Ten Ways to Help Your Kids to Spend Wisely
Kids often view cash and gift cards as things that need to be used immediately. I recall how my now grown son spent all of his birthday money within two days after he had received it, often wasting it on things that he never used. When I voiced concern or suggested [...]Helping Mom Transfer Old 401(k) To Vanguard IRA
My mom is trying to organize and simplify her financial accounts, which I applaud. A major part of this is to finally move her orphaned 401(k)s and IRAs into one location. I recommended Vanguard, since that’s where all my IRAs are. She was okay with sticking with low-cost and passive index funds, which is Vanguard’s specialty. They are also known to be investor-oriented and have high client loyalty.
If you intend to buy individual stocks or ETFs, I wouldn’t go with Vanguard Brokerage Services because they are relatively expensive. Open an account elsewhere - check out Zecco, TradeKing, or Sharebuilder.
Make A Phone Call To Old Administrator
There are a variety of ways these rollovers can happen. They may want to know the name of the company you’re going with, and also have some various paperwork to fill out. With some companies, you can request everything be done online. Even so, I think the easiest way is to simply call them and ask them the easiest way to do it (my mom didn’t like having to deal with the old company “Why are you leaving us? You can simply rollover to an IRA here…”).
You have to ask for a “direct rollover”, because otherwise you may be subject to a 20% automatic withholding, taxes, and also penalties. If the transfer can’t be done electronically, the old company will liquidate your account and send you a paper check made out to your new company. Be sure to send the check to your new company within 60 days.
Open An Account At Vanguard
Just go to Vanguard.com, click on “Open an account” at the top-right, and follow the guide. We went with “Invest for retirement” > “Roll over a 401(k) or other employer-sponsored plan” and then “Vanguard® mutual funds”.
Choosing Initial Investments
If you don’t know what to buy yet, just choose a conservative money market fund to get started. One popular option is the Prime Money Market Fund (VMMXX). You can switch into other mutual funds later easily as there are no transaction fees.
If you have over $100,000 in assets at Vanguard, you reach their Voyager level which includes a discounted financial plan. The pitch: “Pay just $250 for a plan developed by a Certified Financial Planner™ from Vanguard—a $1,000 value.” I haven’t actually paid for this myself, so I don’t know how customized it is.
Avoiding Fees
Don’t want mom getting hit with crazy fees! Vanguard charges a $20 annual fee for each Vanguard mutual fund in which your balance is under $10,000. Again, if you are at the Voyager level ($100,000+ in total assets at Vanguard) these are all waived. After that, the easiest way to avoid this fee is to sign up for electronic delivery of documents. Most people are willing to save a potential $20-$100 a year by printing out their own statements.
So now she has a funded Vanguard IRA. Next task is to provide her some investment options which fit within her overall portfolio.
31 Ways to Improve Your Career Today
While I currently work for myself, there was a time when I actually worked for a large corporation. My time there taught me that corporate life wasn’t the career path that I ultimately wanted to walk down, but that didn’t stop me from learning a lot of solid advice from the mentors I met there [...]How Toothpicks Motivated My Family to Save Money
During my quest to pay off the mortgage early, I engaged in a basic visual hardware method that has absolutely nothing to do with computers. I have been committed to paying down the mortgage on our home for several years by adding extra money to the payment each month; however, about 18 months ago [...]There Are Some Foods That Should Never Be Made Generic
Getting my finances in order sucks. It sucks even more when I have idiots teaching me how to do it. Since I am now writing for a personal finance blog, I decided that I should actually try and get my finances in order. Usually I would call my sister and ask her for help in such [...]Financial Benefits of Owning a Dog
After years of struggling to justify the cost of dog ownership, I have compiled a list of chores for my dogs to do that save me money and time. Training was simple, since most duties are derived from their natural instincts. I find myself with more time, more money and less stress. Most dogs would [...]IRS lien release - can you remove IRS lien from credit report?
Water, Water Everywhere! Why You Need Flood Insurance
Mother Nature can give us a lot of free entertainment. There are few things more relaxing than hiking through the woods on a Saturday morning or sitting outside on a Sunday afternoon and watching the sunset. Mother Nature can also wreak havoc on your home and possessions when she decides to dump too [...]Talking About Money Is Inappropriate
Not that long ago it was taboo to speak about money in public. But now, as with so many other things, talking about money has become more acceptable. I hear it all the time. Friends have asked me what kind of debt we have, wanting me to break it down into car payments, credit cards, [...]Frugal Your Way Out of Debt
People have gotten into debt for a variety of reasons. Some is due to their own fault while others aquired the debt from circumstances beyond their control. While it’s important to understand why you got into debt so that you can take the necessary steps so that it doesn’t happen again, the fact is that [...]-
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