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I have really needed to do this IRA rollover.
Procrastinator much? I am. And sometimes on really stupid things.
BUT I FINALLY DID MY IRA ROLLOVER ON THAT BofA TRADITIONAL IRA THAT EARNED ME $50 INTEREST ON A $5000 DEPOSIT IN SEVEN+ YEARS.
I’m a procrastinator. I have no excuses.
Actually I do, but, still, there’s just no excuse for that. So I wanted to let you know why I put it off so long and how easy it actually was.
Moral, don’t be a stupid procrastinator when money is involved. I probably lost about $6,950 I could have made.
Start from the beginning
This was the first traditional IRA that I opened up when my income really started to go up and my accountant suggested I do that to lower my tax burden. She suggested it like the day before taxes were due, and said “GO TO A BANK TOMORROW AND OPEN UP AN IRA.” Cool, sounds good, open an IRA and less taxes.
Well, what I didn’t really understand at the time, as I hadn’t put much thought into investing (I don’t think I was even eligible for 401k yet at my job… that’s probably why I got the panicky call from accountant) was that there would be MUCH better options online. I’m not sure I would have even had the time to do it online, which is why she told me to go to a bank and get it done ASAP.
So I stuck the money there and kind of forgot about it. I don’t think I even inquired about what the interest rate was etc. I had opened CDs before, and I just figured it worked kind of like that. I don’t know that I even thought of it as a retirement savings account, I just knew I needed something to bring my taxes down.
I kind of forgot about it for a while
After that I was eligible for 401k, and, probably making too much money to be eligible for a tIRA. Plus we were saving for a house down payment, I was working a ton, thinking about an out of state move, etc. That $5000 IRA was kind of the last thing on my mind.
When I got my first annual statement I thought it hadn’t made much at all. And that’s what I thought the next year. And the year after that. At some point I’m sure I realized I should look into it and that there had to be something better to do with the money.
A little banking PTSD
In 2014(?) (this is an aside here) I had a TERRIBLE months long, like 7 months if I remember right, issue getting my HSA (more here on HSAs) from an old job rolled over after they moved my plan to a new administrator.
The old plan had cut me a check, after mailing something to my OLD address in another state asking me what I wanted to do with it. Even though I didn’t confirm knowing this or do anything, they STILL cut the check to this address. They did not roll it over for me automatically as you would have guessed. My mail forwarding period had ended, so I never got the notice of closed account OR the check.
I found out when I went to use my HSA card and it didn’t work. What followed was round ands rounds of phone calls, that ultimately involved me getting the Consumer Finance Protection Bureau involved to get my $15,000-20,000 of HSA funds back in my hands.
After this utterly ridiculous fiasco, I think I had had my fill of dealing with banks for a while.
My robo advisor started nagging me
I had already started investing with Betterment when this happened. All my accounts were linked and I was getting messages from time to time suggesting I roll over the account and how much extra money I could make over a lifetime if I did.
So I DID try. And here’s where my next excuse comes in: I thought it would be as simple as a few button clicks like transferring money between online bank accounts. It wasn’t. I assumed that bank did not want to lose my money and wasn’t going to make it easy on me.
Let’s face it. I’m a little lazy sometimes
There were forms to fill out. Things to mail. I printed them out and did nothing with them. And I repeated this process 2 or 3 more times.
The last time that I did not follow through all the way (but intended to), I got confused because the paperwork instructed me to call the bank and have them liquidate my account to make the transfer easier. For this question I contacted Betterment support because I was concerned with the tax implications of this. The paperwork was also confusing because it said the transferring bank would transfer the funds to Betterment on my behalf, so I didn’t understand how I would be involved if I got my account liquidated.
Betterment support assured my I could just fill out the paperwork and send it along and that I didn’t need to do anything involving asking my accounts to be liquidated. I think I was afraid that I had taken too long to do it that time and it was close to the end of the calendar year. I wasn’t sure if there would be any odd tax implications so I put it off again.
I finally signed and mailed a few simple forms to get this IRA rollover done
Finally in a the beginning of May 2018, this year, I filled out the paperwork and actually sent it in. It wasn’t hard at all. Literally like 2 pages. Just as I was beginning to wonder if I should contact one of the companies involved and check if something was going in process, I got that oh so welcome email notification that my transfer was complete. What big sigh of relief to have an item that had been nagging at my to do list for years completed.
Bonus points, Betterment happened to be running a promotion that if you rollover an IRA or 401k you get free management fees on the amount of the roll over for a year. Sweet.
I’ve also been using Personal Capital’s free software and paying better attention to how all my accounts are doing for a couple months. If you’re not signed up with a robo advisor like mine (or even if you are), it’s a free option to keep track of everything in one place and take note of accounts like mine that might be lagging behind. There are investment checkups and retirement check ups that show you where you’re at and where you might be losing tons of money to fees etc. It’s a great tool.
I’m not totally done yet
I actually plan to roll it over to Vanguard eventually. With the way I procrastinate, and the time it will probably take me to get comfortable with Vanguard and how the website works, a year is probably a fair guess as to when I will get around to rolling it over to them.
I probably SHOULD have just rolled the IRA over to Vanguard to begin with, but, I know myself, and I just wanted to get it out of the original bank. I did not want to procrastinate anymore while I was trying to learn the Vanguard platform.
So there it is. One of my most stupid procrastinations finally dealt with. And I want to kick myself because it was so easy!
I shudder to think how well that money would have done over the last seven or so years, but I’m guessing it would have made about $7,000 based on average market returns 2011-2017. It makes me cry inside a little bit. Hopefully this lesson keeps me from procrastinating so much on future financial decisions. Live and learn they say.
Regina is That Frugal Pharmacist. She’s a PharmD, mother to a son with cancer, breadwinning wife, personal finance enthusiast, artist, writer, and entrepreneur. Regina’s single-income household has been debt-free, including her home, since she was 28 years old.
Her money approach is “holistic financial health.” She encourages mindful spending, awareness of the non-monetary costs of choices, and aligning personal values with money habits. Regina sees a frugal lifestyle and mindset as an important part of environmental stewardship. As such she’s interested in ongoing efforts towards self-sufficiency and sustainability.