Getting rid of my $ Planner. What to do with Roth?

[Guest kstealth25]

My husband and I opened individual Roth IRAs with a small broker about a year and a half ago. Since then the broker's business has expanded and he does not seem to have the time for us anymore.

How can we get our Roths out of his hands and into our own hands? Should we cash them out and pay up or can we transfer them? If we can transfer them, how would we do that? We would prefer to manage our funds without a broker for the time being. Any suggestions would be greatly appreciated?

[Guest steve1234]

First, it sounds like you were working with a broker not a planner. If however you have made it clear to this person that you want a relationship than he/she should be in contact or have the decency to tell you he/she has not the time nor desire to continue the relationship. if you invested in mutual funds you can either open an account at that company or go to a brokerage firm eg. fidelity and move it. IF you bought a product from a captive company, it may have to be liquidated first. in the roth there is no tax consequence but you should make sure it is done trustee to trustee instead of getting the check payable to you.

[John G]

Before you take any action, please examine the documents you got when you opened your account, or call the custodian. Some mutual funds and other IRA investments have penalty clauses if you terminate early. For example, your broker may have sold you a back end loaded mutual fund. If you must liquidate the fund before moving the money to another custodian, then you might lose a significant chunk. Some back end fees decline over time, so waiting a few years might eliminate this problem. If your IRA holdings are just standard stocks and bonds then you should not have this problem. Get this clarified before you act. You need to separate the question of good custodian from good investment. Sounds like your biggest beef is with the lack of customer service.

Second, you can always take "new money" to another custodian and let the initial IRA funds stay with broker #1 for a while.

Have you spoken with the broker directly about your concerns? I would start there, and possible request that someone else at the firm handle the account. This might solve your problem.... at least it is worth a phone call.

If you clearly want to move your money then this is the best proceedure: (1) talk to a few potential custodians about their investment options, services, and fees, (2) select one custodian, (3) fill out the paperwork at custodian #2 for a direct transfer and let them make the contacts. Usually the second custodian can do just about everything using a copy of the recent IRA statement. DO NOT ask for a check and close the IRA as this opens the door to a host of problems. The custodian to custodian transfer avoids most of these problems. You just monitor the process to make sure it is done correctly.

[Guest kstealth25]

Thank you both for your advice. It seems that (depending on the type of fund) my best bet is to find another broker or institution and transfer the Roth accounts to them. Is there anyway that my husband and I do not have to go through a broker and can transfer the accounts into our own names...say using a site like Sharebuilder for its brokerage services? Is this a good/bad option?

[John G]

I can't comment on sharebuilder. You can get your IRA transfered to any institution that is willing to be a custodian. The integrity of the account is preserved by a custodian to custodian transfer. The key is that you can only use someone who is acting as an IRA custodian, if you have any doubts ask the potential institution. Any money flowing to an institution that is not acting as an IRA custodian may create a taxable distribution. No ever institution will act as an IRA custodian, but you have thousands of banks, mutual funds and brokerages to choose from.