FINRA Issues Investor Alert on IRA Rollovers

The Financial Industry Regulatory Authority has put out an alert to help investors figure out whether an IRA rollover is the right choice. Gerri Walsh, the self-regulatory organization’s senior VP for Investor Education said that comparing investment choices and costs can prevent “unnecessary cracks” to one’s “nest egg.”

FINRA offers 10 tips when deciding about an IRA Rollover:

• Assess your transfer options: do you keep in an ex-employer’s plan, move assets to a new employer’s plan, roll over plan assets into an IRA, or cash out your balance?

• Consider carefully before opting for an indirect rollover, which come with tax ramifications.

• Be aware of conflicts of interest. Is your financial professional recommending an IRA rollover because he/she will earn a commission?

• Watch out for “No Fee” or “Free” claims: There may be other costs even if not to the IRA rollover, such as administration and account management fees. Make sure you know what is involved.

• Make sure you do look at the different investment options available to you so you can choose the best one for you.

• Make sure to ask your financial/tax professional questions. Don’t be embarrassed if you don’t know or understand something. It is their job to make sure you know what is going on. If you don’t understand the investment, don’t buy it.

• Consider minimizing taxes by rolling assets from a traditional plan to a traditional IRA or a Roth plan to a Roth IRA.

• Know what the fees and expenses are, including sales loads, commissions, investment advisory fees, customer service access fees, etc.

• Look at whether there are tax implications for company stock that is appreciated.

• Know that your age makes a difference. If you leave a job after age 55 but before age 59 ½, you may be able to take penalty-free withdrawals from a plan that is sponsored by an employer. This is not an option until age 59 ½ for withdrawals from an IRA.

Shepherd Smith Edwards and Kantas, LTD LLP is a securities fraud law firm that has helped thousands of customers recoup their losses. Contact one of our FINRA arbitration attorneys today.

Finra cautions investors to be careful with IRA rollovers, notes that adviser fees can hurt returns, Investment News, January 23, 2014

The IRA Rollover: 10 Tips to Making a Sound Decision, FINRA

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