Merging SEP and Rollover IRA Funds with Traditional IRA

May 4, 2006 By Jonathan Ping 6 Comments
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I love Vanguard, but it seems all their funds require $3,000 to open, except for the STAR fund, which really doesn’t interest me. Unfortunately, I could only contribute $2,500 to my SEP-IRA for 2005. Arrgh. The good thing is that, if you have a regular Traditional IRA with them, you can simply have them transfer the funds from your SEP-IRA or Rollover IRA into your Traditional IRA. There are no tax consequences and it doesn’t affect your IRA contribution limits. That way, you have a bigger chunk of money that is easier to work with, and can help you avoid low-balance fees and minimum balance requirements.

Now, instead of having three IRAs ($8.7k Traditional, $16k 401k Rollover, and $2.5k SEP), I just have one with $27k that is invested as I like. I don’t know if I’ll do a SEP-IRA again this year, I just didn’t have the option before of an individual 401ks since I had to open one up by the end of the year. I wish these financial companies would step it up and start offering Roth Individual 401ks already!

Filed Under: Retirement
Last updated: February 9, 2017
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Comments

  1. j says
    May 5, 2006 at 8:12 am

    I think that you can avoid the $3000 minimum at Vanguard if you use their automatic assest builder option. This requires $50 a month automatic deduction. I am not sure this is possible for retirement accounts but I think it is for other accounts. I know this is the case for T Rowe Price.

    Reply
  2. Jonathan says
    May 5, 2006 at 10:05 am

    j – I’m pretty sure Vanguard does not offer this, although you are right that other places do.

    Reply
  3. nick says
    May 5, 2006 at 10:18 am

    Correct me if I am wrong, but I remember that if you mix up your rollover IRA with funds from other sources, you lose the opportunity to later roll it over back to an employer’s 401K plan.

    Reply
  4. Jonathan says
    May 5, 2006 at 10:23 am

    nick – You are correct. However, I don’t see why someone would want to put their money into a more restrictive 401k plan, unless there is something special available to that plan that’s not available in an IRA.

    Reply
  5. Corey says
    May 5, 2006 at 9:26 pm

    T.Rowe Price has nice funds and i think the min on each fund is a lot lower than vanguard and even fidelity!

    Reply
  6. tpdo says
    May 10, 2006 at 9:57 pm

    If you are mixing pretax IRA contribution (401K) into after tax IRA contribution (traditional IRA), you will have to keep track of the after tax $ when you get your distribution down the road.

    Reply

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