Employer Sponsored ROTH IRA to non Employer ROTH IRA

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Cop51
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Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by Cop51 » Mon Feb 12, 2018 11:20 am

A few years back I started my ROTH IRA with an employer sponsored plan with ICMA-RC. The fees are extremely high as others have stated about the company. I currently use them for my 457 plan with ICMA-RC, but would like to withdraw all the money from the ROTH IRA account and start using Vanguard ROTH IRA. Being an employer sponsored plan, that I have not separated employment from, and I'm not 59.5 can I withdraw contributions and earnings if its going right into another ROTH IRA account in a rollover? I started this when my salary was lower and DCA because I couldn't do the entire $5,500 up front. Since than I can now do the lump sum, or DCA with Vanguard if I chose to. The account has about $15,000 in it because I previously was not maxing out the ROTH IRA. If I can roll it all over I would like to do that if not I'm looking for some options.

Looking for some information and assistance with this question and advice.

Thanks

Rom1b
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by Rom1b » Tue Feb 13, 2018 8:19 am

Hi,

I do not live in the US and do now know how you can move stuff out of your IRA; but I imagine its possible.

I find the idea good though and wanted to say it - these fees are bleeding your returns out; and you should pursue that idea. There are good articles here in the Investment Theory sub-forum, and a lot of advice on IRAs I suppose. Vanguard is a very good choice.
Dr Bernstein - If You Can / free PDF, google it | 3Fund Portfolio www.bogleheads.org/forum/viewtopic.php?f=10&t=88005 | CollectiveThought www.bogleheads.org/forum/viewtopic.php?f=10&t=7353

niceguy7376
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by niceguy7376 » Tue Feb 13, 2018 12:18 pm

ROTH IRA has nothing to do with an employer.
What does it mean by Employer Sponsored Roth IRA?

Alan S.
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by Alan S. » Tue Feb 13, 2018 12:26 pm

Cop51 wrote:
Mon Feb 12, 2018 11:20 am
A few years back I started my ROTH IRA with an employer sponsored plan with ICMA-RC. The fees are extremely high as others have stated about the company. I currently use them for my 457 plan with ICMA-RC, but would like to withdraw all the money from the ROTH IRA account and start using Vanguard ROTH IRA. Being an employer sponsored plan, that I have not separated employment from, and I'm not 59.5 can I withdraw contributions and earnings if its going right into another ROTH IRA account in a rollover? I started this when my salary was lower and DCA because I couldn't do the entire $5,500 up front. Since than I can now do the lump sum, or DCA with Vanguard if I chose to. The account has about $15,000 in it because I previously was not maxing out the ROTH IRA. If I can roll it all over I would like to do that if not I'm looking for some options.

Looking for some information and assistance with this question and advice.

Thanks
First, please clarify whether you are contributing to a Roth 401k sponsored by your employer OR a payroll deduction IRA where your employer uses payroll deduction and forwards the contributions to an outside Roth IRA custodian, such as a bank or mutual fund company. If your contribution limit is really 5500, it is an IRA. If a Roth 401k, your annual limit has been around 18,000.

Spirit Rider
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by Spirit Rider » Tue Feb 13, 2018 4:09 pm

While I have never actually seen one in the wild, but there is such a thing as a "deemed IRA" outlined in 408q.

It is a sub account under a qualified plan that is subject to IRA rules. The intent was to allow participants to have all their retirement accounts in one place and use the plan's investment options for good or bad.

However, most record keepers didn't want to have anything to do with them. The only reason I mention it was the OP's statement about a high cost plan. Who else would want the hassle, except to bring in more funds under management.

Cop51
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by Cop51 » Wed Feb 14, 2018 3:59 pm

It is not a ROTH 401k. It’s through payroll deductions and is through the work place sponsored plan ICMA-RC. They sponsor our 457 plan and a Roth IRA is also an option to participate in. The money comes from payroll right into the ROTH IRA.

JBTX
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by JBTX » Wed Feb 14, 2018 4:11 pm

Cop51 wrote:
Wed Feb 14, 2018 3:59 pm
It is not a ROTH 401k. It’s through payroll deductions and is through the work place sponsored plan ICMA-RC. They sponsor our 457 plan and a Roth IRA is also an option to participate in. The money comes from payroll right into the ROTH IRA.
If it is truly a Roth IRA you should be able to move it to a different Roth IRA. I would suggest contacting the administrator to verify you can do this.

