Where can I put my Annuity?

[wookielovin]

I have an employer contributed annuity from my previous employer that is managed by Prudential. I have not worked for the company in over a year, so there are no new contributions coming in. I now have a 401K with my new employer, also through Prudential, that I am contributing to in order to take advantage of the company's match.

I would like to have a little more freedom to invest my money in ways that I see fit, and I can only choose from a handful of funds through Prudential. I don't really want to roll it into my new Roth IRA with Prudential for that reason - not a lot of options, just a handful of funds.

What options do I have here? I would like to have more control of my money, and I want to roll it into the appropriate vehicle.

 

Thanks!

[Kevin20]

I have an employer contributed annuity from my previous employer that is managed by Prudential. I have not worked for the company in over a year, so there are no new contributions coming in. I now have a 401K with my new employer, also through Prudential, that I am contributing to in order to take advantage of the company's match.

I would like to have a little more freedom to invest my money in ways that I see fit, and I can only choose from a handful of funds through Prudential. I don't really want to roll it into my new Roth IRA with Prudential for that reason - not a lot of options, just a handful of funds.

What options do I have here? I would like to have more control of my money, and I want to roll it into the appropriate vehicle.

 

Thanks!

 

 

Is that annuity actually a 401k? Or 403b? Or 457? If its not one of those, I'm not understanding what it is -- but I have seen 401k's that are built on an annuity, and 403b's are usually annuities, and 457 plans are often or always annuities (I'm a little rusty on this stuff).

 

In any case, if it's one of these "qualified" plans (meaning, the money you put into it is pre-tax or employer-contributed, it grows tax-deferred, and you are taxed on it at the end when you withdraw) -- then you can roll it into either your current 401K or a traditional IRA. NOT directly into a Roth IRA, which has different tax treatment.

 

Generally it's a nice idea to have a traditional IRA at a discount broker or mutual fund company, as a bucket into which you roll qualified retirement savings from previous jobs, as you progress through life and switch jobs. That way, you have plenty of discretion and choices for investing; and you don;t end up with a scattered collection of retirement plans still with a bunch of former employers you have to keep up with. I prefer using discount brokers.

[wookielovin]

Thanks for the reply, Kevin.

 

Yes, I believe that it is a 401K I have through the United Brotherhood of Carpenters. A set dollar amount per every hour of work goes into the account, paid by the employer. I do not have the ability to add to it, only the employer. Yes, it is tax deferred.

 

I actually have an account at OptionsHouse that I set up to tinker around with some stocks. I chose OptionsHouse because they had the cheapest commissions I could find, but I'm having second thoughts with them now. I want a broker that offers the ability to purchase fractions of stocks, and they don't offer that.

 

So, I could roll it into my IRA at OptionsHouse (or rather a new account with a more favorable broker)? Are there any penalties or fees to pay? I thought I read in my googling efforts about some kind of fees that they would marigolds for rolling your account over if the account was too young. My account is about 8 years old, I believe.

 

Do you have any brokers that you personally recommend?

[Kevin20]

Thanks for the reply, Kevin.

 

Yes, I believe that it is a 401K I have through the United Brotherhood of Carpenters. A set dollar amount per every hour of work goes into the account, paid by the employer. I do not have the ability to add to it, only the employer. Yes, it is tax deferred.

 

I actually have an account at OptionsHouse that I set up to tinker around with some stocks. I chose OptionsHouse because they had the cheapest commissions I could find, but I'm having second thoughts with them now. I want a broker that offers the ability to purchase fractions of stocks, and they don't offer that.

 

So, I could roll it into my IRA at OptionsHouse (or rather a new account with a more favorable broker)? Are there any penalties or fees to pay? I thought I read in my googling efforts about some kind of fees that they would marigolds for rolling your account over if the account was too young. My account is about 8 years old, I believe.

 

Do you have any brokers that you personally recommend?

 

If you haven't been able to contribute yourself, I'm thinking it's not a 401k. But, it can probably be rolled into a traditional IRA regardless, as long as its a tax-deferred and tax-deductible / pre-tax / employer contribution account.

 

In fact, there's one way to know, and that's to do the paperwork drill for a rollover and see what happens. If it's not transferable, you'll find that out. You can open up a new account and fund it with a rollover. If the rollover never appears, the broker would likely close the account after 90 days or something like that for lack of funding. But, that's no big deal.

 

I for one would not bother with buying fractional shares. The only place I know of to do that is ShareBuilder. I actually have a small account there but I've regretted it, because it's deceptively VERY expensive to buy with any kind of diversification.

 

I prefer discount brokers with low commissions. Good ones I've used are Schwab, Scottrade, and TD Ameritrade. Schwab is my favorite, as just the most user friendly and nicest website.

 

You can't buy fractional shares, but you can buy however few shares you want. It's not like the old days when they always wanted you to buy 100 share round lots. Unless maybe you're wanting a very expensive stock like Apple, it shouldn't matter. And you can buy lots of mutual funds also.

 

There may be a fee to pay to close the current account, but it depends entirely on the firm who has it. Also, annuities often have an exit fee that decreases over time and often goes away -- but again it depends entirely on the particular company policy, so there's nothing I can say generally about that.

 

So what you'd want to do is apply for a traditional IRA at a discount broker (my preference) or a mutual fund family. Check their website or call them about documents for an IRA rollover. There'd be some form to fill out, and the exact procedure varies. But, the new broker wants your money, so they'd tend to be helpful.