opening an IRA account (convert, deduction, immediate, get)

[Bridge781]

I am speaking to someone at merill lynch about this.

I am not sure i can move the money i put in with them due to possible tax implications? That's what an agent there told me. It's $800 and i just put it in yesterday.

[Aredhel]

Originally Posted by Bridge781

I am speaking to someone at merill lynch about this.

I am not sure i can move the money i put in with them due to possible tax implications? That's what an agent there told me. It's $800 and i just put it in yesterday.

There are absolutely no tax implications from moving an IRA to a different provider, provided the money is rolled from Merrill to Fidelity without you directly touching it and you stick with the same type of IRA (traditional to traditional, or Roth to Roth). If you decide you want to move the money from a traditional IRA to a Roth IRA, then you will owe some taxes on the transfer. Fidelity will handle the transfer. You may have to wait a few days for your deposit to become available in the settlement account before the money can be moved, but that’s trivial.

Fidelity is better because it has more lower-cost index funds and charges lower management fees. Over time, higher fees can really eat into your gains.

Whether a Roth IRA or a traditional IRA is better for you depends mostly on your tax bracket. Roth IRAs are generally best for lower-income folks (since they don’t pay much in income taxes, they don’t benefit as much from the tax break a traditional IRA offers) and for very high income earners (since they don’t get a tax break for contributing to a traditional IRA). Traditional IRAs are generally best for people in the middle tax brackets. But either is a great place to put money intended for retirement, because of the tax-free growth they offer!

[Bridge781]

Thanks, I've read that if you are a certain income bracket you can't do a Roth iRA?

Also does it make sense to have a traditional IRA and a 401k?

ALSO, i noticed that there is now $1600 in my account and not $800. Somehow two $800 transactions were made. Hmm.

[flyonpa]

Originally Posted by Bridge781

Thanks, I've read that if you are a certain income bracket you can't do a Roth iRA?

While there are income limits on a Roth, you can do a "Back Door" Roth, Once you have a traditional IRA, you can have the broker convert it to a Roth.

You would have to pay income tax on any gains in the traditional IRA that is converted, But if you just opened it any gains would be minimal, (As its sitting in a money market fund at .02%). You might owe a penny or two in taxes, that would round down to zero.

[Bridge781]

Once the IRA is set up is it possible to transfer money into it on a weekly basis?

[flyonpa]

Originally Posted by Bridge781

Once the IRA is set up is it possible to transfer money into it on a weekly basis?

I guess Yes, Most would deposit funds monthly, But there is no reason you could not transfer funds Weekly.

[Bridge781]

Ok thanks. Has anyone had a bad experience with Merrill lynch?

[Aredhel]

Originally Posted by Bridge781

Thanks, I've read that if you are a certain income bracket you can't do a Roth iRA?

You can’t contribute directly to a Roth IRA once you reach a certain income level. But there’s a trick known as the Backdoor Roth which high income earners can use to make Roth IRA conversions. Because there’s no income limit on Roth IRA conversions, they can make an after-tax contribution to a traditional IRA and then roll that contribution over into a Roth IRA.

Also does it make sense to have a traditional IRA and a 401k?

It can, especially if you’re already maxing out your 401k contributions or if your employer’s 401k investment options are lousy. There’s no one-size-fits-all rule for when a Roth IRA or a traditional IRA is better.

[Petunia 100]

Originally Posted by Bridge781

I am speaking to someone at merill lynch about this.

I am not sure i can move the money i put in with them due to possible tax implications? That's what an agent there told me. It's $800 and i just put it in yesterday.

Nonsense. You can transfer your IRA to any custodian you please with no tax implications.

But, let your new custodian handle it for you. Just call them and ask for their help. You will need to sign, etc.

[Bridge781]

Thanks. So maybe ill just keep the 1600 in there and call fidelity and tell them I want to move it over.

My current 401k is with fidelity now but I’ve been at a new job for 2 months and they don’t use fidelity. I’m in the process of moving my 401k over to what the new employer uses.