Alan S.
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by Alan S. » Wed Feb 14, 2018 5:11 pm

I checked the ICMA website, and this is a payroll deduction Roth IRA.

ICMA operates as the plan administrator for over 9000 public sector retirement plans. However, there the website does NOT provide any information about transferring out of the plan. Obviously, if the IRA is transferred to an outside IRA custodian, the payroll deduction option would cease because they are unlikely to work with other IRA providers competing with them.

Bottom line, you will simply have to call the plan and ask them about the mechanics of doing a trustee to trustee transfer to Vanguard or any chosen IRA custodian. This is the preferred method because you are only allowed one 60 day rollover per 12 months. In the end, if they refuse to participate in direct transfer out, you may have to request a distribution check and do a 60 day rollover, but consider that a last resort. If you ask for a distribution be sure to decline withholding, particularly since this is a Roth IRA.

From the appearance of the website and all the participating investment firms, you are likely paying multi level fees to participate here and could probably save quite a bit by moving your IRA out to a low cost provider. But expect to get hit with an exit fee, although you will probably offset those costs quite fast with a low cost provider.

retiredjg
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by retiredjg » Wed Feb 14, 2018 5:21 pm

This "payroll deduction Roth IRA" from ICMA seems truly evil, suckering in people who don't realize what they are paying for it.

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BL
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by BL » Wed Feb 14, 2018 5:44 pm

retiredjg wrote:
Wed Feb 14, 2018 5:21 pm
This "payroll deduction Roth IRA" from ICMA seems truly evil, suckering in people who don't realize what they are paying for it.
Maybe so, but I expect many of these folks would not be saving in a Roth at all without it.
Convenience costs money sometimes.

Yes, I would find out if it can be transferred out. Perhaps Vanguard or other low-ER fund brokerage could help you get it started.

billfromct
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by billfromct » Wed Feb 14, 2018 9:20 pm

I would stop the contributions to the employer sponsored Roth IRA.

Open a Roth IRA with Vanguard to establish the Roth IRA that your employer sponsored Roth IRA will be transferred into.

Maybe Vanguard can "pull" the money from your employer sponsored Roth IRA into your Vanguard Roth IRA ("trustee to trustee transfer" as suggested). I'm sure Vanguard has worked with every conceivable U.S. mutual fund/financial services company.

Just make sure you don't contribute more then $5,500 into both Roth IRAs for the calendar year.

bill

Cop51
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by Cop51 » Thu Feb 22, 2018 12:09 pm

As I stated I DCA my ROTH IRA with ICMA. I did a salary percentage so when I worked overtime I contributed more into the ROTH IRA. Now that I am maxing out the $5500 I do payroll deductions of $211.53 each paycheck. The account is small and I have about $13,000 in it. When I called ICMA because it is an employer sponsored plan and I am not 59.5 and I did not separate employment they can not close the account and roll the money into Vanguard. My only option is stop contributing to the account and withdraw my $10,000 in contributions and I have to leave the $3000 in earning in there to avoid paying a penalty. I think this is my best option to avoid the high fees of this account.

I will still be contributing to my 457 with ICMA even though the fees float around 1% even for S&P500 index funds just for the tax advantage.

Spirit Rider
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by Spirit Rider » Fri Feb 23, 2018 12:28 am

Whether this is a payroll deduction Roth IRA or a "deemed" Roth IRA, this is still a Roth IRA. An employer has no ability to restrict your withdrawals/rollovers from any IRA.

ICMA is grossly mistaken. Even in the case of SEP IRA and SIMPLE IRA employer retirement plans. Once contributions go into any kind of IRA account, the account owner can do withdrawals/rollovers at their discretion. The only possible consequence is a tax one.

ICMA seems confused. What is true with a Roth IRA, is that contributions can be returned at anytime. Earnings are taxable and subject to a 10% penalty if withdrawn before 59.5. However, there is no restriction on withdrawals/rollovers and a custodian can not refuse a request to do either.

Cop51
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by Cop51 » Fri Feb 23, 2018 9:57 am

Okay im going to look further into this.
thank you

Spirit Rider
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Re: Employer Sponsored ROTH IRA to non Employer ROTH IRA

Post by Spirit Rider » Fri Feb 23, 2018 10:21 am

You will want to do this as a trustee-> trustee Roth IRA transfer.

Maybe you can enlist Vanguard on this. They can certainly clear up any misunderstanding ICMA might have. Of course that assumes ICMA is willing to listen to anyone.

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