Northwestern Mutual Roth IRA
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Northwestern Mutual Roth IRA
Good afternoon. I having been reading the forum for a few months, but am a new member/poster. I previously (2011-2012) contributed to a ROTH IRA at Northwestern Mutual which is currently valued at approx. $10K. I maxed out my ROTH IRA with Vanguard in 2013, 2014 and for 2015. I decided I wanted to switch my Roth IRA at NM to Vanguard, and contacted Vanguard. They handled their end and NM hit me with a $450.00 cancellation fee stating "back loaded" funds. I simply had all my money in an S&P 500 fund at NM. Any suggestions? Anyone experience this? Thanks.
- Mel Lindauer
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Re: Northwestern Mutual Roth IRA
Yes, avoid Northwestern Mutual and go with Vanguard to start with. Too late for you, but your experience and my answer might help others.southflanole1 wrote:Good afternoon. I having been reading the forum for a few months, but am a new member/poster. I previously (2011-2012) contributed to a ROTH IRA at Northwestern Mutual which is currently valued at approx. $10K. I maxed out my ROTH IRA with Vanguard in 2013, 2014 and for 2015. I decided I wanted to switch my Roth IRA at NM to Vanguard, and contacted Vanguard. They handled their end and NM hit me with a $450.00 cancellation fee stating "back loaded" funds. I simply had all my money in an S&P 500 fund at NM. Any suggestions? Anyone experience this? Thanks.
Best Regards - Mel |
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Semper Fi
Re: Northwestern Mutual Roth IRA
If you have other products with them then you might want to "thank them" and move those as well.
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Re: Northwestern Mutual Roth IRA
Could you post the ticker symbol and share class (if applicable) of the S&P fund you were invested in? That way, we can check if their cancellation fee is consistent with the fine print (which it presumably is).
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Re: Northwestern Mutual Roth IRA
Index 500 Stock (MSA) -B....... Any reason to just keep the plan, rather than converting it to Vanguard?
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Re: Northwestern Mutual Roth IRA
The Northwestern Mutual website suggests this product is offered within a Variable Annuity. Is that your situation?
If so, I would contact NM and ask them how for how long the termination fee will apply. For example, if the cancellation fee drops to $0 after 12 months, and your account is 11 months old, it would be worthwhile to wait, then transfer to Vanguard. I would draw the line at 6 months of waiting.
If so, I would contact NM and ask them how for how long the termination fee will apply. For example, if the cancellation fee drops to $0 after 12 months, and your account is 11 months old, it would be worthwhile to wait, then transfer to Vanguard. I would draw the line at 6 months of waiting.
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Re: Northwestern Mutual Roth IRA
8 years unfortunately, I guess I should just take the hit.
- Mel Lindauer
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Re: Northwestern Mutual Roth IRA
Your break-even point will probably be relatively short since you'll be saving those high insurance company annuity costs using low-cost Vanguard funds.southflanole1 wrote:8 years unfortunately, I guess I should just take the hit.
Best Regards - Mel |
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Semper Fi
- Dale_G
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Re: Northwestern Mutual Roth IRA
Be sure to thank the insurance agent who got you into this.
And I am not trying to be a wise guy. You learned a very valuable lesson that will save you a lot of grief and money in the future. Many of us have made much bigger mistakes - and some still haven't learned. You are lucky that this was an early mistake and you caught on quickly.
Dale
And I am not trying to be a wise guy. You learned a very valuable lesson that will save you a lot of grief and money in the future. Many of us have made much bigger mistakes - and some still haven't learned. You are lucky that this was an early mistake and you caught on quickly.
Dale
Volatility is my friend
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Re: Northwestern Mutual Roth IRA
I agree with Mel. If the annuity fees are 1.25% of your $10,000 assets, that is $125 per year in savings after switching to Vanguard. You will be moving from a high-cost investment product with limited flexibility to more flexible, low-fee investment. And you'll move to a firm that puts client interests first.Mel Lindauer wrote: Your break-even point will probably be relatively short since you'll be saving those high insurance company annuity costs using low-cost Vanguard funds.
- Mel Lindauer
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Re: Northwestern Mutual Roth IRA
So true, dailybagel. And using 1.25% for an annuity expense ratio in your example is very generous, since many annuities have total costs of 2% and some even approach 3%.dailybagel wrote:I agree with Mel. If the annuity fees are 1.25% of your $10,000 assets, that is $125 per year in savings after switching to Vanguard. You will be moving from a high-cost investment product with limited flexibility to more flexible, low-fee investment. And you'll move to a firm that puts client interests first.Mel Lindauer wrote: Your break-even point will probably be relatively short since you'll be saving those high insurance company annuity costs using low-cost Vanguard funds.
Best Regards - Mel |
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Semper Fi
Re: Northwestern Mutual Roth IRA
Like many others here, this cost should probably just be chalked up to "cost of financial education". Your Boglehead education, OTOH will be free.hit me with a $450.00 cancellation fee stating "back loaded" funds. I simply had all my money in an S&P 500 fund at NM. Any suggestions?
Part-Owner of Texas |
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“The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle
Re: Northwestern Mutual Roth IRA
Please let your agent and all your friends know how much you appreciate him and his company!