Roth Front end fees & Whole Life. Keep or something else?

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Colson2015
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Joined: Thu Nov 07, 2019 9:01 am

Roth Front end fees & Whole Life. Keep or something else?

Post by Colson2015 » Thu Nov 07, 2019 11:57 am

I have $26K in a Roth that charges 4.8% Front end fee and $35/year. The fund is all LIPPX through Blackrock 2050. I max contribute every year.

I also have $60K cash value in a whole life policy that has a guaranteed 2.7% interest return. It has a 6.8% front end fee but cost of insurance is only $400/year for $450K policy. The interest currently pays for the life policy and nets me about $800/yr. The policy is set up to allow me to borrow against the cash value at any time. I fund $7200/year which all goes to cash value minus the front end fee. I like the option of being my own bank and having a guaranteed return but don't like paying such a high front end fee.

Couple questions

Should I keep the Roth in the current fund and/or with the current company that is managing it?

Should I continue to fund the Whole life or put that money somewhere else.

Thanks for the help

mhalley
Posts: 7579
Joined: Tue Nov 20, 2007 6:02 am

Re: Roth Front end fees & Whole Life. Keep or something else?

Post by mhalley » Thu Nov 07, 2019 1:57 pm

Twelcone to the forum.
ransferring the Roth to vanguard, Fidelity or Schwab is a no brainer. Putting it in a tr fund at one of these would be fine, just be sure to use the fidelity freedom index ones if you go to Fidelity. The whole be your own bank thing is not ideal. Not quite a scam, but there are much better uses for your money.The whole life policy needs further evaluation, you can have it done for a fee at evaluatelifeinsurance.org
Do you even need life insurance? marital status, dependent children? You can probably get a million dollar 20 year term policy for about the same price you are paying now.
https://evaluatelifeinsurance.org/
BYOB article:
https://kahlerfinancial.com/financial-a ... this-party
Last edited by mhalley on Thu Nov 07, 2019 2:18 pm, edited 3 times in total.

HomeStretch
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Re: Roth Front end fees & Whole Life. Keep or something else?

Post by HomeStretch » Thu Nov 07, 2019 2:07 pm

Colson2015 wrote:
Thu Nov 07, 2019 11:57 am
I have $26K in a Roth that charges 4.8% Front end fee and $35/year. The fund is all LIPPX through Blackrock 2050. I max contribute every year.
...
Should I keep the Roth in the current fund and/or with the current company that is managing it?
Per Morningstar, Blackrock TDF LIPPX has a front-end load of 5.25% and a 0.40% ER, in addition to the $35 account fee. There is no good reason to invest in a Roth IRA with high fees. Contact Vanguard/Fidelity/Schwab to transfer the account.

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Nate79
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Location: Delaware

Re: Roth Front end fees & Whole Life. Keep or something else?

Post by Nate79 » Thu Nov 07, 2019 2:29 pm

I would stop doing both. Boy, they really got you didn't they? High fee investments and scammy insurance. The salesmen really made it off with your money.

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David Jay
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Location: Michigan

Re: Roth Front end fees & Whole Life. Keep or something else?

Post by David Jay » Thu Nov 07, 2019 2:32 pm

Welcome to the forum!
Colson2015 wrote:
Thu Nov 07, 2019 11:57 am
Should I keep the Roth in the current fund and/or with the current company that is managing it?
No. Absolutely not!

The Roth can be transferred without any tax consequences. As others have said, any good, low-cost brokerage like Vanguard, Fidelity or Schwab can set you up in a Target Date fund with no front end load. There is simply no excuse for charging front end loads in this day and age. Also, no annual fee and lower fund costs: Vanguard’s Target Date fund has an expense ratio [ER] of .15 instead of .40.

Work with the firm receiving the funds to perform the transfer, they have the incentive to make sure everything goes smoothly. The receiving firm can tell you whether it is better to liquidate the Blackrock fund before transfer or after transfer.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Brianmcg321
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Re: Roth Front end fees & Whole Life. Keep or something else?

Post by Brianmcg321 » Thu Nov 07, 2019 4:43 pm

I echo all the other comments.

Move everything and drop the whole life. If you need current life insurance get a term insurance plan in place and then drop the whole life. Pure garbage.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

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