Where should I open new Roth IRA accounts

[bedraggled]

Which are the best IRA companies if I use TLT for rebalancing? Shwab? Fidelity? Barrett explained that Fidelity is good for buying units of LTTs. I am thinking of leaving TD Ameritrade behind.

I recently realized I can fund Roth IRAs with some of the proceeds from my home sale. As I have read, holding TLT in a Roth IRA is a good idea for rebalancing. But is their still concern about the structure/exposure of TLT? 24,000 Dollars would be contributed in 2016-17.

If I go with Shwab, I read on this forum about the checking account to use when traveling- convenient in the next year.

Thanks.

[WiseOne]

Putting money in a Roth is good. As long as you've got the earned income to qualify and you aren't over the income limit of course.

If you've got $24,000, I would split it four ways and plan to contribute $6,000 to each asset. $6,000 goes into your favorite cash bucket. $6,000 adds to your current stock holdings. Buy $6,000 worth of gold coins (or a gold ETF if that suits you better). And either add $6,000 to TLT or buy 6 long bonds (adding a bit extra to cover the premium).

I like to accumulate TLT until I get to an amount I've picked as a reasonable "lot" for long bonds. Then I sell and buy the long bonds. Whatever you do is fine. I understand your concern about TLT, and I don't use it as a long-term vehicle for that reason.

As far as what to put into a Roth: there are different schools of thought. I try to have some of each asset in my Roth, including a healthy dose of cash as it can serve as a source of emergency funds. I view my Roth as too valuable to risk the balance dropping by picking one volatile asset to overload it with. I can't predict what any one asset will do. On the other hand, I don't insist on keeping a perfectly balanced PP in there. Some people keep separate PPs in their Roth.

[goodasgold]

IRAs can be a bit messy because, as in my case, they are divided between a number of traditional IRAs and Roth accounts, in addition to taxable holdings. This often occurs due to limited selections in the plans offered by employers. But multiple accounts aren't a serious deterrent to those of us who like to fine-tune portfolios.

Actually I don't think it is a bad idea to divide IRAs between several companies. If one of them somehow goes under (unlikely but still possible), our savings will still be available in other companies.

Owning LTTs directly is preferable to holding TLT, since Blackrock earns money by loaning out its LTTs, held in our name, to companies betting on a drop in interest rates. In the event of serious interest rate hikes (inevitable in my view, but no one knows when it will happen) Blackrock might have a hard time getting our LTTs back.

As to gold, Craig and MT's book offers the best way to proceed. Holding physical gold in an insured safe deposit box is by far the safest method, although some "paper gold" in ETFs is convenient for rebalancing.

Perhaps we can discuss these matters in detail at our Labor Day get-together.

[MachineGhost]

I believe I did find a loophole around the earned money requirement and limitation for retirement accounts. (Its not that you can just earn a token $1 to be able to contribute -- career legislators decided to also limit what you can contribute only to those earnings as well.)

The 529 educational accounts don't appear to require earned income. So they will grow tax deferred. There will be a breakeven point where the 10% penalty for non-educational spending distributions is overcome vs a taxable account. I haven't done the analysis yet.

[MachineGhost]

As to gold, Craig and MT's book offers the best way to proceed. Holding physical gold in an insured safe deposit box is by far the safest method, although some "paper gold" in ETFs is convenient for rebalancing.

This is considered more and more to be "money laundering" nowadays. Just be aware. Cash and cash-like instruments like gold and coins is no longer allowed in safety deposit boxes. Read the fine print. There's no insurance anyway, so its potentially stupid security theatre. Look at what Reub went through... he's damn lucky he didn't lose his gold via theft, oversight or what not.

Best thing to do is just avoid banks for storage. They clearly don't take the job seriously anymore.

[bedraggled]

Thanks, Folks.

MG,
Thanks for the gold coin safe deposit box input. Also, MG, Your new picture is not a close-up.

[MachineGhost]

Thanks, Folks.

MG,
Thanks for the gold coin safe deposit box input. Also, MG, Your new picture is not a close-up.

It is Gene Wilder hugging the Monster.

[dualstow]

Vanguard charges $7 for each trade involving non-Vanguard funds.

I think that depends on level of membership. I pay close to zero for all trades. Not that I have much money in there, but they combine it with my family members' accounts.

[bedraggled]

Looks like I need to check in with Vanguard.

Thanks.

[dualstow]

For what it's worth, there are some things I like better about Fidelity. For example, when bond interest is due to come in over the weekend, Fidelity shows it the Friday before. Vanguard shows it the Monday after, or maybe even Tuesday. In general, dividends and other payments show up promptly in Fidelity.

