CNBC Forums: Which Rollover IRA? - CNBC Forums

I'm 40, married and have 2 kids and currently on medical leave under my company's long term disability plan due to a recent breast cancer diagnosis. Since I am not allowed to contribute to my company's 401K, a few weeks ago, I have just terminated my 401K - I have about $170K. I am now ready to put it in a Rollover IRA. I don't know which company and what kind of funds to rollover it to. Yes, I'm only 40 but given my health conditions, don't know whether to invest based on a retirement age (60's) or sooner since I might need to tap into it sooner than later. I have been given various advises like putting in an annuity. But don't they have a high fees? Isn't it for older folks? Should I go for no-load funds? Should I park it under CDs? buy bonds? or go the mutual fund route and hopefully buying low? All of these would still be under a Rollover IRA type program. I also have a Roth IRA. Pls. advice as I'm lost. Thanks.

ConfusedIRA, on Oct 27 2008, 11:12 PM, said:

There is no reason to put tax-deferred money from a 401k into an annuity which is a tax deferred account, unless you want to make some salesperson very happy with the high commission it will generate for them. Normally annuities have load fees, high annual expenses and awful surrender charges.

Bonds are mainly for income, so putting the money into bonds is not going to give you much if any growth over the long term. You would want to buy quality bonds and they probably would not keep up with inflation.

If you received a check from your 401k custodian made out to you, you only have 60 days to roll it into an IRA otherwise it will be deemed a withdrawal and you’ll be hit with a 10% penalty and it will be considered ordinary income. You could go to your local bank (make sure they have FDIC insurance) and put it into a short term IRA CD until you decide exactly what you want to do with it, don’t let the bank talk you into anything else (save a plain old savings account), if they try pushing mutual funds they will be load funds (they need to make a living).

You might want to go to your local library and get out a book called “Common Sense on Mutual Funds” by John Bogel, who is the founder of Vanguard’s Index funds. Vanguard, Fidelity, T Rowe Price are no load mutual funds companies and there are others. We have most of our assets at Vanguard and Fidelity, one nice thing about Fidelity you can get to talk to someone 24 hours a day every day (well, maybe not on a holiday-I never called them then). Mr. Bogel definitely is in favor of index funds, with a Total Stock Market Index Fund or an S&P Index Fund you’ll do exactly what the market does (less expenses) no more no less and for a start that’s fine. Best to get some education before you end up in a bad situation. You could also go to www.bobbrinker.com, Mr. Brinker has been on the radio for about 22 years and he gives financial advise. At his web site on the left hand side there is a section entitled Education, you can check that out for all type of information. Bob is a big believer in no-load funds.

Good luck and I hope you make out okay on your diagnosis.

Chandu32, on Oct 27 2008, 11:56 PM, said:

Thanks for your response and advice.

I had the check made out to Smith Barney since my financial adviser is with them. I'm still holding on to the check. I don't know if it's too late to split it to 2 diff. companies.

ConfusedIRA, on Oct 28 2008, 10:29 PM, said:

If you are thinking of splitting the money around, just have the check deposited into a money market IRA rollover account at Smith Barney. If you decide you want to move some of the money to Vanguard, or Fidelity or XYZ, then contact that company (Vanguard, Fidelity or XYZ) and have them send you the paper work to move the money from Smith Barney to them. You can do an unlimited number of IRA transfers via custodian to custodian.

However if you start moving money to no-load mutual fund companies your financial adviser/planner is NOT going to be very happy unless he's a fee only planner because these companies do not pay commissions or have front end loaded mutual funds.

Chandu32, on Oct 29 2008, 08:10 AM, said:

With the way the market is right now and with the impending inflation that looms over this economy's head I would be very leery of putting any of my money in a bond or a CD, you just wont' make enough % to cover the inflation and declining buying power of your money. I wish I would of found this forum back in september and told you then what I'm telling you now. You should roll over your money or part of your money into a Gold IRA. A third party custodian like Sterling Trust, who we use, holds your gold in a depository and sends you quarterly statements of the growth on your IRA. Gold is the best way in the current economic times to protect your money and hedge against inflation and the declining dollar. When the economy goes south gold goes up. It's a historic fact. You can do your research or I can send you the information. If you would of put some or all of your money into a Gold IRA in October you would of made 90% already of what you put in. I know it sounds unreal, but it's fact. My girlfriend rolled over 4500 into a gold IRA at the end of september and as of the middle of march statement her gold is worth 8400 dollars. You can put gold Bullion in the accounts but I advise against it. Bullion is what you see on the ticker every day, it goes up and down. It has went up $200 oz since last OCT. which is good and you would of made a nice size return on your investment since then. But the government allows you to put Gold Proofs made by the US Mint into your Gold IRA accounts. These are rarer then bullion, the government only mints a certain number each year and since the supply of Proofs is low, the demand is high and they get pulled out of the market fast. Thus making them worth more then regular bullion. That is what my girlfriend invested in. I've been informing all of my friends, family and clients to do this. You can rollout of the Gold IRA at any time. So you protect and grow your wealth in gold now then in a year or 2 you roll it back over into the market when it corrects itself. I can help you with this if you want. We do it every day here at my company. If you want more info email me at rfricke@regalassets.com
good luck