I have a large sum sitting in my 401K that I had with my previous company. I need to roll it over into a traditional IRA. I am not sure which company to choose. I have mutual funds accounts with T.Row Price and Charles Shcwab but I am not sure if they would be a good choice in terms of maintenance costs associated with IRA. I need some advice on using a reliable and cost effective company that offers good diversified funds.
Any help is highly appreciated.
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^ I was going to suggest the same as FB....
You may also want to get the information from the other two institutions you listed along with Fidelity, Merryl Linch and compare the information.
Account maintenance costs for brokerages have dropped significantly and most of them are either zero or pretty darn close to zero for an average investor (including Schwab where you already have an existing account). So keep this in the back of your mind as your research.
I am assuming that you're looking to roll it over into mutual funds and not stocks and bonds. If you are confident in your ability to do your own research and create a portfolio based on your investment objectives, then the likes of Fidelity, Schwab, and Vanguard are all good candidates. Their commissions for trades are reasonably similar. Since this will be a Rollover IRA, you probably wouldn't be trading as frequently (unless you’re absolutely confident about what you are doing) and thus the impact of commissions on your overall portfolio would be negligible and would further become a non-issue in selecting a brokerage.
With commissions and maintenance fees out of the way, the major component left for you to consider is what funds (investment options) are available through brokerage. IMO, you should first do your research on the types of funds you want to buy and then select the firm which offers most or almost all of them. This will simplify the paperwork headaches. In your case, I would lean towards Schwab since you already have an account with them.
Moment of truth: I found Fidelity to be the least expensive brokerage with all the available investment options that I wanted.
Also, when rolling over your IRA, make sure your 401k check is made out to the brokerage and not to you otherwise your 401k plan administrator has the right to withhold portion of your money for taxes. You may also get hit with the early withdrawal penalty. So the safest option is to have the rollover check made out to the brokerage. Avoids the clutter!
Finally, if you have no idea about how to create a portfolio that matches your investment objectives or if you don’t a clue as to what your investment objective should be, talk to a financial advisor before you rollover. A good one will charge a fee but its small price to pay for managing your retirement nest egg the right way. Good luck!
Thanks for the great help Ghalib. I am leaning towards schwab myself. I do know the types of funds I want in order to make a good diversified retirement portfolio.
everyones 401k has been losing $. just from 1999 to 2002 i lost nearly 30%. and some folks i know lost even more.
whereas the real estate investments nearly quadrupled in the same period. its a simple calculation if you look at longterm real estate vs. 401k returns.