However, Fidelity charges me about $8 per trade, and when I asked how much money I have to put in there to get free trades, they answered that the $8 is universal. You can't get around it unless you buy Fidelity funds and certain iShares funds.

Vanguard is dirt cheap. While they may have room for improvement in the accounting dept, they get the job done, and they have a wonderful selection of funds. I have everything in there (including a Roth IRA) except for a solo 401(k). There's a reason Vanguard is so popular.

[clacy]

I'm a big fan of Scottrade. Great selection of no-load, commission free mutual funds.

You will pay $7/stock trade, so if you're hell bent on TLT it would cost you once or twice per year.

Scottrade also offers BTTRX for free, which is a nice alternative, IMO.

I would look at Interactive Brokers as well.

[curlew]

I recently realized I can fund Roth IRAs with some of the proceeds from my home sale. As I have read, holding TLT in a Roth IRA is a good idea for rebalancing. But is their still concern about the structure/exposure of TLT? 24,000 Dollars would be contributed in 2016-17.

There must be something about Roth IRA's I don't understand. I thought it had to be earned income and the maximum contribution limits were $6500 per spouse (assuming both over 50). Is there some special provision I don't know about? Is this what they call a backdoor contribution?

(BTW, I used to have our Roth IRA's with Fidelity but when I wanted to buy some Vanguard Funds to put in them and they wanted $75 for the trade I moved them to Vanguard. Everything else is at Fidelity).

[barrett]

I recently realized I can fund Roth IRAs with some of the proceeds from my home sale. As I have read, holding TLT in a Roth IRA is a good idea for rebalancing. But is their still concern about the structure/exposure of TLT? 24,000 Dollars would be contributed in 2016-17.

There must be something about Roth IRA's I don't understand. I thought it had to be earned income and the maximum contribution limits were $6500 per spouse (assuming both over 50). Is there some special provision I don't know about? Is this what they call a backdoor contribution?

(BTW, I used to have our Roth IRA's with Fidelity but when I wanted to buy some Vanguard Funds to put in them and they wanted $75 for the trade I moved them to Vanguard. Everything else is at Fidelity).

curlew, Do a search for Roth 401(k) and Roth Solo 401(k). Not sure of this is what bedraggled is talking about but both have higher contribution limits than a regular Roth. Bedraggled is probably looking at a base contribution of $18,000 plus a $6,000 makeup contribution for being over 50 years old.

Also, FWIW, I've recently run into a headache with my solo 401(k) at TD Ameritrade. Evidently I was supposed to fill out a "restatement" form by 4/30/16 which is something that the IRS apparently requires from brokerages from time to time (I was told every six years). So I've done the restatement form four months late and now have to fill out a couple of IRS forms and pay a penalty. Trying to figure away around this but it's been a big headache so far. If the paperwork is not done, the accounts run the risk of being considered as taxable with back taxes due. A nightmare to say the least. Any other self-employed folks on here who have run into this issue?

As to bedraggled's question, I have been very happy with Fidelity all around. The only reason I didn't open up the aforementioned account with them is that they wouldn't allow it at the time.

[dualstow]

Also, FWIW, I've recently run into a headache with my solo 401(k) at TD Ameritrade. Evidently I was supposed to fill out a "restatement" form by 4/30/16 which is something that the IRS apparently requires from brokerages from time to time (I was told every six years). So I've done the restatement form four months late and now have to fill out a couple of IRS forms and pay a penalty
~Any other self-employed folks on here who have run into this issue?

Never heard of it. I had better look into that, as it's been at least 7 years since I opened mine. I'm not going to fret, though.

[MachineGhost]

There must be something about Roth IRA's I don't understand. I thought it had to be earned income and the maximum contribution limits were $6500 per spouse (assuming both over 50). Is there some special provision I don't know about? Is this what they call a backdoor contribution?

I didn't catch that consciously but it is true, you can't just put in any source of money into retirement accountns, it is limited strictly to EARNINGS. Only exceptions are annuities, life insurance and 529's.

There might be a loophole if you were self-employed and were a real estate investor or something like that for company contributions. But I'm pretty sure you would need the enchilada setup well beforehand.

It amazes me how much of our regulatory system relies completely on voluntary compliance to offer up the actual truth, especially Medicaid and welfare. The enforcement -- if any -- is obviously pathetic but that's to be expected of the government. Does anyone mind if I apply to become an IRS agent?

[barrett]

Also, FWIW, I've recently run into a headache with my solo 401(k) at TD Ameritrade. Evidently I was supposed to fill out a "restatement" form by 4/30/16 which is something that the IRS apparently requires from brokerages from time to time (I was told every six years). So I've done the restatement form four months late and now have to fill out a couple of IRS forms and pay a penalty
~Any other self-employed folks on here who have run into this issue?

