What's my best bet in moving a Rollover IRA to another bank/brokerage firm with my negative net worth?

April 20, 2009 3:36 PM

I need to know what my options are for moving this thing, given that I have a negative net worth. Can I roll it into another brokerage-style Rollover IRA at a brokerage firm, not a bank, and avoid the money laundering law stuff? Or am I relegated to Bank IRAs until I'm out of school debt? Do I suck it up and take the $75/month hit until I can start depositing money again (I don't know when that will be), and hope that the investments make up the difference in the long run? I haven't lost as much as most in my portfolio, and I know I have time to make up the losses, the monthly fee just seems like an unnecessary loss I should be able to avoid.

My Rollover IRA (brokerage, not CD/money market) is with Schwab, and is a product of a 401(k) account I had through them ages back that I converted when I left the company. The monthly fee ($75) is waved if you deposit at least $75 into the account every month. When I had a job, and for the past 8 months this wasn't a problem, but money is tighter now. This means that if I keep my account here, I'll be losing $900/year in fees.

My original plan was to move the money into a Rollover IRA at Bank of America, since that's where I keep my other stuff, and they have no-fee brokerage IRAs. However, from reading articles on AskMeFi and elsewhere, a bank sounds like not the best plan. In any case, in investigating the process, I found that the application asked for my net worth; I have a negative net worth because of school loans, and the field only accepts positive numbers. The customer service rep I chatted with online told me that I can't open a brokerage retirement account with a negative net worth because of money laundering laws. He said my best bet was a Bank IRA (CD/money market options).

So what's my best bet?

posted by blue andrea to work & money (5 comments total)

You managed to roll over your IRA to Schwab, right? And your net worth was presumably negative then too, yeah? I've never heard of this positive net worth rule and I can't find any references to it. I think maybe the BofA rep was just a little bit confused?
posted by phoenixy at 3:47 PM on April 20

Are you sure it wasn't asking for the net-worth of the rollover? Your personal net worth seems irrelevant to opening the account.
posted by nomisxid at 4:27 PM on April 20

I would look at a Rollover IRA either at a full service firm with no account minimums like Edward Jones, or a mutual fund company that waives fees if you have at least $3000 per fund, like Vanguard.

The process for opening the accounts and rolling over the assets is fairly easy.

At a full service firm, you would just stop by and open the account, and then sign some transfer paperwork to rollover the assets.

At a mutual fund company, you would go online or call, open an account, and then sign a transfer paperwork to rollover the assets.

In transferring the assets, it's best if you can get a check made out to the custodian (the firm that owns the account) for your benefit. For example, you could make the check out to Edward Jones FBO Blue Andrea.

The difference between the full service firm and the mutual fund company is primarily the difference between advice and cost. Vanguard will be cheaper, but they won't help you very much in selecting funds or asking questions like this.

Full service firms will be more expensive, probably charging you a commission, but should offer you a lot more service and advice.

Best of luck!
posted by davidamann at 4:57 PM on April 20

The customer service rep I chatted with online

Find someone else to talk to.

Seriously. You got no from this guy, I have no idea if he's right or not, but it costs you nothing to try another venue.

Or go to Schwab and threaten to take a hike if they don't drop this monthly deposit and maintenance fee rule. No need to tell them the why of it. Times are hard on wall street, they might just jump.
posted by IndigoJones at 5:11 PM on April 20

Schwab's rollover IRA doesn't have any account service fees if you open an account with $1,000. I'm not sure why yours does...I'd give Schwab a call and talk to a live rep. In my experience, they have very good customer service.
posted by mullacc at 5:54 PM on April 20