IRA Rollover Question

[bevocbs]

My wife used to do some substitute teaching in a couple different school districts. As a result, she has a little bit of money in 2 separate retirement accounts (probably a little under $1K combined). One of the schools is forcing her to withdraw her money and she wants to get it out of the other school as well. She no longer works or has any income. Based on those facts, a couple questions:
1. Can she open an Rollover IRA to roll the $ into even though she has no income;
2. Is it worth rolling the money over, or should she just take the cash and early withdrawal penalty?
3. If it is worth rolling it over, I'm interested in suggestions of recommneded IRA's
4. I assume she would have to contact the bank/investment company to set up the IRA before she can fill out the papers from her former employer. Do they allow you to set up the account w/o immediately funding?
5. Can she roll both into the same IRA (even if they get rolled over at different times?)
6. If she rolls over to an IRA, is there a time limit before it can then be converted to a Roth (if that makes financial sense)?

Thanks in advance.

 

[busterbrown16]

I am certainly no expert but know enough to be dangerous, so here goes:

1. Yes, you can always open a retirement account even though you have no income. I opened an IRA for my wife, even though she stays at home and I contribute the maximum to it every year.
2. This is really a personal question and it depends on what your retirement and investment goals are. I would always choose to save money and not take any unnecessary tax penalties, so I would chose to roll the money over, but that is just me.
3. I use Fidelity for my IRA and individual investment accounts. But there are several options like Charles Schwab, Vanguard, etc. I believe that most banks even offer IRAs as well. I chose Fidelity because it had the best mutual funds and that is what I chose to invest my money in my IRAs in.
4. Yes, you can set up an IRA without funding it. She should do this first and then contact the former employer to move the money over. It is fairly simple and can be done within a couple days.
5. Yes, you can roll both into the same IRA (we just did this with my wife's former employer's 401k. Interestingly, it does not count against the contribution limit for a given year. So, if you did it this year, you could still invest up to $5,000 in her IRA.
6. You want to open it as a Roth IRA (if she and you qualify). There is no conversion that occurs because you will open it initially as a Roth IRA.

Hope this helps. Let me know if you have any questions or any clarifications.

 

[DCLonghorn]

I just rolled over a 401K from my previous job to a Fidelity IRA account. Can someone recommend a good place to do mutual fund and bonds research?

 

[busterbrown16]

Fidelity has great online tools to research mutual funds, both Fidelity and non-Fidelity. Go to the research tab on the web page and it is pretty easy from there.