I ran into a comment lately, I guess on the M* discussion board. Someone was advising someone else not to mix "new" money with the money that is already contained in an old 401k or 403b and rolled-over to become a "Rollover" IRA.... Um, how come? I think one advantage that was mentioned was just the PROSPECT of needing to file for bankruptcy. Things would be simpler if no NEW money were deposited beforehand into the Rollover????
.......Anything else that might be good to know? Because I've HAD a 403b, but its been transmogrified into a TRP Rollover IRA now. I should just watch and let it---hopefully--- grow on its own, without additional deposits? Thanks for your responses.
Comments
I recently did a 403b IRA to self direct IRA rollover at TRP. I wanted to keep my fund positions rather sell them...go to cash...convert...and repurchase same shares. I was instructed to complete the transfer "in kind". This kept all my fund positions intact and the rollover was just a matter of recoding the account as a self directed IRA. This could be important if you no longer meet the fund minimums or if the fund is closed.
On a separate but related topic, when one does a Roth conversion there is a strategy where separate Roth conversion accounts can be established which hold small amounts of money (say $3-5K) in unique investments ideas such as: sector funds, concentrated bond fund or whatever you think will out perform in the short term. I mention "in the short term" because Roth conversion have the unique feature of re-characterization...by the middle of October in the year you convert.
This let you look at the performance of that distinct (investment) and decide whether to maintain it as a Roth conversion (pay taxes) or re-characterize the account back to a Self Directed IRA status and continue deferring taxes. A candidate for conversion would be the account that outperformed...the candidate for re-characterization would be the fund that under performed.
By using small individual roth conversion accounts you can convert outperforming investments and re-characterize under performing assets because they reside in distinct individual accounts.
Other than that, Rollover IRA is just a Traditional IRA with a different label. From IRS point of view they are all one IRA (irrespective of how many accounts the IRA is distributed over).