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Columns | Go Far With Kovar

Advice on Rolling my 401(k) Into an IRA?

by Taylor Kovar
Hi Taylor - I'm leaving my job where I've got a fully vested 401(k) and wondering where I should roll the money. I know I want an IRA, but how do I pick the provider? - Don

Hi Don - Great question, and glad you got that 401(k) vested! You're going to have endless IRA options - lots of those options are great, many are not. My advice is to find a company you like that doesn't charge relentless fees, and here are a few ways to go about finding such a company.

1. Ask about fees before you do anything else. Naturally, banks and mutual fund companies want to talk about everything other than what they charge when luring new clients. That's why you should start with these questions and fight to get straight answers. Lots of brokerage firms have very few extra fees (probably fewer than your old 401(k) provider) and they'll be happy to promote that. Other companies charge trading fees, fund manager fees, advisor fees and pretty much any other noun you can put in front of the word "fee." If an account manager has a pitch that sounds too good to be true and then you see some strange numbers in the fine print, you probably don't want your money with that company.

2. Think about how you want to invest.
You can take a lot of control over your IRA. Some people love that option, other people don't trust themselves to make the right financial choices. You might spend a little to have someone build an investment strategy for you, which can cost more up front but deliver far better returns than a standard mutual fund. There are big insurance and brokerage firms that have been offering IRAs forever and sometimes get a little impersonal in their strategies. Other companies do a much better job of trying to meet your individual needs and goals. If there are stocks and commodities that interest you, pass that info along to your advisor or broker to make sure everyone is on the same page. It's your money and you should have a say in how it gets invested.

3. Ask around. When you open an IRA, you give someone else the chance to make money off of your money. This means everyone wants to have your account, and they will make it sound like a very, very smart choice for you to invest with them. If you aren't sure who to trust, ask some friends who have investment accounts and see how their funds are doing. Compare stories and see how you feel about different companies and advisors after hearing from average investors like yourself who are just trying to save for retirement.

To dig a little deeper, head to NerdWallet or another financial review site and get specifics about the fees different companies charge. Having a frame of reference will make it easier to sort through the options. Happy investing, Don!


Taylor Kovar October 26, 2018
More "Go Far With Kovar"

Disclosure: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. To submit a question to be answered in this column, please send it via email to Question@TaylorKovar.com, or via regular mail to Lessons on Wealth, 106 E Lufkin Ave., Lufkin, TX 75901.

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