emotional breakdown due to the uncertainty of my financial decisions regarding my retirement investments. Frankly, I’m still a bit unsettled. I now have TWO retirement accounts. One Roth. One Traditional. I’m not sure how I feel about that.

Tomorrow (today?) when I wake up, I will be on the hunt for a financial institution that will authenticate my signature. My brick & mortar credit union is 3 hours away from me (I do all my banking by internet!) so I’m hoping I can find a bank or something that will authorize for me even though I’m not a member. I’m willing to pay the fee. I just need this money out of the Rollover IRA and into a regular Traditional IRA. Somehow that will give me peace of mind.

The next question is…what do I do with both a Roth and a Traditional IRA?! I thought I was having headaches with just ONE account…now I have two? (I plan on monthly contributions to the Roth and for right now leaving the Traditional sit there with the $6000 in it once it gets transferred. I don’t have any other ideas. The $50/month is an automatic payment.)

3 users responded in " not sure what just happened "

Foxie said, in July 14th, 2008 at 12:01 pm

Aww, I didn’t mean to cause you any headaches. =/ Just wanted to see you get rid of those ugly fees, that’s all.

In the end, it isn’t the worst thing in the world, though. Traditional IRA’s give you the tax break up front, whereas Roth IRA’s will give you one later on. So it’s not entirely something awful, as many people have both types. (Traditional is similar to 401(k)’s and other employer sponsored retirement accounts, then you can open Roth’s on your own. Typical advice is to get the employer match and divert all other retirement savings into a Roth, or so I’ve found.)

Just watch the contribution limits on both accounts; since I just have a Roth I’m not sure how they affect each other, if at al. I also don’t see it as an entirely bad thing, though, as you can use Vanguard to invest in other types of funds, and Sharebuilder is very focused on ETF’s. Think of it as a little bit more of that good diversification and don’t let it stress you out.

Foxies last blog post..Link Love: Splurge Edition

You didn’t cause any headache, if anything you pointed me in the right direction! Thanks for your help and for putting my mind a bit more at east when it comes to having both types of IRAs. You’re right…it doesn’t sound too bad!
-Tiffanie

Patrick said, in July 14th, 2008 at 3:22 pm

You have nothing to worry about. You can have multiple IRA accounts as long as you don’t exceed the maximum annual contribution ($5k in 2008). The transfers from your previous accounts don’t count against your annual contribution either. Good luck with your investments!
Patricks last blog post..Get Paid to Try Blockbuster Total Access!

berchta said, in September 2nd, 2008 at 3:15 am

It is such a great article. Had fun reading it. For those who are new to the idea of IRA it is an investing tool used by individuals to earn and earmark funds for retirement savings. There are several types of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs. You can find out more about IRA at http://www.rollover-ira.info which was of great help when I was looking for a retirement arrangement.

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