Can I roll my current Roth IRA into an online brokerage account and ma

[Guest Tony Griffith]

I have a roth IRA with Scandia and want to roll this account into an on-line brokerage account as a roth IRA. I would research, buy stocks and keep the portfolio as a roth IRA. Has anyone ever heard of or has done this before? Can this be done? I look at it as cutting out the middle-man and the "fund" myself.

[John G]

Yes, but with some cautions.

First, you can switch the location of any IRA or Roth account via direct custodial transfer. Do not handle the money yourself or you run into a tax witholding. But, before you do this find out if you have any termination and exit fees. Some funds are back loaded. Some brokerages will charge $50 to terminate an account.

Second, understand up front that research and investment decisions take up time. Also understand that you may be tempted to go for "sure things" and long shots that are more like gambling (one guy on this site lost 75% of this small IRA in less than a year buy backing a volatile single stock).

On the positive side, doing it yourself will get you involved in your investments and you will learn more. Just hope the tuition is not too steep.

You can try almost all the big online firms like Etrade, Ameritrade, etc. Ask about fees, minimums, etc. You can find lots of this info at their web sites.

[Guest Tony Griffith]

Hi John,

When you say "direct custodial transfer"; do you mean have my online broker transfer the funds for me from my current roth into the new account from which I would buy stocks?

I know what you mean by a back end load. I have an 8% charge that degrades down to zero after eight years. So I would have to see how much this would cost me if I were to try a roll over.

I currently have an account with TD waterhouse and have bought a few (not many) stocks. So I am a little familiar with the research. I have been reading an investment book by Motley Fool. They got some pretty good info for the not-so-well educated investor like me!

Some of us guys at work are starting an investment club, too. This will be a good learning experiance for all of us. Thank you for your time! Tony

[John G]

Direct custodial transfer: You initiate this by starting with the destination broker, filling out their IRA forms and particularly the section on transfers. Often they will ask for a copy of the last monthly statement from the prior brokerage. The primary reasons you do a direct transfer is to avoid the tax withholding (US Sam assumes you are cashing out and keeping the money) and avoids the 60 day maximum rollover period.

8% back end load: If these funds are in a decently performing fund you may want to leave them there. Remember, you may also pay and account closure fee in addition to the back end load.

Investment club: could be good for you, but beware of clubs that are focus on social rather than financial issues. You will know in 4 months if the club is working or not. Differences in decision dynamics and time commitments ussualy means you need lots of patience.

Other decent sources on info: mags = Worth, Kiplinger Finance, Money also books by Peter Lynch. Online = motley fool, street.com TV = nightly biz report, Rukeyser both on PBS.

Avoid like the plaque the message boards. 90+% junk and hype