See Jane Get Rich

Spring 2010 Financial Goals

2. Roll over 401(k) from my holiday job to a Roth or transfer it to my brokerage

One of my Spring financial goals included rolling over the 401(k) I contributed to during my holiday job this past Christmas break.  I contributed 50% of my paycheck which was a grand whopping total of $527.00!   I was planning to do a direct rollover but since I was no longer an employee and my funds were less than $1k the Big Box Retailer, my former employer, closed out my 401(k) and cut me the check in February.  

Since the check was in my name, I could no longer do a  direct roll over and opted to do an indirect roll over.  This constituted of me opening a traditional IRA account with my broker/dealer and depositing the check with them within 60 days.  So, I opened an account on Friday and this morning I went over and deposited  my whopping $527 in the IRA.  The IRA had a minimum of $500 and I was so glad to have had enough to meet the minimum and continue to put that money towards retirement.  Although it is a very tiny amount, I am sure my $527 will grow mighty in 30+ years!

Financial Goals for Spring 2010

1. Make my 2010 Roth IRA Contribution
2. Roll over 401(k) from my holiday job to a Roth or transfer it to my brokerage
3. Find more affordable car insurance before February 11
4. Obtain a credit report from one of the three agencies
5. Budget/Keep track of my expenses
6. Diversify my investments

Today I visited Scottrade and wrote them a big fat check for $5k for my 2010 Roth IRA contribution.  I like to make my contribution at the very beginning of the year so it can grow the entire year.   

Attempt at Minimizing Trading Fee Damages to Roth Contribution

When I first opened up a Roth IRA I was disheartened by the fees that I got charged everytime I bought something (usually $7).  This is not a huge figure but for my first contribution I made  6 trades so its $7 x 6 trades = $48.00.  That is a lot of money and if you do the math that $48 can grow to $483  in 3o years at 8% and that is a whole lot of money that is basically leaking out of my maximum $5k contribution.  Not cool at all.  I called up Scottrade one day and asked if there was any way the transaction fees could come out of another account so that my $5k contribution would really be a $5k contribution rather than $ 4952 contribution.  The answer was no.  I also wanted to buy some securities that I thought were good buys and I would want to eventually put them in a Roth IRA when I could contribute again next year. 

The employee suggested I open an individual investment account with Scottrade and then transfer the funds when it was time to make my Roth IRA contribution.  I opened an individual account and invested some money.  A few days ago I called Scottrade about how I could transfer my funds in the individual account to the Roth account.  I was told that there was no way I could just transfer those funds since the individual account is taxed and the Roth isn’t taxed.  To use the money in my individual investment account I would have to sell the securities, pay taxes when its time to do so, and transfer the cash to my Roth and then buy the funds again.  So, instead of me spending just $7 to buy a security in my Roth account now I would have to pay three transaction fees.  First $7 charge to buy the stocks for my individual account, $7 to sell them, then transfer the cash to Roth, then $7 to buy the stocks again.  Perfect, instead of $7 it suddenly becomes $21 for the transaction.  I wish I knew who the idiot at Scottrade who advised me to open an individual investment account.   I’ve had basically good experiences with Scottrade so I am not holding it against them.  And now that I think about it, it makes sense that I can’t transfer assets in a taxable account to a non-taxable accountable as simply as I envisioned.  So, I decided to leave my individual account alone to be dealt with another day and wrote the check.

 Tiny Problem with the Roth Contribution

You can only contribute money that you earn to the Roth.  So, in order to contribute $5k in 2010 I need to earn at least $5k in 2010.  There is a tiny problem in that I haven’t earned any money in 2010 and I will likely not earn any money anytime soon because I will be in school until May and then I will be doing bar stuff until the end of July.   So, instead of going on a trip to celebrate graduation I may need to get a job, any job, to get at least $5k in earnings so that I don’t have to withdraw the $5k contribution I just made. 

How do you keep transaction fees from whittling down your actual contribution?  Have you made your 2010 Roth Contribution? 

Pudding Index

The Pudding Index is a nifty little tool that you can use as a benchmark to see how you are progressing in your retirement planning.  You put in your information and they compare that information against an index derived from a benchmark account.  The goal of the benchmark account is to produce 55% of your final retirement income(60% for males).   If you score above a 100 points then it means you are ahead of the curve and if you score under then you are behind and need some serious fine tunining.  

I scored 106 out of 100.  How thick is your pudding? Read the rest of this entry »

See Jane Get Rich

I am a voracious reader of personal finance blogs.  I especially enjoy reading “open-wallet” personal finance blogs.  These include MyOpenWallet.net (written by a NY based blogger) and BostanGals.com.  I like reading these personal finance blogs because they give you a complete picture of their personal finances including their spending, investing and networth. 

I am a law student based in Washington, DC.

I hope to share my personal finance journey now until my retirement in 2050.