What to do with Orphaned Small $ Rollover IRA

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
chartcab3785
Posts: 103
Joined: Fri Jul 11, 2014 12:30 am

What to do with Orphaned Small $ Rollover IRA

Post by chartcab3785 »

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?
livesoft
Posts: 86075
Joined: Thu Mar 01, 2007 7:00 pm

Re: What to do with Orphaned Small $ Rollover IRA

Post by livesoft »

convert to her Roth IRA directly perhaps?
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
kwan2
Posts: 384
Joined: Thu Jun 14, 2012 9:13 pm

Re: What to do with Orphaned Small $ Rollover IRA

Post by kwan2 »

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.
“The history of Paris teaches us that beauty is a by-product of danger, that liberty is at best a consequence of neglect, that wisdom is entwined with decay."
User avatar
Watty
Posts: 28859
Joined: Wed Oct 10, 2007 3:55 pm

Re: What to do with Orphaned Small $ Rollover IRA

Post by Watty »

chartcab3785 wrote:Any other options that I am not aware/thinking of?
I would think you could pay the taxes to do a Roth conversion at USAA then transfer it into her current Roth at Vanguard.
User avatar
celia
Posts: 16774
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: What to do with Orphaned Small $ Rollover IRA

Post by celia »

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.
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.
icefr
Posts: 613
Joined: Sun Apr 17, 2011 10:50 am

Re: What to do with Orphaned Small $ Rollover IRA

Post by icefr »

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.
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: What to do with Orphaned Small $ Rollover IRA

Post by retiredjg »

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.
seamonkey
Posts: 194
Joined: Fri Oct 19, 2012 8:55 pm

Re: What to do with Orphaned Small $ Rollover IRA

Post by seamonkey »

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.
Topic Author
chartcab3785
Posts: 103
Joined: Fri Jul 11, 2014 12:30 am

Re: What to do with Orphaned Small $ Rollover IRA

Post by chartcab3785 »

We'll get this rolled over into her Roth.

Thanks everyone. :sharebeer
User avatar
Watty
Posts: 28859
Joined: Wed Oct 10, 2007 3:55 pm

Re: What to do with Orphaned Small $ Rollover IRA

Post by Watty »

I didn't think about it before but watch out for any account closing or transfer fees.
Post Reply