Roth IRA paid, but not invested

[sisterinhk]

I have a Roth Ira with Wachovia. I've had my Roth with Wachovia for 5 years. My 2009 contribution hasn't been 'invested'. I just made my 2010 investment.


I've been giving them 5000 a year in one lump sum (usually for the previous tax year right before tax time). Now, my adviser is saying that (last year, at least) my money isn't invested. I'm scheduled to talk to them next week. But I don't understand what that means. Help?? What sort of questions do I need to be asking? I'm 35, this isn't my only retirement plan but surely a good chunk of it.

Second question, I'm thinking of just leaving Wachovia and jumping to Vangaurd or Fidelity. What are the cost implications of this? Is it worth it?

I've had my Roth with Wachovia for 5 years. My 2009 contribution hasn't been 'invested'. I just made my 2010 investment.

EDIT: Wachovia is Wells Fargo now.

[midjd]

I made the same mistake in 2010 (but with Schwab) - the money was sitting in my "money market" account, rather than any index fund or stock. It took me a few weeks to figure out why my balance wasn't increasing with the market! If you have an adviser, and he didn't tip you off to this for almost 2 years, you may want to consider switching firms. This is something you should have been made aware of, particularly if you're paying them to handle your investments.

Our Roths are with Schwab, and we have our EF with Vanguard - both have very low fees/transaction costs, and are pretty user-friendly. I don't have personal experience with Fidelity, but I'm sure other posters do. You may have to pay a percentage of your current investments to "cash out" of Wachovia, but the savings after switching to one of the low-fee brokers will more than make up for it.

Also check out some of the books mentioned in Robbase's thread - there are some good ones on the basics of investing that have really helped me (The Four Pillars of Investing is my favorite). I was (probably still am) a "newbie" investor, but I'm 100x more educated than I was before I started reading these boards!

[phil5185]

I'm thinking of just leaving Wachovia and jumping to Vanguard or Fidelity. What are the cost implications of this? Is it worth it?

That would be my choice. No costs or taxes, just a lateral move. (This happened to before the days of on-line trading, a broker left my cash in a sweep account and responded "someone has to direct me to invest it". I moved it.

[Deleted]

This happened to me as well. I was sending my IRA in monthly, and I kept seeing my "cash reserve" increase. I asked once, but the advisor said I was confused. After a couple more months, I finally asked if he would prefer I just contribute once a year since I was getting no interest on the $$$ and would at least get a minimum at a place like ING.

It turned out that he had to initiate an investment each month, which he was failing to do. The company (I forget whether it was AmSouth or ML since he worked both places) waived the yearly maintenance fee when I brought it to his attention.

[Deleted]

Lol, TT, and I agree. But it was explained to me that they couldn't legally credit me the interest I might have earned because it was an IRA. So this was the only way of reimbursing me.

No idea if it was true or not. I'm at Vanguard now, and I am happy. It was honestly too much stress being at ML. I will never forget the day that his assistant accidentally liquidated my entire portfolio . . . right in the middle of the meltdown. It could be undone (and was), but I HATED being put in the position of having to second-guess my decision to hold on.

Yes, I PAID this guy to handle my IRAs. Imagine.

[Deleted]

Apr 2, 2011 18:37:02 GMT -5 @southernsusana said:

Lol, TT, and I agree. But it was explained to me that they couldn't legally credit me the interest I might have earned because it was an IRA. So this was the only way of reimbursing me.

No idea if it was true or not. I'm at Vanguard now, and I am happy. It was honestly too much stress being at ML. I will never forget the day that his assistant accidentally liquidated my entire portfolio . . . right in the middle of the meltdown. It could be undone (and was), but I HATED being put in the position of having to second-guess my decision to hold on.

Yes, I PAID this guy to handle my IRAs. Imagine.

Wow, that is incredible!!!
Good thing you switch to vanguard

[sisterinhk]

Thanks for the advice! I'll be talking to Wachovia on Tuesday. I pretty sure I'll be moving it as I've just done the research to set up a Roth for a family member. There's no need to take the time to re-educate myself since when my family took me to Wachovia 5 years ago.

Question, Since it's April 3rd and I'm looking at investing my 2010 contribution AND changing my provider.....Is it better to invest at Wachovia, then change or do you think the transaction could be completed at Vanguard by April 18th-Change of providers and 2010 investment in 14 days. (April 18th is tax day this year).

I could get this on Monday but I don't know the processing time.

Thoughts?

Thanks again.

[Deleted]

If you invest at Wachovia, they will put it in a load fund. That's how banks work and how their reps. get compensated. You can do a transfer-in-kind so you don't have to cash it out days after you paid the load, but you will still have paid it.

I'd go ahead and set the account up at Vanguard using the 2010 Roth money. Then transfer the rest from Wachovia at your leisure. A Vanguard rep will work with you. You aren't entirely left on your own there; they are very helpful when you have questions.

[The J]

Apr 3, 2011 7:51:13 GMT -5 @sisterinhk said:

Thanks for the advice! I'll be talking to Wachovia on Tuesday. I pretty sure I'll be moving it as I've just done the research to set up a Roth for a family member. There's no need to take the time to re-educate myself since when my family took me to Wachovia 5 years ago.

Question, Since it's April 3rd and I'm looking at investing my 2010 contribution AND changing my provider.....Is it better to invest at Wachovia, then change or do you think the transaction could be completed at Vanguard by April 18th-Change of providers and 2010 investment in 14 days. (April 18th is tax day this year).

I could get this on Monday but I don't know the processing time.

Thoughts?

Thanks again.

Make the contribution to Wachovia. No need to risk missing the window. Also, I'd just note that there may be a fee involved with moving the account -- it depends on Wachovia -- but it's likely to be small (I know that if I moved mine from Sharebuilder it would be like $50) and it's not paid from the balance.

[commentator]

J, the OP can invest in a new Roth set up just about anywhere and not miss the window. If Wachovia is not providing acceptable service, then the OP shouldn't give them any more money to play with.

Most IRA custodians will happily take your money, even for a new account, up to the close of business on April 18th and give you credit for a 2010 contribution.

[The J]

Apr 4, 2011 8:50:39 GMT -5 @commentator said:

J, the OP can invest in a new Roth set up just about anywhere and not miss the window. If Wachovia is not providing acceptable service, then the OP shouldn't give them any more money to play with.

Most IRA custodians will happily take your money, even for a new account, up to the close of business on April 18th and give you credit for a 2010 contribution.

I agree, but I'm saying that it's just easier to make the contribution, let it sit in a money market account for the week or so it takes to complete the transfer and not have to worry about adding extra steps to the process.