I need feedback advice about a Washington Mutual IRA…?

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In the late-1980s, I worked for an independent self-service gas station and the owner had given me an Independent Retirement Account (I don’t remember if it was a bonus or if it was an employer-match), but when I left, the account remained open (thru American Savings&Loan) and several months later, I found out that they were bought by Washington Mutual (and to this day, the account is still open).

I have a financial investor with my current bank and have another IRA from my last employer and he has distributed the funding into 3 separate accounts (Small Cap, Balanced Fund, and Cash Management) and when I mentioned that I had the account with Washington Mutual, he said that it was FDIC-insured and not to worry about it and to leave it alone, even though I have the IRA with his bank.

Is there any advantage to leaving my account open at Washington Mutual, given all the problems they had with IndyMac and FreddieMac and FannieMac? I know that the MACs have to do with mortgages and that my IRA is something entirely different.

Can anyone give me feedback about my IRA with Washington Mutual?
I just turned 45 and I understand that there is a penalty of some sort to withdraw any or all of the IRA before I turn 59½.

3 Comments
  1. Reply
    Aliz
    February 10, 2011 at 2:53 pm

    I have an IRA with Bankers Life. And I have been given the same advice as you have been given. So, I would leave it where it is now.
    And yes there is a penalty if you take the money before 59 1/2 without rolling it over into another IRA account. I am not sure what it is but I think it is at least 10%.

  2. Reply
    jlf
    February 10, 2011 at 3:27 pm

    Employers don’t give you IRAs – you give yourself an IRA. Are you talking about a 401(k) account?

  3. Reply
    Net Advisor
    February 10, 2011 at 4:23 pm

    Few things:

    1. If you have an IRA or any account with Washington Mutual it is now owned and called Chase Bank.
    http://www.usnews.com/blogs/planning-to-retire/2008/09/26/how-the-washington-mutual-takeover-will-affect-consumers.html

    2. IRAs or any retirement account are NOT FDIC insured or guaranteed by any bank or government or government agency.
    http://www.fdic.gov/consumers/consumer/information/fdiciorn.html

    3. If you have FDIC insured Certificate of Deposits inside the IRA THEN those deposits are FDIC Insured. But that still does not mean the IRA is insured nor guaranteed. FDIC Insurance is scheduled to revert back to $ 100,000 coverage by year end 2009 unless higher coverage is authorized by FDIC. Current FDIC insurance for deposit accounts as below is $ 250,000.
    http://www.fdic.gov/deposit/deposits/insuringdeposits/

    4. If a current or former employer made the decision to place you in ANY investment (other than distributing cash to the retirement account), that employer is now, what is called a “Fiduciary” and can be held liable for the investment decisions.
    http://en.wikipedia.org/wiki/Fiduciary_duty
    http://www.dol.gov/ebsa/publications/fiduciaryresponsibility.html

    Employers, even investment firms such as a stock brokerages do not engage in placing money in their employee’s retirement accounts and then directing those funds into any particular fund or investment. The liability here is huge!

    You could take legal action against the fiduciary if you lost money or your funds were down as the result of them acting as an unlicensed adviser, and acting as a fiduciary. A securities attorney or better an ERISA attorney can be of further help for legal advice.
    http://www.lectlaw.com/def/f026.htm
    http://www.seclaw.com/docs/RIAOverview.htm
    http://codes.ohio.gov/orc/5815.35
    http://www.winston.com/index.Cfm?contentid=34&itemid=1638

    Retirement plans are regulated under, The Employee Retirement Income Security Act (ERISA) of 1974
    http://www.investopedia.com/terms/e/erisa.asp
    http://www.dol.gov/dol/topic/health-plans/erisa.htm
    http://www.dol.gov/ebsa/compliance_assistance.html

    5. If you have a current investment advisor, I would say this person has no clue what they are doing based on the statements you made about him or her. I would seek a professional advisor with 10+ years of retirement experience and preferably 15+ years of investment experience.

    6. My question is do you have a SEP IRA, a SIMPLE IRA, a SARSEP, or the similar? An employer sponsored retirement plan would not open a “Standard IRA” as those are open and managed by individuals only, not by employers.

    7. Yes, there is a 10% penalty for taking money out of a qualified retirement account before 59 1/2. In addition to that penalty, the ENTIRE amount withdrawn would be deemed as taxable income in the year it was withdrawn.

    See this link below for more info on taking money out of a qualified retirement account prematurely. Note, no matter what kind of qualified retirement account you have the answer is the same:

    How much will my 401K cashout tax be?
    http://answers.yahoo.com/question/index?qid=20090303111950AAijAaE&r=w&show_comments=true&pa=FZB6NWHjDG3N56z6v_2wXVTV6igbwQuehdgfQCGq2KUvXhjrBd.HQA–&paid=add_comment#openions

    Additional info on retirement accounts:
    Should I open a Roth IRA or just an IRA?
    http://answers.yahoo.com/question/index;_ylt=AsnUXN0g6HSkPbxUymoO4GPty6IX;_ylv=3?qid=20080603121941AAMN0bP&show=7#profile-info-RtfCGOtNaa

    8. I would move (transfer) your retirement account(s) to someone who understands what they are doing. I would suggest a firm that offers more depth of understanding of investments and retirement services.

    Suggestions to consider:
    Charles’s Schwab. Offers both discount series and live body in person help.
    https://www.schwab.com/public/schwab/home/welcomep.html

    You can do this online with fund companies or other discount firms but do you get knowledgeable people? Rarely.

    Depending on your assets, I would also consider Morgan Stanley.
    http://www.morganstanley.com/about/offices/usa.html

    Again you want to ask (demand) for advisors with the said experience above.

    9. Final note:
    IndyMac is bankrupt. No longer operating as a public entity.
    FreddieMac and FannieMay are mortgage companies now under US Gov control (Sept 2008). If they have ANY sort of investor services/ financial planner assistance, avoid them like the plague. They are not experts in this dept either.

    Good Luck!

    Disclaimer:
    Links are for references only and are not deemed as endorsements. I am not currently employed by any of the firms listed hereto, and do not receive any compensation for ANY referrals such forth.

    Additional Disclaimers:
    http://profiles.yahoo.com/u/CUXTCCBSBYDZODXWGYK2IZDOOI
    http://360.yahoo.com/profile-MRcc7V81cqUI1qzb8SDAZw–

    <05.23.2009>

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