Brokerage doesn't want our money anymore

January 20, 2011 6:08 PM

My wife's brokerage has just resigned as the guardian of her traditional IRA, due to lack of activity (she's a buy-and-hold type of person, and has more recently been contributing to a Roth IRA). The account contains a few stocks and some cash. She needs to make a decision fairly soon as to what to do with the account -- otherwise they'll just sell the stocks and send her a big check that she'll have to do something with in order to avoid tax penalties. What options should she be considering? (If it matters, the total is less than $20K).
posted by svenx to Work & Money (7 answers total)

You should be able to transfer it into a new IRA. Talk to a broker, and they'll arrange the transfer. I've done it, it was a slam dunk. And it was less than 20k.
posted by Xoebe at 6:17 PM on January 20, 2011

First question - does she really want to hold individual stocks? In other words, is this a carefully invested buy-and-hold strategy or is it more buy and forget? In the second case, i would suggest switching to mutual funds so she can have greater diversity. I am a big fan of Vanguard for their low costs.

Second, if she does want a broker, there are several that focus on low cost services for the smaller investor. E-trade is the one I know best but there are others (including even Vanguard)

I have recently been consolidating our IRA accounts at Vanguard. Some custodians will send the money or shares directly to Vanguard. Others will only send a check to me, but more out to Vanguard FBO myself so I can just send the same check to Vanguard myself.

She also ask her current broker what fees are involved in transferring the shares vs. cashing out and getting a check (and perhaps paying a commission to rebuy the shares on the other side.) When I have made gifts of shares of stock, our broker has charged us a fee for the transfer that is higher the commission if I had sold and then repurchased the shares. (Which I can't do since these are charitable contributions but in an IRA where you don't have to worry about capital gains or wash sale rules, it would be more of an option.)
posted by metahawk at 6:59 PM on January 20, 2011

Yeah, move it somewhere that's used to buy and hold types where there aren't brokers trying to make all their money off your commission fees. If it were my money, I'd roll it into a Vanguard account. You can sign up for an account online and start the roll over from the web site.
posted by advicepig at 7:02 PM on January 20, 2011

I am rather happy with the guys at ThinkOrSwim. They are a full-service broker (buy/sell individual stocks), AND you can buy/sell ETFs, and normal mutual funds. Amazing support people, etc,etc,etc. Just all around happy with them. Very cheap fees (even though that doesn't particularly matter for buy&hold, it can if you trickle money in over time).

Open the account with them, then follow the directions for a transfer from another brokerage. There's a whole system setup that's very easy to do cross-brokerage transfers. I can't remember what it's called, but it's a standard.
posted by cschneid at 7:32 PM on January 20, 2011

Seconding ThinkOrSwim; they are great. All of the major brokerages should be fine though, and they all have an account transfer system. With IRAs, it's easier if you transfer it directly broker-to-broker; you can get a fat check cut out to you that you can redeposit elsewhere within 60 days (and keep it in a new IRA: it's called a 'rollover') but they'll try withholding taxes, etc that are a pain to deal with.

What was the broker that's resigning as a custodian?
posted by bsdfish at 12:25 AM on January 21, 2011

Thirding low-cost mutual funds, thirding Vanguard, unless you're a very careful, very dedicated, very savvy individual investor with a lot of free time and interest.
posted by fivesavagepalms at 8:05 AM on January 21, 2011

nth-ing Vanguard
posted by Fiat124 at 4:11 PM on January 26, 2011