mcat, yes I used to work in the bank so I know how and what can be done but it’s very frustrating sometimes.
On other topic, I have a small pension but I won’t have access to it until I’m 62. I wonder whether I will remember to file for the pension. I hope I will remember to file it.
Thanks. I was thinking of transferring it to Fidelity or similar one eventually. That is the reason why I started to pull the money into the same IRA saving account because there is no maturity date for a saving account.
If I need to transfer an IRA account from one institution (say, a bank) to a discount broker house like Fidelity, how can I start the process? Should I start with Fidelity or my bank? Or, I will be sent back and forth between them?
The guy at the bank told me today that the government has a rule that we can not transfer too frequently (like more than once every 12 months. But this money has been with this bank for many years; it was just in different IRA accounts because of the maturity of the CD account.) Am I stuck with my bank for the next 12 months if the newly opened IRA account at that bank turns out to be opened successfully? (I was told to go home to monitor my account online after 7 days to see if the account is opened successfully, as if they do not know whether they have opened the account correctly today. Last time I dealt with them on another similar transaction (IRA CD to IRA saving, within the same bank), we received a snail mail from another location of their bank one month later and telling me that I need to fill out another form.
In the past, at one time we had more than half a dozen (small) IRA accounts. It took us a year or even longer to consolidate them into one IRA account.
Thanks again.
@mcat2, the guy at the bank is half right. To my understanding, you can do as many trustee to trustee rollovers per year as you like (ie, you never have the money). If you’re going to use the money for up to 60 days, not a great idea, you can do one rollover per year. AFAIK, there’s no limit to how many distributions you can do over year if you’re over 59.5.
The “once per 12 months” limit is only if the money passes through your hands. It used to be once every 60 days (essentially an interest-free loan to yourself) but some guy messed up by missing the 60 day limit, sued the IRS, and lost, thereby messing it up for everyone else. As part of that case, they decided the limit was really once per 12 consecutive months, among all your accounts together.
For a trustee-to-trustee transfer, where you never touch the money, there is no such limitation. You can do unlimited numbers of transfers.
Open an account at Fidelity or Vanguard, which will be pretty much immediate, and have them initiate the transfers. They will take care of almost everything and help you if there is anything you need to fill out. It’s what they do, and they are good at it.
edit: xposted with IxnayBob, I am a slow typer. 
NRE and IxnayBob are correct. If the check is made out to YOU, you can only do it once a year and if you don’t get it back in an IRA within 60 days, you will pay taxes and penalties for it. If it’s a trustee-to-trustee transfer (moving from bank IRA to Vanguard IRA), you can do it multiple times and it’s not a taxable distribution.
@notrichenough, heck, I was on my iPad, which means that I was doing the police sergeant one finger hunt and peck. If I still beat you … :))
In my own defense, I did type a lot more than you. 
Oh. Okay. Truce
CountingDown, IxnayBob, notrichenough,
Thanks. You have explained this much clearly than the guy in the bank.
After I have learned the thing called trustee-to-trustee transfer, I always use this transfer. I do not want to “touch” the money.
In my whole life, I had the check made out to me. It was likely in 1990 when I left a company.
I remember I deposited in a few days but I could not remember whether I did the right thing if the company deducted 20% and I needed to put in 20% when I deposited the money into a traditional IRA. Do you think they deduct 20% back in 1990? (or maybe even earlier than that. It was so long ago. If I made a mistake back then, I do not think I could file a 1040X to fix it now. Oh…well. At least IRS was not after me in the past 25+ years. I am aware that decades ago, I once paid the taxes twice for the same money I received from the sale of the stock from my company. I have never been audited by IRS for my tax returns.)
Maybe I had no choice at that time. When the 401K amount is too small or the company is too small, they may just cut a check to you and is not willing to do the trustee-to-trustee transfer for you.
Sorry to hijack current discussion, but I think for the Sam’s club Synchrony card, you can download the billing activity to a .qfx format file and import it into Quicken. Not real time automatic update, but at least you don’t have to key it in by hand. On the other hand, as a newbie Quicken user, I haven’t figured out how to download the Vanguard 529 account transactions in the same way it does for other accounts, so Quicken says our education expenses are close to zip…
@Dadof3, good luck with the Vanguard 529 downloads. I’ve been using Quicken for more than a decade, and had accounts at Vanguard for around the same duration. According to our Flagship rep, there are no 529 downloads of any type. Every couple of months I update the quotes manually and adjust the balances if necessary.
Btw, hijack the discussion? This entertaining and informative thread has been all over the map, and nearly always fruitfully so. We’ve had a couple of political tangents, which are a risk, but if you don’t get political, hijack away
A question for the CC retirement experts.
I have a question for some friends of ours. The couple is our age …mid-to-late 50s. H is well-employed, but has no pension. 
I don’t know his exact salary, but I would put it at around $90k-125k. Children grown.
Wife will have a tiny pension from a previous job…she’s not working now and possibly can’t for health reasons. The wife had a growing 401k at one point, but it was in “company stock,” and the amount was wiped out sometime back when the company collapsed. The H doesn’t have a 401k. He does pay into SS.
The H plans to retire in about 12 years…but some health issues could always change that. Also, the desire to get out of their high state tax area sooner may also be attractive.
Their property taxes are high even tho their home is not particularly large. Along with very high property taxes, the H also incurs a lot of transportation expenses.
Their mortgage will be paid off in 4 years. Because of that, they hardly have any mortgage deduction. I think they only had 2k to deduct this last year. Mortgage is about $2k per month.
Loosely, this is their plan…
Once the mortgage is paid off in 4 years, begin saving for retirement, contributing $2k a month.
