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How many IRAs?
Old 04-06-2012, 11:46 PM   #1
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How many IRAs?

Sorry for stupid question..How many IRAs one can have? Can I have more than 1?
My wife has IRA in Edward Johns and this guy (finance adviser), buying her only Invesco load funds and they are not outperforming my Vanguard index funds. She needs to move 401K from previous employer, and I don't want to move it to Edward Johns but want to open her IRA in Vanguard instead.
So, can she for some time have 2 IRAs? I can't move money from Edward Johns yet, there are some funds that we she cannot touch for a year.
When we move IRA from Edward Johns to Vanguard do she need to pay any taxes or it just rollover?
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Old 04-07-2012, 12:05 AM   #2
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Originally Posted by aleabo View Post
Sorry for stupid question..How many IRAs one can have? Can I have more than 1?
My wife has IRA in Edward Johns and this guy (finance adviser), buying her only Invesco load funds and they are not outperforming my Vanguard index funds. She needs to move 401K from previous employer, and I don't want to move it to Edward Johns but want to open her IRA in Vanguard instead.
So, can she for some time have 2 IRAs? I can't move money from Edward Johns yet, there are some funds that we she cannot touch for a year.
When we move IRA from Edward Johns to Vanguard do she need to pay any taxes or it just rollover?
Yes, you can have multiple IRAs. Yes you can transfer the full balance from one insitution to another institution. However, you cannot contribute in a given year more than the annual maximum when all contributions are combined. The maximum varies based on several factors, so I've not quoted it here.

When she moves money from EJ to Vanguard, the recommended method is to use a direct transfer. Essentially this means you will not take control of the funds...they will be sent from one financial institution directly to the other. Typically the receiving institution can provide you with a form...see the sample below.

https://www.kinecta.org/uploadedFile...structions.pdf

There are ways to have the check written to you, and then you send it to the next institution. However, IMO this method is fraught with dangers....so I'd avoid it. One problem is that the company sending you the check must withhold 20% taxes by law....something you apparently are trying to avoid.
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Old 04-07-2012, 12:06 AM   #3
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P.S. It's not a stupid question at all...don't be afraid to ask.
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Old 04-07-2012, 12:46 AM   #4
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P.S. It's not a stupid question at all...don't be afraid to ask.
Thanks!!
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Old 04-07-2012, 02:15 AM   #5
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There are ways to have the check written to you, and then you send it to the next institution. However, IMO this method is fraught with dangers....so I'd avoid it. One problem is that the company sending you the check must withhold 20% taxes by law....something you apparently are trying to avoid.
FD.......you might be thinking about a rollover of a qualified plan (like 401K). I don't think w/h is required for IRA rollovers tho your broker might do it by default if you don't ask them not to (might also have to fill out a form documenting the no w/h request). I routinely have the checks made to me to avoid the broker fee for direct transfers but I physically pick up the check and avoid half the problem of being lost in the mail but still have to face the risk for the 2nd leg.
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Old 04-07-2012, 02:36 AM   #6
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I would suggest calling Vanguard. When I have done roll-overs in the past they have been VERY helpful in leading me through the process. For instance, IIRC, you need to open the IRA with them before transferring the funds. Essentially that way, you have a fund (with no money in it) awaiting a check or electronic transfer from your other financial institution or broker. It is relatively painless unless your current IRA custodian tries to hold things up to keep your money as long as they can. That can happen, but if you follow their rules, they can not refuse to transfer the money per your wishes. By already having the account at Vanguard (or wherever you choose) the transfer has a place to go and can't get lost (leaving you owing taxes and penalties on a "withdrawal"). Good luck with this (in my opinion) good move. YMMV
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Old 04-07-2012, 08:13 AM   #7
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There are ways to have the check written to you, and then you send it to the next institution. However, IMO this method is fraught with dangers....so I'd avoid it. One problem is that the company sending you the check must withhold 20% taxes by law....something you apparently are trying to avoid.
I just did a 401k>tIRA transfer. In my case, a direct transfer was not possible without paying a pretty expensive wiring fee, so the 401k administrator sent me a check made out to Vanguard Fiduciary Trust Company FBO <my name>.

FBO = for the benefit of

I then mailed the check to Vanguard with the appropriate form and when they receive it they will deposit it to my IRA.

I agree that if the check had been made out to me it would be dicey.
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Old 04-07-2012, 08:43 AM   #8
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pb4uski...........thanks for your input. Wasn't sure whether you were implying anything about the w/h since you didn't say specifically.........
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Old 04-07-2012, 08:51 AM   #9
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pb4uski...........thanks for your input. Wasn't sure whether you were implying anything about the w/h since you didn't say specifically.........
There were no federal taxes withheld in my case since it was a rollover and the fact that the check was NOT made out to me is consistent with the fact that it was a rollover even though the funds did not go directly from the 401k administrator to Vanguard.
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Old 04-07-2012, 09:02 AM   #10
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There were no federal taxes withheld in my case since it was a rollover and the fact that the check was NOT made out to me is consistent with the fact that it was a rollover even though the funds did not go directly from the 401k administrator to Vanguard.
Thanks for the confirmation. Interesting that you could do that w/o a fee. My broker charges the same for a direct transfer or a direct rollover (check made out to trustee but given to me) but only doesn't charge if check is made out to me .
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Old 04-07-2012, 09:46 AM   #11
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When I FIRE'd and had my 401K and pension lump sum moved from w*rk (w*rk used Fido) to Vanguard. Vanguard was very helpful in the process. It wasn't a direct transfer, but a checks from Fido made out to Vanguard, sent to me, then I sent to check to Vanguard.

Right now, since retired, I can't contribute to my IRAs. But have several accounts and I use them to rebalance back and forth from each year. That works well as doing so avoids a tax impact since that rebalancing is done within an IRA.
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