To roll or not to roll.
May 13, 2010 10:42 AM Subscribe
What should I do with this IRA?
3 years ago I got a new job after working for 2 years in my first job after college. At the time I had a very small sum on my 401K account of about $2,000 dollars that I rolled over into an IRA in Citibank. In the last 3 years the IRA has been reduced from the original amount of $2,000 to 1,500.
I was wondering if it makes sense and whether it is possible to either roll this IRA to my current 401K account (which is currently managed by Vanguard and is doing a much better job beating the market?) or should I roll it over to a different account (probably an IRA with Vanguard).
If neither of the last two makes sense would it be worthwhile just to leave $1,500 and their current account? Something tells me that I did a bad choice when I opened up the original IRA and this is my chance to rectify it.
Thanks.
3 years ago I got a new job after working for 2 years in my first job after college. At the time I had a very small sum on my 401K account of about $2,000 dollars that I rolled over into an IRA in Citibank. In the last 3 years the IRA has been reduced from the original amount of $2,000 to 1,500.
I was wondering if it makes sense and whether it is possible to either roll this IRA to my current 401K account (which is currently managed by Vanguard and is doing a much better job beating the market?) or should I roll it over to a different account (probably an IRA with Vanguard).
If neither of the last two makes sense would it be worthwhile just to leave $1,500 and their current account? Something tells me that I did a bad choice when I opened up the original IRA and this is my chance to rectify it.
Thanks.
I've never heard of an IRA to 401k rollover either, I'm not sure if that's possible. Put Vanguard funds are excellent so transfering your IRA from Citibank to Vanguard may be a good idea (depending on the costs involved and whether or not Vanguard will let you open an account with that amount of money).
If not, you should still be able to invest in low-cost Vanguard-like funds in your Citibank IRA. The returns you get are not really related to who provides your IRA account, it's based on what assets you decide to invest in.
posted by burnmp3s at 11:42 AM on May 13, 2010
If not, you should still be able to invest in low-cost Vanguard-like funds in your Citibank IRA. The returns you get are not really related to who provides your IRA account, it's based on what assets you decide to invest in.
posted by burnmp3s at 11:42 AM on May 13, 2010
Do we need to clarify that an IRA is not an investment vehicle itself - it doesn't return any rate at all. It's a type of ACCOUNT in which you can use the money to purchase stocks, bonds, index funds or whatever.
In order to answer your question, we would need to know what investment does your IRA hold, and which investment(s) are in your 401K. Look on your Citibank statement and see if it says what you have invested in.
If you like the return of the investments in your 401K, you can sell whatever you have in your IRA and purchase the same things that are in your 401K. But the money itself will still be in your IRA account - you don't need to move it to the 401K account (if that's even possible).
I don't know all the correct investment terminology; I hope what I have typed makes sense.
posted by CathyG at 11:49 AM on May 13, 2010
In order to answer your question, we would need to know what investment does your IRA hold, and which investment(s) are in your 401K. Look on your Citibank statement and see if it says what you have invested in.
If you like the return of the investments in your 401K, you can sell whatever you have in your IRA and purchase the same things that are in your 401K. But the money itself will still be in your IRA account - you don't need to move it to the 401K account (if that's even possible).
I don't know all the correct investment terminology; I hope what I have typed makes sense.
posted by CathyG at 11:49 AM on May 13, 2010
Response by poster: Cathy,
what you typed makes perfect sense, basically you are saying that I can arrange my current IRA at CITI to mimic my current investments in my 401k at Vanguard. I guess this is doable. I kinda set up this IRA 3 years ago and have never looked at it and I guess thats part of the problem. I wanted to forget about it and I just cant believe that 3 years in a row thing has lost money.
I am in the process of getting online access to my IRA through Citibank and so far its been hell.....soo much more difficult than it was to set up online access for Vanguard.
posted by The1andonly at 12:15 PM on May 13, 2010
what you typed makes perfect sense, basically you are saying that I can arrange my current IRA at CITI to mimic my current investments in my 401k at Vanguard. I guess this is doable. I kinda set up this IRA 3 years ago and have never looked at it and I guess thats part of the problem. I wanted to forget about it and I just cant believe that 3 years in a row thing has lost money.
I am in the process of getting online access to my IRA through Citibank and so far its been hell.....soo much more difficult than it was to set up online access for Vanguard.
posted by The1andonly at 12:15 PM on May 13, 2010
I wanted to forget about it and I just cant believe that 3 years in a row thing has lost money.
Keep in mind that over the last three years the S&P 500 is down around 25%, so if you have gone from $2000 to $1500 in that time period you are pretty much matching the overall stock market. The S&P 500 is up around 30% in the last year though, so if you've had your Vanguard 401k during that time period, you are again just matching the overall market rather than beating it. It would be a bad sign if your Citibank IRA lost money over the last year, but again if you've still only lost around 25% over the last 3 years it hasn't done that bad overall.
posted by burnmp3s at 12:37 PM on May 13, 2010
Keep in mind that over the last three years the S&P 500 is down around 25%, so if you have gone from $2000 to $1500 in that time period you are pretty much matching the overall stock market. The S&P 500 is up around 30% in the last year though, so if you've had your Vanguard 401k during that time period, you are again just matching the overall market rather than beating it. It would be a bad sign if your Citibank IRA lost money over the last year, but again if you've still only lost around 25% over the last 3 years it hasn't done that bad overall.
posted by burnmp3s at 12:37 PM on May 13, 2010
It may be a good idea to roll the IRA over into a Vanguard IRA. The fees at Vanguard will probably be lower than at Citi (both at the account level and transaction level). If you mimic your Vanguard 401k in the Citi account, you may have to pay transaction fees on top of the annual management fee.
As others have said, you probably can't roll your IRA into your employer's 401k. But if you leave this current job in the future, you'll probably roll over the 401k in to an IRA. If you already have the Vanguard IRA set up, you could combine the accounts.
posted by mullacc at 12:50 PM on May 13, 2010
As others have said, you probably can't roll your IRA into your employer's 401k. But if you leave this current job in the future, you'll probably roll over the 401k in to an IRA. If you already have the Vanguard IRA set up, you could combine the accounts.
posted by mullacc at 12:50 PM on May 13, 2010
You can definitely roll your rollover IRA back into a new employers 401k. I did that exact thing with my new 401k (to Fidelity's 401k service.) I didn't want to deal with multiple retirement accounts so just called them up for specific instructions (essentially just requested a check made out to 'Fidelity FBO (for benefit of) of me and mailed that check to Fidelity. Not much else to it.
Just give Vanguard a call. I'm sure they can do it to. I think you'll find it easier allocating all your assets within one account than doing multiple allocations in multiple accounts and trying to keep them similar.
posted by jourman2 at 1:08 PM on May 13, 2010
Just give Vanguard a call. I'm sure they can do it to. I think you'll find it easier allocating all your assets within one account than doing multiple allocations in multiple accounts and trying to keep them similar.
posted by jourman2 at 1:08 PM on May 13, 2010
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posted by cschneid at 11:33 AM on May 13, 2010