Rollover IRA Full Service Broker Vs. Online Broker
If you are leaving your job, one of the most important things you need to consider is your retirement plan. In order to retain the tax advantages and avoid penalties, you need to roll the money in your 401k or 403b over into an IRA. You can choose either a full service broker or an online discount broker to handle your rollover, and each choice has its advantages and disadvantages.
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Investment Advice
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If you open an account with a full service broker, you receive investment advice and guidance in addition to the ability to buy and sell stocks. If this investment advice is important to you, moving your IRA rollover to a full service firm makes a lot of sense. If you prefer to do your own research and choose your own stocks, you can save a lot of money by using an online discount broker for your IRA rollover.
Maintenance Fees
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Before you open your rollover IRA at any full service or online discount brokerage firm, you should ask about any setup and ongoing maintenance fees that may apply. Some brokers, both traditional brick and mortar firms and online discount firms, charge a quarterly or an annual maintenance fee to manage rollover IRA accounts. If you bring an account with a high balance, that maintenance fee could be waived, but it is still important to get a full fee disclosure before moving your rollover money to the firm.
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Ease of Trading
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Placing a trade with a full service broker is as easy as picking up the phone and connecting to a trader. If you choose an online discount broker instead, you will have a number of trading options, including online trades, telephone trades and broker assisted trades. You might find, however, that the charges for broker assisted trading and even telephone trading are higher than those for online trading. Before you open your rollover IRA with an online broker, it is important to review the commission schedule carefully.
Investment Costs
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If investment costs and brokerage commissions are your primary considerations, it is probably best to open your rollover IRA with an online discount broker instead of a full service firm. If you choose an online discount broker, you can buy and sell stocks for less than $10 per trade, much less than full service brokers charge. In addition, any online discount brokers allow their clients to buy and sell mutual funds and exchange-traded funds without any commission at all. Over the long run, these low fees can save you a lot of money and leave you with more funds to invest.
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