Never heard of it. I had better look into that, as it's been at least 7 years since I opened mine. I'm not going to fret, though.

Please do let me know if you come up with anything, dualstow. In my case TD claimed that they had sent me "a number of notices." The first one I got (unless I threw something away by accident) was about ten days ago. But ultimately it looks like the owner of the account is supposed to know the law and be proactive. OTOH, if I just let it go from here and don't contact the IRS about this account, nothing may ever come of it. It can take the IRS years before they ever get around to doing anything about something they have an issue with.

I am fretting (at least a little) because my wife is in the same position with her account. So together we owe something like $1,000 in penalties. The forms that we are supposed to fill out are so devilish that I keep putting it off.

[dualstow]

I remember when Steve warned me about filling out that form for gold ETFs in taxable. I never have.

I did have to pay a penalty once for filing 'married filing separately' which led me to accidentally overfund a Roth IRA. My accountant (at the time) and Fidelity fought over it for a while, and the fact that they didn't agree made me nervous. In the end, the excess went into a Traditional IRA which was created on the fly. All small money, though.

I haven't contributed to my 401(k) for a few years, as my current accountant talked me out of it. (I'll save that for another thread).

Thank you for mentioning all this, though. I wrote to my accountant about restatement and we'll figure it out. That's why I love these forums.

It sucks that (some of) the ultrarich are getting away with murder but that a technicality like this could still cost us honest taxpayers.

[WiseOne]

Wow, barrett, thank you SO much for posting this! Like dualstow, I'd never heard of it either. I fired up an online chat with Fidelity, and got the following information when I asked about their restatement process:

Chat rep: May I ask if you are referring to plan amendments possibly? Oh okay thank you for this information this does. help. This will be called PPA. We periodically update our plans in compliance with IRS regulations and we will send you a notification when the time comes to resubmit the certification form. website: https://www.fidelity.com/retirement-ira ... -amendment

The problem is that I may have missed a notice also, and my reading of the website says that everyone had to do it by this past April 30th because of some obscure law that got passed. I'm trying to find out this info through the online chat now. How Orwellian can you get with "pension protection act"?? Sheesh!

[WiseOne]

Confirmed that it's every 6 years from the date of account opening:

"It will be every six years from the year that the account was opened. You will receive a package in june of the previous year, a follow up letter on February-april of the year that it is required. however you will not need to wait for the package or the follow up, you can always follow that link provide and submit the certification forms."

I'd say this is a good reason to change brokerages. I'm pretty sure that if TDA had sent you a "package" you'd not have missed it.

[barrett]

Confirmed that it's every 6 years from the date of account opening:

"It will be every six years from the year that the account was opened. You will receive a package in june of the previous year, a follow up letter on February-april of the year that it is required. however you will not need to wait for the package or the follow up, you can always follow that link provide and submit the certification forms."

I'd say this is a good reason to change brokerages. I'm pretty sure that if TDA had sent you a "package" you'd not have missed it.

Hmm. Very interesting. Both my wife and I opened our accounts in early 2014 so maybe TDA has in fact messed up. I'll try them again in the morning when they have their IRA people in. Although so far they seem VERY reluctant to admit that there could be any fault on their end. They do have an online message center and I see that we both got notices on 7/7/16 which was already ten weeks after the 4/30/16 deadline. Nothing before that though.

I only opened these 401(k) accounts with TDA (my wife and I both have individual 401(k) as well as individual 401(k) Roth accounts) because Fidelity doesn't allow people to open an individual 401(k) Roth. Strange but true. As I recall Vanguard would have allowed it at the time but only if I pulled another account over to them.

[dualstow]

My brokerage house just informed me that I filled out the necessary form in 2015, whoo hoo!
It's funny. From the way he said he had an answer to my "great question", I guessed what language the sender's name would be. Bullseye.

[bedraggled]

Curlew, et al,

We have salaries this year that, so far. have not been utilized to fund Roth IRAs- too many bills. The home sale proceeds provide flexibility. To use TLT, or some other fund which the great people on this forum suggest, should help with rebalancing.

And yes, I believe also that no salary means no Roth contribution. We agree.

Thanks.

[MachineGhost]

My brokerage house just informed me that I filled out the necessary form in 2015, whoo hoo!
It's funny. From the way he said he had an answer to my "great question", I guessed what language the sender's name would be. Bullseye.

What was it?

[barrett]

My brokerage house just informed me that I filled out the necessary form in 2015, whoo hoo!
It's funny. From the way he said he had an answer to my "great question", I guessed what language the sender's name would be. Bullseye.

What was it?

My guess is Hindi. Second choice would be Tagalog.

[dualstow]

Arabic. However, those are good guesses.