Ask Terry Questions Roth IRA — where?

Roth IRA — where?

By Terry Savage on September 17, 2014 | Investments

I opened a Roth IRA at my bank about one and a half months ago. It’s only $3,000. My sister says I should go with her guy who will put real effort into making good investments for me. He’s with Edward Jones. What kind of penalty would I be looking at to get the Roth changed to E. Jones? And would the bank make just as good of choices with investing my money as he would if I stayed with my bank? I live in South Carolina if that makes any difference with the rules. I’m new to all of this and it’s all confusing to me. I would so appreciate your insight. Thank You, Greta

Terry Says:   Well, first you have to figure out how your “bank” invested the money.  If it is in a bank’s FDIC-insured certificate of deposit, then you are probably earning a very low return.  If you invested through the “investment division” of the bank, then this is not FDIC insured against loss — and the account probably carries fees and commissions, which cut into your return.

As for moving the account, if it is in a bank CD, you will probably have to wait until the CD matures to move — or ROLL OVER — your IRA to another custodian.  If it is in an investment of some kind, you can simply sell the stocks or funds in the IRA,  leave the money in cash — and ask your new custodian (whether Edward Jones or another company) to do a DIRECT rollover to a Roth IRA at their firm.

But before you do any rollover, you need to know what you have in your IRA now, and what it is costing you.  AND, you need to examine the alternatives.  Ask Edward Jones what they charge annually, and ask what investments they would recommend as you keep adding to your account each year.  Or you could contact Fidelity or Vanguard or T. Rowe Price and ask them about their fees and charges.  It doesn’t have to be complicated.  I don’t know your age or time horizon, but at this point I would suggest that each of the above has an “equity-income” fund that might be appropriate as a ROTH IRA investment,  and will easily and inexpensively facilitate your annual contributions.



a personal
finance question