I was told I would need to liquidate my IRA with Principal and then invest the money with Schwab. I thought liquidating an IRA into cash and then putting it in another IRA would incur a tax or other penalty, if it doesn't, then I don't mind. There are a couple of different possible scenarios here, so just to make sure there's no confusion: If you simply sell the funds within your IRA (but the cash still sits in your IRA) and then transfer that IRA directly to another broker, there are no taxes or penalties. You have to be very particular that this is properly registered/reported, and not to keep a single Pennie to your pocket, as THEN IRA will nab you.
The Schwab agent who called me about this (and who I was talking to on the phone) told me there would be no tax penalty (although he said there could be a fee from Principal). I am liquidating an IRA into cash basically, right? I don't understand why it is I can't do what I want with my own money. If your new firm doesn't have an agreement on file for each of your funds they can not hold it. If you CASH OUT THE IRA ITSELF--which is different than the above in that you're taking your money OUT of the IRA--you have 60 days to move that money into a new IRA with another broker. Basically, you sell all your assets with company A, and transfer them, as re-investment, to company B. You will lose whatever brokerage fees they charge you and whatever losses you may incur from normal market volatility at the time of sale.
Blame it on the stampede to passively managed products such as exchange-traded funds and away from traditional actively managed funds.
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I am trying to transfer my IRA from Principal to Schwab and I was told because of some contract the two companies have, I can't.
Are there any advantages or disadvantages to doing one or the other, or does it really not matter?
@imsoconfused that is good advice but it doesn't answer the question - I'm going to go to safer investments either way.
The shocking collapse of the Third Avenue Focused Credit Fund ("TFCVX") highlighted the panic that can take over in times of falling asset prices.Market watchers tend to look closely at these numbers to determine the bullish or bearish feeling in the marketplace.Given the volatility in the equity, commodity and junk bond markets thus far in 2016, investors are repositioning their portfolios for both safety and growth going forward.By the way, this Principal account (if it matters) was an old 401k that I converted to an IRA after I left the company I was with that offered the 401k. There are no tax related issues however because you don't pay cap gains or write off the losses in your ira. If you don't do it within that time frame, then yes, there will be taxes and early withdrawal penalties. In the lingo of the mutual fund type firms like Schwab, Fidelity, Vanguard etc they say "liquidate" to main LITERALLY "make the assets CASH".Most firms do charge a termination and or transfer fee when you leave and those can range from 50.00 to 100.00 each The "Money" may be in Principal only Mutual Funds or 401K only Class of a Mutual Fund, that can not be transferred. This is the STANDARD way to deal with these sorts of transfers unless the firms have reciporcity of accounts OR you have shares held "in street" so that they are transferable.