His work does offer something like a 401k plan (maybe 403b?), and there is some kind of “catch up” allowance after I think the age of 50… He’s been at the company long enough to qualify for catch up as well. Since I don’t know which one is the option, I’ll just call it Plan.
Once the H does retire, they plan on selling their home for around $325k and move to a much cheaper area where they can pay cash for a smaller home and have LOW property taxes. For instance, if they moved to the south, they could easily find a nice 3BR/2Ba home for about $150k and property taxes would be about $500 a year.
We were talking and I was wondering if some other route would be better.
What would be better?
Plan A…
refinance the home loan to a 15 year loan (are there 10 year loans?) to reduce payment to less than half of the current payment. This would allow the family to immediately start contributing to the Plan immediately and begin the catch up. They would be disciplined to do that and not just spend the extra money. Since the deduction would be automatic, it would be easy to follow thru.
Plan B
Pay off the mortgage in 4 years, and then begin contributing to the Plan and doing catch up.
Both plans include selling the home at retirement (it’s in good shape, but will need some sprucing up over the next 10 years while they’re living in it), and moving to a cheaper area. The home is not super pricey…maybe in the $300k range.
(1) Unless the couple has other significant Itemized Deductions in addition to their mortgage interest, they should be taking the MFJ Standard Deduction anyway, which was $12,400 for MFJ in 2014. So, I would not delay paying off the mortgage just to have “deductions.”
(2) By not contributing to the company 401k or 403b, are they leaving employer matches on the table? If so, that’s unfortunate and they should move heaven and earth to contribute enough to at least maximize employer matching. Catchup contributions begin at age 50. If they are not losing out on employer matches, then it is still unfortunate that they are not taking advantage of their 401k to save for retirement while reducing their taxable income.
(3) I would be worried about having all of my retirement dependent on one large asset – the house. The market might be great now, but things can turn, especially as the buying heat in the market right now may be attributable to people rushing to buy because the Fed will raise interest rates soon (albeit not really much higher initially than the current historically low rates of today).
The “catch-up” provisions are based on your age, not how long you’ve been at the company. So he can do them at any time. But they don’t kick in until you’ve already contributed $18K for the year.
There are no refinancing options that will free up $2k/month if their mortgage is already at $2K/month. I’m guessing, based on having 4 years left on their mortgage, the balance is around $90-100K. Refinancing to a 15 year will free up around $1300 per month, a ten year around $1000 per month. They will need to tighten their belts and find a way to come up with the extra out of their current income.
I suspect whether plan A or plan B comes out ahead will depend on your assumptions of investment return.
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By not contributing to the company 401k or 403b, are they leaving employer matches on the table? If so, that’s unfortunate and they should move heaven and earth to contribute enough to at least maximize employer matching. Catchup contributions begin at age 50
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Yes! That is my concern…plus the delay of the “catch up” …which he is eligible for (he’s 57/58).
I agree with the “move heaven and earth” but it appears that their budget is too tight right now.
I wasn’t thinking that there was a “need” to just create deductions.
I was just thinking that if they cut their payment in half, that would free up $1000+ a month to contribute to 403b and Catchup. The only reason I mentioned the part about deductions is that it wouldn’t be a totally bad thing for them to extend their mortgage repayment because then they would have more to deduct. Right now, they only have $2000 a year. I haven’t “done the math” to see which way they would come out ahead.
I’m skeptical about this. Almost any budget can have something squeezed out of it.
Switching to a 15 year mortgage would increase their interest paid per year by only $500 or so. There’s really no tax savings to be had there to speak of.
Do they have any other savings they could use to accelerate paying off the mortgage?
You said “she’s not working now and possibly can’t for health reasons”, is this firm? Even a part time job at minimum wage would bring in a couple hundred a week which could go towards retirement.
Some raw numbers to think about:
If they refi to a 10 year mortgage, freeing up $1000 per month, they could put about $1400 per month into the retirement plan, due to tax savings. For 10 years, this is $168K in contributions. If they can deduct the mortgage interest, that’s $17K total over the 10 years in deductions, which gives them another $5K to play with. Pre-tax, call it $7K, for a total of $175K.
If they pay off the mortgage in 4 years and then put in $2000/month, after 6 years they would have contributed $144K. It would also free up $800/month in tax savings, which if they invested would give them another $57K in money added to an after-tax investment account, giving them total contributions of $201K. And they could do the IRA Roth conversion trick to get most of that $57K into a Roth.
The first plan would give them a $67K head start over the second plan. Are the returns on that enough to make this plan better? Maybe. But this plan is also substantially riskier. What if he loses his job in a few years? Having that mortgage hanging over them could cost them their house, or force them to prematurely start collecting SS.
I think refinance is a bad idea, especially when there’s only 4 years left.
As far as the refi, I think it depends a lot upon their interest rate. Do you know what they are paying? If they have a 5% loan and they could refi into a 3% no closing cost loan (thought that’s probably hopeful), it could be worth it. I can’t believe they aren’t saving something for retirement, that’s pretty bad, at their age.
Notrichenough has some good ideas there, depending upon the cost. However, if depends if they would actually save money and invest it well, or just spend the extra. Hard to believe the wife couldn’t get some sort of work, unless she is completely bedridden, and even if she is, there could be things she could do to earn money online.
I have not had a lot of coffee yet this morning, but some thoughts.
I’m biased, but I see this family headed to an unsatisfactory retirement. They can barely get by on $90-$125k. How are they going to live on only SS, which they’ll probably have to take early based on need? Even if they have $200k from the home swap, that can’t be relied on for more than $500 or so per month.
Bus, it’s true but the last 4 years, one pays very little in interest, mostly principal payment.