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Traditional IRA fees and esop inquiry


Mona
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Good afternoon,

I appreciate your time, as I typed quite a bit.

I'm in the process of setting up a traditional IRA with a Financial adviser I unfortunately found through my credit union. The fees associated with the account, or for him are 0.8000%. Is this rate about right? the amount accidentally rolled over was $14000

This whole ordeal has been a nightmare for me but I'm slowly but surely learning more about finances so I dont make another mistake in the future

Back story, I'll try to be swift. I had an esop for 7 years from a previous employer, I wanted to rollover $45,000 and keep $14,000. I knew 20% was going to be held from the $14,000.

Well the documents sent to my employer were incorrectly filled out by my financial adviser. And I signed it so I was slow too. I was sent a huge check I didnt want, and the bank was sent $14000. $9000 was sent to the irs for federal and nothing can be done about that. I may get it back next year but doubt.

Lastly I still have this check I havent decided what to do with, my financial adviser has been trying to get that too I just want other options.

 

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Depending on the timing, you might be able to do a 60-day rollover by paying the amount to the IRA.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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If (and I realize this if might not be true) you have enough cash in other sources you can fix this. 

You wanted $45,000 in the IRA.  If you have that much money between this distribution and other savings get $45,000 into the IRA.  You would need to find $31,000.  You have to do that before the 60 days are up. 

If you do that the $45,000 isn't taxable income. 

You would still have only $14,000 taxable you wanted. 

Yes, when you file your taxes next year you will get credit for the $9,000 so it will even out in the end. 

The weak link in that process is you might not have enough outside savings to get the desired $31,000 into the IRA.   You are most likely going to need some saving outside this payment to get the $31,000.   If not, get as much as you can afford into the IRA before the 60 days are up you will have at least sheltered as much of the income as you could from current taxation.

As always this is free advice so you get what you pay for. You need to find a tax adviser other than this finance guy to help you.  They can look over your whole situation and give you complete advice.   It shouldn't cost you much but the tax saving will be worth it.  The biggest problem there is you might not be able to see them until the lock down is down which could be after the 60 days are up.  

This is mostly to completely fixable if you move quickly and do the right things.  

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