What to do with Orphaned Small $ Rollover IRA
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- Posts: 103
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What to do with Orphaned Small $ Rollover IRA
DW has a ~$600 Rollover IRA at USAA from a previous short term job. The expense ratio isn't great but admittedly this is a teeny balance. Most of our other retirement accounts are at Vanguard. This is a small annoyance.
Is there any practical way to consolidate this at VG? She has a VG i401k that doesn't accept incoming rollovers and fully funds her VG Roth IRA annually. I think we could open an IRA with VG and rollover the account to there, but we would have to contribute the difference to get up to $1000 fund minimum? Then we would deduct that difference from her Roth contribution for the year? Do I have that right?
Or we could just cash it out, pay the tax and be done with it.
Any other options that I am not aware/thinking of?
Is there any practical way to consolidate this at VG? She has a VG i401k that doesn't accept incoming rollovers and fully funds her VG Roth IRA annually. I think we could open an IRA with VG and rollover the account to there, but we would have to contribute the difference to get up to $1000 fund minimum? Then we would deduct that difference from her Roth contribution for the year? Do I have that right?
Or we could just cash it out, pay the tax and be done with it.
Any other options that I am not aware/thinking of?
Re: What to do with Orphaned Small $ Rollover IRA
convert to her Roth IRA directly perhaps?
Re: What to do with Orphaned Small $ Rollover IRA
have you called VG, the concierge for IRAs, will do whatever it takes, to get more money and accounts over to VG, was my experience.
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Re: What to do with Orphaned Small $ Rollover IRA
I would think you could pay the taxes to do a Roth conversion at USAA then transfer it into her current Roth at Vanguard.chartcab3785 wrote:Any other options that I am not aware/thinking of?
Re: What to do with Orphaned Small $ Rollover IRA
I would move it to Vanguard and convert it into her Roth. I think you can do this in one step now. She will be able to still make full Roth contributions as the conversion is "orphaned" money from another year (when the contribution was made). Taxes will be due on the $600 for the year the conversion is made.
Call Vanguard and talk to a retirement specialist. They will make it easy for her.
Call Vanguard and talk to a retirement specialist. They will make it easy for her.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
Re: What to do with Orphaned Small $ Rollover IRA
You could roll it to a Vanguard Rollover IRA and buy some shares of an ETF that would satisfy your asset allocation and then leave it alone. That would avoid the fund minimums.
Re: What to do with Orphaned Small $ Rollover IRA
I'd transfer it to her current Roth IRA and just pay the taxes on $600 (using money out of savings, not from the tIRA). USAA has little to offer in low cost funds and it is just a nuisance to have a tiny account like that.
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Re: What to do with Orphaned Small $ Rollover IRA
For such a small amount, roll it into existing IRA and strongly consider just converting to Roth. The conversion isn't counted toward the contribution limit. You just have to pay taxes on it, assuming no taxes had already been paid on it if it were pre-tax contributions to a 401k.
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- Posts: 103
- Joined: Fri Jul 11, 2014 12:30 am
Re: What to do with Orphaned Small $ Rollover IRA
We'll get this rolled over into her Roth.
Thanks everyone.
Thanks everyone.
Re: What to do with Orphaned Small $ Rollover IRA
I didn't think about it before but watch out for any account closing or transfer fees.