• Posts Tagged ‘simple_ira’

    SIMPLE IRA, Meet Vanguard

    by  • May 22, 2007 • Tagged: , ,  • Comments

    I’ve written in the past about my dissatisfaction with my SIMPLE IRA plan administrator. In the past few months I decided to move my hard earned dollars elsewhere. And by elsewhere I mean Vanguard.

    As I stated before, our plan administrator is also the guy who manages all of the money for the higher ups in our company…the same higher ups that I had to get sign the paperwork so that I can transfer my funds. Tricky.

    I’ve decided that I would approach this in the most professional way that I can think of: just be straightforward with everyone. Here’s how it all went down.

    1. Research new home for SIMPLE IRA. I would have loved to have moved to Fidelity since I already have a Roth IRA with them, but they don’t take “orphaned” accounts; I’d have to get everyone in my company to go along with. The other choices were T. Rowe Price, Schwab, and Vanguard. I ultimately chose Vanguard because I like the idea behind low cost index funds.

    2. Call broker. Notify him that I’ll be changing brokerages and to expect an asset transfer form. Ask him to close the account as soon as the asset transfer is completed. Of course he didn’t sound pleased when I told him. He asked why I was moving my funds, to which I replied, “I just like doing this stuff myself.” And by that I mean I don’t like getting whacked by your fees. Nothing personal, dude.

    3. Approached higher up who needs to sign paperwork. Explained that I’m moving SIMPLE IRA. Handed over paperwork. Smooth transaction.

    4. Wait.

    5. Account opened!

    6. Mail in asset transfer form. Wait.

    7. Assets are transfered! Woo!

    A few months ago I listed the contents of both of our investment portfolios. We’ve made some changes, but the biggest one is the liquidation of JCLGX and the acquisition of Vanguard Target Retirement 2045 Fund (VTIVX). I did have to take a 1% hit on the assets I had in JCLGX for less than a year; I minimized this by asking my old broker to stop putting money into that fund way back in February. Thus, about $4,000 was subject to that fee – I can live with a $40 hit now to save in fees and expenses down the line.

    The only thing that I don’t like about having my SIMPLE IRA with Vanguard is their $25 fee for each mutual fund you have. This fee can NOT be waived by signing up for the e-service package, but can be waived once I have more than $100,000 total in all Vanguard accounts. Fortunately, the minimum balance fees are waived for funds in a SIMPLE IRA.

    Now that this has all been completed, I’ll revisit our “Planning the Joint Retirement Portfolio” (Part 1 Part 2 Part 3) series. It’s only been on hold for the past 3.5 months.

    SIMPLE IRA – Should I Stay Or Should I Go?

    by  • January 24, 2007 • Tagged: , ,  • Comments

    There have been numerous times on this blog that I have expressed dissatisfaction towards the investment options that are currently offered for my SIMPLE IRA plan. A few weeks ago I incorrectly stated that I could only invest in loaded fund of funds; on further review of all of the products, there was a mix of loaded mutual funds with pretty good expense ratios and loaded fund of funds with high expense ratios. Personally, I don’t like paying loads or excessive funds.

    SIMPLE IRA plans are different than 401(k) plans in that an employer can either require its employees to deposit their contributions at an employee selected financial institution (using Form 5305-SIMPLE [PDF]), or have its employees select to designate their own financial institutions for receiving contributions (using form Form 5304-SIMPLE [PDF]). My employer has chosen the latter, with us being able to choose our own financial institution for our contribution.

    Not everyone at my company understands this portability of our funds, with due reason. Our company brings in a guy from a brokerage firm to educate (sell?) new employees about the SIMPLE IRA. He’s brought in for one reason: he manages the money of our higher ups. Admittedly, when I started participating in the plan, I thought that this guy and his brokerage firm was the only way to go. I did notice that we were given the form to choose our own financial institution, but no one else in the office was able to help, so I signed up with the guy and his brokerage company (a downfall of working at a small company as we have no HR person).

    In the year and a half since I have had my SIMPLE IRA, I’ve learned that there are a few options with my plan:

    1. Pick up and move. There is no penalty for transferring SIMPLE IRA assets from one financial institution to another. So far I’ve looked at moving my SIMPLE IRA to either Vanguard, T. Rowe Price, or Schwab, on the basis of their reputations and investments. The problem? The 1% deferred sales charge on all contributions less than a year old, which would really only be a measly $60 or so. Also, I don’t want to burn any bridges with the high-ups by snubbing their guy of my business.

    2. After two years in the plan, transfer assets to a Traditional IRA. On a yearly basis, accumulate money in my SIMPLE IRA, then transfer funds (see how this works at Barry’s blog) The problem? The financial guy recommends class C shares with a deferred sales charge after that is waived after one year, of up to 1%. I don’t want to lose out on 1% of my assets every year. Alternatively, I could just let my contributions sit in a money market account and let it earn interest.

    3. Stay where I am. The problem? I don’t like paying for loaded funds. Also, it was never disclosed how much we’re paying this guy to “manage” our money. Fortunately, after looking over my statements it seems that it is a reasonable $35 a year.

    I am leaning towards option #1. I’d like to hear your thoughts.

    Should I reduce my retirement contribution to pay down debt?

    by  • February 8, 2006 • Tagged: , , ,  • Comments

    If you haven’t noticed, we are drowning in a crapload of debt. Between the two of us, we have eight credit cards (down from 20+ a year ago) and about $18K in credit card debt. Because we are also trying to save for a wedding, right now we’re only putting an extra $100/month towards the highest rate card (mine at 20.99%, eek, I know). This feels like using a band-aid to cover a gaping wound. We need some sutures!

    In order to speed up the process of paying those pesky cards down, I’m thinking of reducing my Simple IRA (a 401k-like plan for small businesses) from 6% to 3%. In doing so, that will free up $80/month that will all go towards credit card debt reduction. When our debt is all paid down, then I’ll put my contribution to 6%. My company matches dollar-for-dollar up to 3% of my salary, so in essence I’m still going to be receiving 6% when all is said and done.

    We’ve already looked at our monthly budget and think that we’ve trimmed most of the budgeting fat. Do you think that this is a good idea?