There are no fees for opening or maintaining an accumulated IRA at Schwab. You only pay fees for the transactions you make in the account, such as trading in stocks, or for the investments you keep in the account, such as the operating expenses of mutual funds. Reinvesting an IRA can involve transferring money from an occupational retirement plan, such as a 401 (k) or 403 (b) plan, to an IRA or changing money from one IRA provider to another. Regardless of the specific type of reinvestment you make, the IRS doesn't require IRA providers to charge you fees.
However, some financial institutions take the opportunity to impose fees on customers, either when they invest money in a new IRA or when they withdraw money from their old IRA. There are several different types of fees, so be sure to keep an eye on each and every charge you may have to pay. If you have a traditional 401 (k) or 403 (b), you can transfer your money to a Roth IRA. However, this would be considered a conversion to Roth, so you would have to declare the money as income when you pay your tax return and pay ordinary income tax on income.
The main difference between a reinvestment and an asset transfer is where the money is kept before it is transferred to Vanguard. When you change or leave a job, a cumulative IRA is a convenient and flexible way to carry your old 401 (k) or other workplace retirement accounts with you, allowing you to use your money today and continue accumulating for the future in a single account. Just remember that once you add money to your accumulated IRA, you may not be able to transfer the account to a future employer's plan. Within 60 days of receiving the distribution check, you must deposit the money into a cumulative IRA to avoid current income taxes.
With a wide range of investment options, a cumulative Fidelity IRA gives you the option of investing on your own or having Fidelity invest for you. There are generally no tax implications if a direct reinvestment is completed and the assets go directly from the employer-sponsored plan to a cumulative or traditional IRA through a transfer from trustee to trustee. The only difference is that money from an accumulated IRA can later be transferred to an employer-sponsored retirement plan if the plan allows it. Don't let the immediate nature of making a reinvestment lead you to spend more on fees than you actually have to pay.
In addition, transferring money from an old work plan to a cumulative Fidelity IRA is free of taxes or penalties. Transferring an IRA can be a smart move, as it will often allow you to make the most of your retirement savings. A reinvestment occurs when assets from an employer-sponsored retirement plan, such as a 401 (k) or 403 (b), are transferred to an IRA. Generally, from a tax perspective, it's more favorable for participants to transfer their retirement plan assets to an IRA or a new employer-sponsored plan, rather than distributing them on a lump sum.
Open or use an existing Roth Fidelity IRA and keep in mind that transferring pre-tax money to a Roth IRA is a conversion to Roth and is a taxable event. For example, if you are making an indirect reinvestment in which you take possession of your retirement funds, it is essential that you complete the transfer within 60 days.
