In order to enjoy retirement, we need to start saving at a young age and individual retirement accounts are important for allowing us to do exactly this. Especially if you don’t have a workplace retirement plan, let’s say you work for yourself, or even if you’ve maxed this plan out, an IRA continues these savings and puts you in a stronger position for later life.
Today, we want to talk about rollover IRAs and using old 401(k) monies to fund a new account. Why? Because most people, when looking to complete this process, get confused by the sheer amount of options available on the market. Instead of seeing the choice as a good thing, they get overwhelmed and make a poor decision; in turn, this leads to reduced savings or increased costs.
Below, we’ve compiled a list of the best rollover IRA companies. Of course, the word ‘best’ is very subjective but we’re going to explain the benefits of each and why you might consider them for your own needs!
Charles Schwab
Firstly, this option makes the list because of the options you have when planning for retirement. Along with over 200 ETFs and 3,000 mutual funds, there’s also a lack of commissions and fees which allows you to save more money. In addition to this, Charles Schwab also offers local offices alongside their presence online and this is important. If you want to speak to somebody face-to-face, it’s likely you have an office nearby where you can discuss your options.
In addition to this, the company also has a fantastic customer service team. If ever you have any questions, perhaps you aren’t sure how the rollover process works, a simple phone call or email and you’ll have all the answers you need.
TD Ameritrade
For many of the same reasons, we believe TD Ameritrade deserves to enter contention for the ‘best rollover IRA company’. Perhaps one of the most well-known companies in the market, TD Ameritrade has no account minimum; although there’s a $1,000 minimum with Charles Schwab, this shouldn’t be something you need to worry about since you’re rolling over as opposed to opening a new account from scratch. Furthermore, auto-deposits of over $100 per month will see this fee waived.
Once again, TD Ameritrade allows you to benefit from customer service not all providers can offer. Although this seems like a point that isn’t too important, we’re talking about your retirement funds so customer service may just prove to be the most important factor of all. If there’s a problem with your account, the last thing you need is to be sitting on hold for several hours.
With over 2,000 mutual funds and 100 ETFs, the options aren’t quite as extensive as Charles Schwab but you don’t have to worry about commission or fees again.
Wealthfront
Next up, we have what’s known as a robo-advisor company which means your accounts are managed by software and technology. Over time, these services will use your money to build a portfolio from low-cost ETFs. Whenever required, the portfolio will rebalance and all for a fee lower than most financial advisors. On the first $10,000, all charges will be waived so this is certainly an interesting option if you feel comfortable with this form of account management. If you prefer the more traditional IRA companies, you might be better suited to another of our options here today.
While on the robo-advisor note, we should also mention Betterment who has more human advisors available whenever you need help. With their premium plan, their style follows a hybrid approach (a combination of technology and human interaction).
Fidelity Investments
If your biggest worry is the fees and expenses when looking for the best rollover IRA company (who wants to lose their hard-earned cash, right?), Fidelity Investments could be the service for you. Although we could easily add TD Ameritrade and Charles Schwab to this conversation, Fidelity Investments has 3,600 mutual funds which are more than both of these companies and they all come free from transaction fees. After this, you’ll also have access to 85 ETFs and these are commission-free so the costs that normally come with IRAs disappear.
With Fidelity Investments, it’s important to note that they offer one of the biggest selections of highly-rated funds so your money will always be in good hands. For example, numerous offer expense ratios of under 0.50%.
Ally Invest
If cost does happen to be the most important factor in your decision, Ally Invest isn’t the best choice because they don’t have any commission-free ETFs, nor do they offer mutual funds without transaction fees. Initially, you might be wondering why they’re in this list at all but they’re a superb choice if you want to dedicate a portion of your retirement fund for trading.
Along with Charles Schwab, Ally Invest has advanced tools for trading and this can be useful after having your money in a somewhat restricted 401(k) plan for so long. As long as you keep your eye on commissions and understand the charges at all times, having some of your money tradings could be a useful asset.
Vanguard
Coming back to the low-cost options, Vanguard sits alongside the very best. In fact, they’re seen as innovators within this niche because they were the ones to bring the index fund to investors. At first, you’ll notice the smaller selection of ETFs and mutual funds but they seem to be the company with the lowest overall costs.
On average, 0.18% is the expense ratio for all their funds and their increased popularity in recent years hasn’t been an accident.
Alternative IRA Rollover Option
If you’re looking for a method of reducing the volatility of your retirement portfolio, gold is certainly the way to go (check our post why invest in Physical Gold). A conventional IRA relies upon the performance of mutual funds, stocks, and bonds, a gold IRA, however, has no relation at all. Since it’s linked to the value of gold, which, as we’ve seen, is always on a steady rise, it provides protection against whatever may happen in the economy in the coming weeks, months, and years.
Making A Sound IRA Rollover Decision
If you’re reading this, you’re currently considering your rollover options and you certainly have six of the best traditional companies above. However, you should never rush into a decision of any kind because this is where mistakes are made. If you want a comfortable retirement with the money you deserve, assess all your options and even consider the help of a financial professional. After reviewing your financial position, they’ll advise on what’s important for YOU (make sure you choose an independent professional with no ties to any particular company!).
When looking for the best rollover IRA company, you need to be careful of the promises made because the market is extremely competitive. At times, advertising for such companies can be a little misleading with companies using carefully-crafted language. When providers say ‘no costs’, this generally applies to the rollover itself; it doesn’t mean there won’t be administration costs along the way. Just because a company uses the word ‘free’, don’t shake their hands and give them your money instantly.
Finally, you also need to be careful with certain types of rollover IRAs. Generally speaking, any rollover distributions that reach you directly are susceptible to the 20% tax rates from the federal government. If you want to avoid losing 20% of your money in a split-second, you need to choose a direct rollover which means the money moves from your current fund straight to your IRA; at no point do you have the money as ‘income’.
I hope you enjoyed this post and if you have any questions about best rollover IRA company or want to leave your own personal experience, leave a comment below.
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