How Can I "rescue" My Inherited Ira From A Greedy Brokerage House?
I have just discovered that I am being charged very high fees on my inherited IRA (all in mutual funds – C share-types for the most part). I’m looking to get out of my current brokerage house (because they offer only C-share or A-share mutual funds, no no-load funds…. rip off! I’m paying maximum 12b-1 fees on practically all the funds, my investment advisor is making his 1% on my holdings no matter what the market does!). I don’t want to cash out the mutual funds, I just want to trade them for no-load, low expense ratio funds via another broker (probably Schwab or Fidelity).
I’ve been told that Schwab cannot handle most C-share-type funds (they don’t approve of them as a financial vehicle), and Fidelity may not be able to accept some of my funds in a transfer either.
What is the best strategy to rescue this inherited IRA from the clutches of my current brokerage house?
If your inherited funds are still in an IRA, under your name, you should have no problem transferring the value to any no load family like Vanguard (that is not only no-load, but also has the lowest management fees). That money can then be easily transferred to any mutual fund in Vanguards’ mutual fund IRA umbrella.
If your inherited IRA is not after tax money because it was moved to an after tax account, you can still transfer the original value (the value of your mutual funds at the time you received them-legally) to anywhere your want without worrying about the tax man.
In my view, investment houses that push C shares should be in jail. The same thing is true with variable annuities.
I understand your concerns and feel your pain and have marked your questions as interesting
Schwab and Fidelity can’t handle the funds your ira is currently invested in but they can handle the direct transfer of the money to no-load funds that they do normally handle. There is no need nor reason to keep your ira money in a loaded C share. Just tell Schwab or Fidelity you have an IRA with X Broker and want to transfer your money from their Y funds to your (Schwab’s or Fidelity’s) Z funds.
Maybe TDAmeritrade or Scottrade will process a transfer of your IRA. If not, could you convert the mutual funds into a money market fund in your IRA, without cashing out the IRA?
You can arrange a transfer of the IRA to Schwab and they can then sell and reinvest as you wish.
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